Nikki Haley talks a lot about business owners when she is on the stump. As the GOP gubernatorial candidate tells the story, she's the daughter of two entrepreneurs who knew the importance of earning a dollar and what it felt like to have the government take that dollar away.
Think about it the next time you're at the market. Haley is ready to put the state's sales tax back on your grocery bill because, well, what the hell have you done to create jobs in South Carolina?
In her first major policy announcement last week, Haley launched a pro-business message, calling for eliminating the state's corporate income tax. Comically, her pitch is wrapped in a much broader vision. She would cut nearly $150 million in direct investment from South Carolina's businesses while pledging to grow the Department of Commerce, strengthen the state's technical colleges, and improve infrastructure vital for commerce, including highways, railroads, and airports.
If the businesses aren't paying for the services, schools, and roads that make their work easier, who is? That would be you. Haley told The State newspaper that she would reinstate South Carolina's 6 percent sales tax on groceries because cutting the tax "didn't create one job." Of course, the purpose for a tax-free grocery bill wasn't to create jobs, it was to directly help Joe Taxpayer.
Haley isn't the only one with her eye on Joe's annual contribution to the Department of Revenue. Last week, the state-appointed Tax Realignment Commission heard pleas from residents arguing against proposed tax hikes on not only grocery bills, but also on other essentials like prescriptions, water, and power.
And the movement to a sales tax economy is really just beginning. A few years ago, the state legislature replaced a large swath of property taxes statewide with a 1 percent sales tax increase. Sales tax collections to cover that tax swap are expected to come up short by nearly $112 million by 2012.
Yet there's a growing chorus of conservatives pushing for a higher flat sales tax that would replace the state's income tax, including state Senate leader Glenn McConnell and state Rep. Tim Scott (R-Charleston), the frontrunner for the 1st Congressional seat.
A higher sales tax would increase the burden on middle- and low-income families, but advocates for the change argue that the government could send out checks to offset those concerns. Considering that tax relief on our grocery bill lasted all of two years before state leaders targeted it for their "pro-business" plans, we won't count on those flat tax checks for long.
Haley has billed her corporate income tax cut as a jobs plan. In truth, unless business owners are seeing an increased demand in their products, they're more likely to pocket that extra cash than add jobs in a down economy. And, of course, there's a lot less demand when everyone is forking over even more in sales taxes on their groceries.
Recent rankings by industry magazine Business Facilities put South Carolina at the top of its list of states showing "Economic Growth Potential," in large part due to the Boeing deal.
In luring Boeing to Charleston, state legislators negotiated a sweetheart package that included both sales tax exemptions and a sharply reduced corporate income tax — but both came with the promise of thousands of new jobs.
State Sen. Vincent Sheheen, Haley's Democratic opponent, says he'd look for a way to help businesses with their local property taxes.
It's hard to say who is going in the right direction, but property taxes are certainly an issue that hits a business owner regardless of whether they're making money, and a large property tax cut was another big incentive for Boeing's new location.