A comprehensive plan for
making us wealthier and wiser
By BRAD WARTHEN
Editorial Page Editor
LARRY WILSON, one of the chief architects
of the Education Accountability Act, came by the office the other day and offered a pretty compelling vision for what South Carolina should do next.
The local entrepreneur doesn’t hold elective office, and doesn’t claim to speak for anyone but himself. But the ideas he put forth are worth sharing because:
- He is a board member for the Palmetto Institute, and that think tank is expected to join with the Palmetto Business Forum, the Competitiveness Council and the state Chamber of Commerce to set forth a unified vision for how to make the average South Carolinian wealthier. Some of these ideas may crop up in that context.
- He is also close to the new speaker of the S.C. House, Bobby Harrell. How many of these ideas Mr. Harrell buys into and how many he has told Mr. Wilson — according to Larry’s account — just aren’t feasible I don’t know.
Nor do I know how many of these ideas my editorial board colleagues and I will go for once we sit down and study them.
But I was sufficiently impressed by this set of interlocked proposals that it seems worth throwing out to see what others think. If not this, we need some kind of comprehensive strategy for moving South Carolina forward. We must get beyond the usual piecemeal responses to crises and interest group demands if we’re to catch up.
The critical element that ties all of these ideas together is the unassailable fact that education and economic development are inseparable. If we don’t realize that, we’ll continue to make 80 percent of the national income.
I don’t have room to set out everything covered in our wide-ranging discussion, but here are the most intriguing and/or appealing ideas that I heard:
EDUCATION
Mr. Wilson wants an Education Quality Act that includes:
- Early remediation. Third-graders scoring below basic on the PACT would attend school year-round in the fourth grade, under master teachers or National Board-certified teachers. The teachers’ incentive? Higher pay for 230 days of teaching. He would then add a grade level at a time, on up to high school.
- Full-day kindergarten for 4-year-olds. This would be provided at “accountable, certified” public and private schools, “financed by vouchers and integrated w/First Steps.” The money might come in part from consolidating current pre-5K efforts, and be distributed in a way markedly different from the awful “Put Parents in Charge” scheme: Low-income kids would get full funding (about $4,000 apiece). The money would go to the school their parents choose. Higher-income folks would get a tax deduction (not a credit) to help with a portion of the cost. “I’m absolutely against vouchers in the public schools, by the way,” Mr. Wilson said. “But this is an area where I think it will work.”
- An appointed state superintendent of education.
- A BRAC-style commission for reducing the absurd number of school districts in the state. He credited this idea to Rep. James Smith, D-Richland, citing the facts that 41 of the state’s 85 districts serve only 14 percent of all students, but account for 100 percent of schools judged “unsatisfactory” under the Accountability Act.
- A statewide salary schedule for educators, by category and qualification. This way, for instance, Marion County wouldn’t lose good teachers to Horry just because the Grand Strand county can pay so much more.
KNOWLEDGE ECONOMY
Mr. Wilson would like to increase the lottery money going to endowed chairs from $30 million to $40 million to take greater advantage of this indispensable tool for helping our research universities to boost our economy.
He would also push for an Industry Partners Act that would:
- Recruit or set up companies to apply cutting-edge research going on in the state, accelerating the growth of economic clusters built around automotive innovation (Clemson), “Next Energy” development (USC) and biotech (MUSC and USC). The idea would be to market the state’s under-acknowledged assets and provide such incentives as local demonstration projects — say, running buses in the Midlands on hydrogen. The goal: to see these products manufactured here, by highly paid South Carolinians.
- Define respective, interconnected roles for the state Commerce Department, universities, S.C. Research Authority and tech system in boosting knowledge-based enterprises in the state.
TAX REFORM
Comprehensive tax reform, of course — the only kind worth talking about. Fortunately, while there’s a lot of talk regarding “property tax relief” as an end in itself, the climate has never been better for realigning our whole tax structure.
Mr. Wilson calls it “tax-balancing.” He would shift the burden of financing schools to the state (the only way to standardize teacher pay and otherwise reduce the gap between rich and poor districts). A Senate panel is talking about replacing the property tax as a school funding source with a higher sales tax. But Mr. Wilson raises two caveats: Care must be taken not to raise the sales tax to the point that S.C. merchants can’t compete with the Internet and neighboring states, and the tax burden must not be shifted to businesses to the point that it stifles job creation.
