Sunday, Oct. 21, 2007
State is tax-cutting itself to death
OCT. 21, 2007 - - If the plan for South Carolina politicians
is to shrink state government by starving it, then it's working.
Yes, this year's budget was larger than ever before - - some
$7 billion in state tax funds alone. But the huge influx of
$1.4 billion in new revenue isn't lasting. Next year, an economic
downturn highlighted by higher interest rates and slow housing
sales will force the state into a shortfall that could approach
$430 million. (Experts say the real shortfall probably will
be $250 million off what's been projected, but that's still
not chicken feed.)
If you step back a little, what becomes clear is that the
state is starting to cycle wildly from fiscal surplus to shortfall
and then back again. Why? Because politicians are responding
to political whims by offering the dessert of tax cuts before
partaking of the meal of good budgeting practices.
For all the caterwauling about South Carolinians being taxed
too much, the state will take in almost $600 million less
in the coming year because of recent tax cuts:
- Estate taxes. Because South Carolina tied its estate
tax to a federal cut, the state phased out so-called "death
taxes" from 2002 to 2004. In the coming year, it won't
collect $60 million that it would have received without
- Small business income taxes. In 2005, lawmakers
passed an income tax cut targeted to small businesses that
caused the rate to drop from 7 percent to 5 percent over
four years. In the coming year, the state won't collect
$54.5 million it otherwise would have received.
- Venture capital fund. Because insurance companies
now can contribute monies that once were taxes into a special
venture capital fund and get a juicy tax break at the same
time, the general fund isn't getting about $50 million in
taxes from insurance companies that it once got.
- Grocery taxes. Next week, consumers no longer will
have to pay the state sales tax on groceries. The benefit
came as the result of two laws - - a 2006 measure that cut
the rate from 5 percent to 3 percent as part of a property
tax swap and a 2007 law that eliminated the remaining 3
percent completely as part of an income tax cut. Combined,
the average family of four will save about $225 per year
in taxes. The state will lose $235 million in revenue in
the coming year.
- Personal income taxes. The state in 2007 eliminated
the 2.5 percent personal income tax bracket for all filers
- - a measure that will keep the state from realizing $86.4
million in the coming year.
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If you add all of the tax cuts, the state won't bring in
some $585.9 million in 2008 than it would have if the tax
cuts had not occurred. In other words, without the tax cuts,
the coming year's budget likely wouldn't face a shortfall
of up to $430 million. Instead, it would have a surplus of
about $150 million.
Now while all of these numbers are interesting, the practice
of incessant tax cuts means something really deeper: Instead
of having a surplus next year and being able to improve education,
health care, prisons, the environment and a host of programs,
state leaders are facing another annual funding crisis.
By cutting in good times, lawmakers create a rhythmic dynamic
that they don't have enough in lean times. In turn, that means
they'll cut more government services. In the end, government
becomes smaller by default, not by design.
But some would argue that it's by design anyway because the
long-term purpose of cuts is to serve as tools to starve government
- to drown it in a bathtub, as one famous budget-cutting devotee
In our book, this strategy is wholly disingenuous. If leaders
want to cut government, they should cut programs outright
and face the music offered by voters. They shouldn't stand
by and wait for lean times to cut programs because they don't
So why do they do it this way? First, South Carolina politicians
just won't raise taxes when they need money because of the
fear of political backlash. And they're scared of another
kind of backlash if they cut programs directly - that a disaffected
constituent might run against them.
Andy Brack, publisher of Statehouse Report,
can be reached at: email@example.com.
helped put state on culinary road map
She-crab soup is uniquely Charlestonian-a silky, seafood
chowder with a European heritage. The dish helped put
Charleston on the regional culinary road map, as surely
as Philadelphia's cheese steaks or Chicago's deep-dish
pizzas. Shrimp and grits are perhaps the only items appearing
more often on the menus of Charleston restaurants than
this elegant appetizer.
"There's nothing quite like it on this side of the
Atlantic," says John Martin Taylor, cookbook author
and the notorious arbiter of Lowcountry cuisine known
as "Hoppin' John." Although some Charleston
area restaurateurs bemoan it as nothing more than a novelty
item slurped by the gallon by gullible tourists, Taylor
maintains it's an example of a delightfully distinct regional
cuisine being bred into mediocrity by taking shortcuts
such as thickening it with flour ("wallpaper paste"
he says with disgust).
Statehouse Report has partnered with USC
Press to provide readers with an interesting
weekly historical excerpt about the state. Each
excerpt, which is used with permission and not for
republication, is taken from The
South Carolina Encyclopedia, a 1,077-page
book published in 2006 with entries by almost 600
contributors and edited by noted historian Walter
Edgar. We hope you enjoy this new feature.
Food historians believe she-crab soup is based on the
Scottish seafood bisque partan bree which was brought
by settlers to the New World in the early 1700s where
it was localized in Charleston with the addition of boiled
and pureed long grain rice and the roe of blue crabs.
During a 1909 visit to Charleston, President William Howard
Taft supped on she-crab soup at the home of Mayor R. Goodwyn
Rhett. It is made with the meat of a dozen female crabs,
fish stock, milk, spices, and heavy cream. Finishing touches
include a sprinkling of the orange crab eggs across the
surface of the thick soup, followed by a dollop of a fine,
dry sherry like Amontillado. The soup is a blending of
the New and Old worlds, served up hot on a Charleston
Another great cartoon by Bill McLemore:
To send a message to cartoonist Bill
McLemore, write firstname.lastname@example.org
power makes sense, Barbara Measter, Seabrook Island,
for tax breaks, Bob Logan, Little River, SC
needs affordable medical help, birth control, Roxanne
Walker, Greenville, SC
good points in sex Ed column, Anne Badgley, Charleston,
insurance companies want to cancel policies, Dan
Norfleet, Summerville, SC
is tip of iceberg, John P. Ford, Sumter, S.C.
have grown apathetic, David Whetsell, Lexington,
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In each issue of Statehouse Report, you'll get:
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