Letter to the Editor
Both [Republican gubernatorial primary candidates] Pam Evette and Alan Wilson are proposing to eliminate the individual income tax in South Carolina. Interesting? Sure you wanna do that? Be careful what you wish!
The easiest way to determine if it can be accomplished is to compare South Carolina to a nearby state that does NOT have an income tax. Closest neighbor with no income tax is Florida. How does Florida do that? Let’s see.
First, EVERY state has a budget. The state budget gets funded one way or the other. The money has to come from someone or somewhere. How big is the South Carolina budget? The budget is $39 billion with a population of 5.6 million, about $7,000 per person. Of that $39 billion, South Carolina gets $13 billion from the United States government. The balance of $26 billion comes from sales, use, and accommodations taxes, about 25% total. The individual tax proposed to be eliminated contributes 22% and property taxes contribute 30%.
Now, let’s take a look at Florida. Their budget is much larger, $115 billion with a much larger population of almost 24 million, that is surprisingly $5,000 per resident, only slightly less than South Carolina. Florida has no individual income tax. How do they balance their budget?
Florida gets $36 billion from the United States Government, 0% from individual income taxes, 64% from sales, use and accommodations taxes and 33% from property taxes. Immediately, you can see that the property taxes are very close to each other in South Carolina and Florida. The butt kicker is the sales tax contributing 64% of their budget. Sales taxes INCLUDE both use taxes and accommodations taxes. Pay closer attention to that number.
Can South Carolina eliminate the income tax and depend on “other taxes” to balance the budget? Will [lawmakers] propose increasing your sales, use, and accommodations taxes to offset the individual income tax? Perhaps a quick comparison of TAX SOURCES will be helpful.
Hotel rooms generate large amounts of accommodations taxes. South Carolina has 1,300 hotels for a total of 119,000 rooms, including VRBO and AirBNB. Florida has 4,700 hotels for a total of 508,000 rooms. WOW, we lost that comparison. Oh, by the way, ever heard of Disney World? Disney alone generates $6.6 billion in taxes for the Florida budget, about 5% of their total budget from one vacation operation.
Do not worry, South Carolina has a huge coastline with three cargo ports, IF we include Georgetown and Port Royal. Really, we only have one port, the port of Charleston. How ’bout Florida? Yep, they beat us again, they have 16 cargo ports which generate about $7.4 billion in taxes every year. The overall contribution to Florida GDP is closer to $176 billion from their port activity.
That’s OK, we have cruise terminals, don’t we? They generate tons of taxes! Actually, South Carolina has one cruise terminal with very limited use, thanks to downtown Charleston residents. Florida has eight passenger cruise terminals which last year generated $1.1 billion in taxes, departure fees, etc.
Gambling is not legal in South Carolina; it is in Florida. South Carolina actually has one casino which is a boat that must travel offshore to allow passengers to gamble. Florida has eight casinos, a lot of revenue from those entities, about $248 million each year.
What about golf courses? They generate sales, use, and accommodations taxes. Yes, every round of golf is considered “amusement” and thus generates additional taxes. South Carolina has about 350 golf courses which generate a surprising $12 million in yearly tax. Florida has 1,260 golf courses and gets over $7 billion in taxes from golf courses every year. Damn, lost that comparison also!
Do not forget about professional sports teams. Florida has 11, including baseball, basketball, football and hockey. South Carolina has none. Plus they have five PGA Tour golf events and South Carolina only has one. Although Florida does not track the specific tax revenue on professional sports teams, it is estimated at $15 billion.
How are you going to balance the South Carolina budget? More sales and use taxes?
OK, there you have it. The revenue MUST come from somewhere. What will Wilson and Evette do? I cannot wait to see their solution.