That latter point is worth considering for a reason he didn’t bring up: If only owner-occupied homes were exempted from school property taxes, gross inequality would still exist between districts rich in industry and commerce, and those without that base.
He would also:
- Eliminate the $300 cap on the automobile sales tax.
- Raise our lowest-in-the-nation cigarette tax.
“The point of all this is, it fits together,” Mr. Wilson concluded. “You can’t fix one problem without fixing the other.”
Exactly.
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I agree with Larry Wilson. In particular I believe that entering the knowledge economy is our greatest opprotunity to increase our per capita income.
Larry Wilson has no new ideas. He is simply repeating the same tired old ideas of more taxes on the middle income office workers.
Has Larry Wilson or The State, or of the tax eaters done any analysis of how much it will reduce automobile sales if the $300 cap is removed on sales tax? Of course not. This is not an intellectual exercise. It is just the greed of politicians, incompetent administrators, and their cheerleaders in the media.
What does Larry Wilson or any of the buzzword slingers know about “the knowledge economy, much less biotech, fuel cells, or automobile research? Nothing. Again, they are promoters, enjoying the status of munching cheese, sipping wine, and pretending to be “high tech leaders”.
So far, Innovista is nothing more than real estate development. Empty buildings don’t create research. USC needs to concentrate on the research first, and design building around real science.
Every time I read some of Lee’s comments, he always seems to be tearing down the efforts of other people. How about a few positive proposals, and not just the same old archaic S. C. “if it’s government, I’m agin it” bilge?
I admit to attacking the phony efforts of people who are insincere about tax reform, who only want to hijack it.
I don’t mean to pick on Larry Wilson, but he set himself up as an advocate of all the latest buzzwords (“biotech, nanotechnology, the knowledge economy, fuel cells, etc ad nauseum). I don’t expect him to know anything about the technology. But someone has to. So far, all we have are a lot of promoters, a few college professors actually doing some research, and none of those in the lead with any experience or track record of success in any of these fields.
USC, Clemson and Charleston have research parks sitting half-empty since they were finished in 1987. Most of the tenants are small conventional manufacturers, temporary help agencies, and a few software firms.
It seems reasonable to me to ask Sorensen, the Clemson advocates of new parks in the upstate, and others, to clean up their old parks and demonstrate the discipline and ability to develop someting on a small scale, before starting construction on projects which have a projected cost larger than the entire annual budget of the state.
Brad, you are so right when you say these proposals are so broadbased that there is not enough room to cover them all. I think Mr. Wilson needs to review the past Commission on Restructuring State government and see where these new proposals align. For example, SC has approx. 42 colleges in a state of less than 5 million people. A large chunk of those people are retirees who sat in their last class years ago. How about eliminating some of this obscene waste of taxpayer dollars and then maybe there will be some funding left for biotech, energy, and knowledge sciences? The cap on the car sales tax shouldn’t be lifted until the annual property tax on vehicles is phased out. Normalizing educator pay seems like the right move but my guess is even if you get good teachers to teach in Marion they will reside in Horry and commute. That type of problem will not solve easily once a teacher compares teaching classes in a progressive area with one like Marion.
The higher tobacco taxes will hit the poor most directly in the wallet. What next, maybe a tobacco rebate for SC citizens making less than $1000 per month?
I spend most of my time working with computer technology and the knowledge based systems of today. I can tell you that this state is so remotely behind, no, buried, away from the leading centers of this type of hi tech that the only way SC will ever catch up is if we can find a way to relocate Seattle or Boston into SC. That doesnt mean I say quit and do nothing but I do believe that this state needs to capitalize on what Seattle and Boston cannot offer. Namely, weather, low taxes, and a strong business climate. Any attempt to raise taxes on business in this state is simply short sighted and self defeating. This is one area I agree completely with Lee about.
Dave hit the nail on the head about how this state cannot afford to raise taxes and drive away more entrepreneurs and educated people.
Why would an entrepreneur in, let’s say, biotechnology, move his business from Illinois, with a 3% income tax, to South Carolina, with 7%? He would move to Florida, with no income taxes, or Atlanta, with lower taxes and more support for his business already in place.
Most of the best students go to college out of state if they can afford it. When the top USC and Clemson students graduate, the best ones leave the state. Just compare the exact same engineering and science jobs on The State’s Career Builder. Atlanta pays 50% more, and Charlotte 40% more, across the board, for all levels of experience.
