Why I support the SC Fair Tax

Contributed by Bill Connor

With businesses closing, unemployment souring, and the overall economy at the lowest point in our lifetimes, we need help.  Jobs must be created by thousands of small businesses in our state.  We must encourage outside business to decide to relocate to South Carolina.  We should find a way to better spread taxes and to ensure working families and businesses are not bearing the entire burden.  To move forward, our tax system is the critical component.  It must encourage savings and tax consumption, not production.  The SC Fair Tax is the answer to all the aforementioned problems and the clear road to economic recovery.

To those who are not aware, let me give a short summary of the SC Fair Tax.  I don’t plan to get in the weeds, as specifics are up for debate by the legislature.  The most important part of the plan will be ending the personal income tax and corporate tax.  This means we will move to the method of taxation used by our nation up until the early 20th century, when Constitutional amendment brought our income tax.  Under the Fair Tax, revenue will be made up by a “consumption based tax”.

Primarily this means sales tax.  Before anyone stops reading because they believe groceries might increase 100+%, consider this:  Our current total for sales tax exemptions is almost equal to the total revenue for personal and corporate income taxes (around $3 Billion).  Our legislature will have to debate which sales tax exemptions should be lifted, but I like to ask this question of parents:  “Which would you rather have, one weekend of tax-free school supplies or a year of no income tax”.  A bit simplistic, but makes the point.

Think of what this will mean for small businesses in SC.  Each of those thousands of businesses makes up the bulk of job creation in our state.  By ending both the corporate and income taxes, SC business owners will have 12% more money.  This generally equals 12% more jobs.  In the case of a very small business (who will generally pay the 7% rate now), this may mean only one more person on the payroll.  However, the aggregate effect across the state is enormous.  This keeps to our nation’s values of allowing maximum freedom and not moving to the failed policies of Big Government Europe.

Imagine the incentive for outside businesses to relocate to SC. Businesses will relocate if it fits their economic interest.  If our state charges neither corporate or income tax (which would be paid by relocating executives), this will be the ultimate incentive package.  Instead of having to pay out massive incentives to the “big fish” corporations, we can bring in many medium-sized fish businesses without shaking down our citizens.

Think of other benefits involved with moving to the consumption-based Fair Tax.  EVERYONE will pay the taxes making up our state’s needed revenue.  As things stand now, many groups in SC are not paying taxes.  Illegal Aliens generally do not pay taxes, as most are “off the books” and their pay is not recorded for tax purposes.  Anyone in law enforcement will tell you of the “underground economy” made up of various criminal enterprises.  Yes, it would be great to end the criminal activity, but in the meantime those engaged should be paying our taxes.  Lastly, only those making above a certain level of income, in other words the most productive pay all the taxes.  While we should be doing everything possible to help the less fortunate (those who truly need the help!), we should not discourage production.

The Fair Tax will help restrain government growth.  Our National and State Constitutions were written to restrain government power and intrusion and allow the economy to grow through the private sector.  America grew to greatness on a relatively small national government and equally restrained state governments.  It was not until the 16th Amendment in 1913 that we saw the exponential growth of government.  This came because a consumption-based tax prevents substantial government growth.  In order to raise taxes, all groups in our society must agree, as all groups pay sales taxes and will be affected.  The Fair Tax prevents our legislators from targeting small groups in our society (“The ‘rich’ must pay their fair share”) and play on class warfare.

Lastly, think about the incentive for personal savings under the SC Fair Tax.  Our national and state economy “snapped” under the pressure of debt.  We are still seeing the results of bad policy encouraging personal debt and overleveraging.  The housing crisis, which precipitated the “great recession”, came due to the multitude of sub-prime loans.  Bad debt has brought Greece to collapse.  Under the fair tax, investment income is not taxed.  Additionally, this consumption-based encourages living below means and putting money in the bank to save on taxes.  Think about something.  We tax cigarettes to encourage smokers to quit or cut back.  The Fair Tax encourages savings and allows for some amount of freedom in the decision to pay taxes.

The time for the SC Fair Tax is now.  We are at a crossroads.  Do we travel the way of Europe, and see states implode like Greece?  Do we continue with the same “big government” policies we have seen from most Democrats and even some Republicans (Though I am a Republican, I fully recognize too many Republicans bought into a big government affair and helped put us in the current mess)?  I think most South Carolinians would answer “NO”, we want progress.  It is time to demand the SC Fair Tax now, before we no longer have that choice.

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2 Comments to “Why I support the SC Fair Tax”

  1. Bill,

    Excellent article! One other thing that should be mentioned though is the benefit to trade it would give us. Right now American manufacturers have to pay income taxes and payroll taxes, the Chinese don’t. Under the Fair Tax American manufacturing is taxed at the same rate as Chinese manufacturing. It gives the advantage to the most productive and creative nation in the world since we won’t have to ship the good 4000 miles across an ocean.

    Keep writing my friend. Maybe one day we can even get Jake Moore to see the light!

  2. The Fair Tax levels the playing field; the drug dealer pays the same as the preacher. All of your saving becomes 401k plans (saving before taxes) you decide how much you will pay in taxes!

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