Brad,
Most of these ideas are a rehashing of the same thinking that put us here to begin with. SC is at a severe statistical disadvantage concerning the capital investment process since capitalism exponentially rewards those states and individuals that already control the wealth. Capitalism, by its nature, takes the wealth generated by ordinary people and redistributes it to a tiny minority of the population. We need national progressive/re-distributive taxation on wealth. We must not raise sales taxes nor promote any kind of regressive taxation-period.
I’m not surprised that The State is pushing these pro corporate “reforms”-any kind of real reform is going have to include major labor reform (nixing right to work laws and abolishing Taft-Hartley) and a system of tariffs. The presented philosophy will not work because it does not take cheap foreign labor (including white-collar labor) into account. India has a giant, computer savvy workforce that works for one tenth of what Americans are paid. These so-called cutting edge and knowledge-based jobs (enough of the buzzwords!) are not going to develop in SC under any circumstances because they are already being outsourced to low wage countries. India’s professional class alone is roughly equivalent to the entire US population. Scientists, engineers, and computer programmers in India work for less than ten thousand dollars a year, so do you really think that the research university/business partnership paradigm is going to work when we can’t even keep our current jobs? Meaningful reform is going to have to come on the federal level. SC can however drop its hostile attitude toward workers by eliminating right to work laws, and by facilitating future federal funding of education and healthcare.
Eliminate sales taxes for everyone and property taxes/payroll taxes for the bottom 95% of the population. Use a national wealth tax to on the top 5% to fund the operation of the federal and state governments. Instead of a payroll tax, the federal government could provide a payroll credit in equal measure to the bottom 95% of the population.
Of course, the goal of doing this would be to reduce the egregious levels of wealth inequality in SC and the US. We should make it a national goal to reduce wealth inequality to New Deal standards. Instead of the top 1% owning 35%-40% of the national wealth, let’s reduce this figure to the top 1% owning 20% of the wealth. It’s paramount that we implement progressive taxation in order to re-instate a viable middle class. Millions of people in the US would be lifted out of poverty by changing the tax structure in this way.
Progressive, re-distributive taxation is necessary in order to maintain a democratic state. Right now, we’re only nominally democratic (remember that we have a congressional incumbent re-election rate of 98%-funded by the same people who run everything else, of course). Over the years, with the decline of the middle and working classes, we’ve become a de-facto plutocracy. It’s only going to get worse if we keep being dictated to by the same corporate interests that created the problem from the beginning.
If we continue to allow ourselves to be led down this free market fundamentalist path, then we can expect SC and America to revert back to our Robber-Barron heritage. Unfettered capitalism will necessarily shove 90% of the wealth to the top 10% (just as it is with the stock market capitalization distribution). Are the vast majority of Americans willing to become second-class citizens again? Do you like the idea of going back to sweatshops (i.e., the modern equivalent of sweatshops) and having no rights. Are you up to working six days a week for twelve hours a day and having no life? It’s already happening where I work, and it’s bound to happen where you work too. Do you like the idea of not having health insurance or Social Security? Do you like the idea of a privatized society, where most people are virtual wage slaves or peasants? I keep hearing the word “slavery” among my co-workers, and for good reason: standing while working for ten hours a day- Monday through Friday-then another six, eight, or ten hours on Saturday-all for pay that’s only a buck more per hour than what the minimum wage should be when adjusted for inflation since 1968. Our system doesn’t work-we need real reform before it is too late.
SC Core Strengths – Low Cost Land, Mild Climate, Abundant Water, Favorable Business Conditions, Deep Port
SC Major Weaknesses – Small existent base of industry/business, overall high tax rates with income/property mix, highest crime rate in USA, public education quality
Solution – No quick or easy fixes will be found. Lowering taxes in real terms to be the lowest in the USA will have the fastest and most notable impact. Eliminate state income tax and minimize corporate taxes. The free market will move into the state and resolve many of the other issues.
As a conservative car guy I have to agree that the $300 sales tax cap on new cars is idiotic. If one is to have a tax, apply it fairly.
The only consumers who benefit are those who purchase expensive new cars — the cap’s benefits are quite narrow.
The real beneficiaries of the cap are car dealers. It lets them pack the price or sell a slightly more expensive model.
As for income taxes, many folks are surprised to learn that our state income tax rates are slightly lower than those in North Carolina, but higher than in Virginia or Georgia. Our corporate tax rates are lower or about the same as those other states.
From a policy and pragmatic perspective, SC could easily raise its tobacco tax rates to the level of Virginia’s or North Carolina’s and expect a revenue increase. Going any higher could cause a decrease.
I have one question regarding the Innovista project. If we are so concerned with building a “knowledge economy”, why is it that all of the “knowledge” work for engineering and constructing Innovista is being done by out-of-state firms? Sure, much of the manual labor will be done by local firms, but I thought this was about moving SC forward. I think that this is simply a slap in the face to the local firms that were passed over.
To build the kind of economy that they want, perhaps they should start by keeping the projects local.
Brad, you guys attack out-of-state groups pushing PPIC constantly. Where is the indignation over this?
The reason Innovista is being headed up by out-of-state real estate consultants, architects, and engineers is for comfort level. Just as people who are unable to discern quality buy name brands, those who have no experience in putting together technology ventures go to name companies, and trust them to make it work.
Meanwhile, experts here in Columbia get on airplanes and fly to Palo Alto, Austin, Boston, and London to sell their expertise to research facilities with a 20-year head start on Columbia.
I wish USC and Clemson all the luck in the world. They’ll need it, if they don’t start over and do these projects the right way.
Brad, thanks for your informative column Sunday, Nov. 6, and editorial today, Nov. 7, that deal with education reforms among other things. I am so pleased someone is at least looking at some options for equalized funding between South Carolina students. Yes, some things mentioned may not work or be well-formed, but it is well past time to trash the $300 new car sales tax cap. The idea of a statewide salary scale for educators would make a tremendous difference in improving scores everywhere. We would applaud narrowing the field and the focus by consolidating school districts.
It seems we have a good chance of moving toward equal education for all South Carolina children in the 2006 legislative session. What I haven’t heard is an interest in coming up with the millions necessary to bring school buildings in tax-poor counties to where they meet the most basic building codes. We’ve been to Dillon County; we’ve seen videos of others. We cannot let our children continue to go to school in such facilities.
If the increased amounts of money now spent on under-performing students is not producing any improvement, what amount is necessary? Who claims to know, and how do they know?
The truth is that school spending, 4-year-old kindergarten, and 3YOK, 2YOK, and 1OK) will not solve the lack of families in the black communities. Low PACT scores and high dropout rates are just one sympton of a problem outside the control of schools to solve.
Interest-Based or Position-Based Politics?
Your column on Larry Wilson’s plan opens up an issue of wide and sweeping importance, and I don’t mean any of the proposals he offers for how to improve South Carolina. I mean the issue of how we can shift the paradigm from position-based to interest-based politics. We have to make the shift, or else we will remain stuck in the fumbling, muddling, bungling and wrangling that is the inevitable consequence of arguing over positions. It’s a matter of noble intentions, lousy execution.
At the founding of our nation we made a big breakthrough. We shifted from rule by despot (benevolent or tyrannical) to rule by representative democracy. It was a very major shift in human affairs, and has served us well for hundreds of years, but it has become obsolete. Two factors make another shift necessary, and practical. They are the overwhelming complexity of modern issues, in their multiple facets and interdependencies, and the emergence of modern means of communication which make true participative democracy possible.
The complexity of the issues means that debate in legislative bodies is now incompetent to deliver effective solutions. Arguing from competing positions cannot embrace the true complexity of the problem, nor can it lead to the effective “outside the donut” solution. Having better quality representatives in our legislatures won’t help. The problem is the adversarial process itself. Debate oversimplifies and fragments the issues. It causes participants to dig in their heels in defense of positions. It suppresses complete and objective exposure of the relevant facts, substituting half-truth and distortion. It squelches creativity which may threaten the shaky props under any of the dug-in positions.
Under the current paradigm we are almost universally guilty of the twin sins of plunging and lunging. Baffled by complexity and ambiguity in early stages of addressing the issues, we take refuge by plunging into details while losing sight of the broad picture. Eager to get on with it, at the first inkling of a problem, we immediately lunge at the first plausible-looking solution without laying any groundwork for a good decision or examining a range of options.
Mr. Wilson’s proposals may very well be good ones, but we have no way of knowing. Throwing them into the meat-grinder of political debate won’t lead to enlightenment.
The remedy is to shift to interest-based politics. When the deep and heartfelt interests behind the pain of the perceived problem or the hope of a prematurely offered solution are brought to light, wonderful things happen. People begin to see that participants from all viewpoints have much more in common than they would suspect from stated positions. People develop respect for one another. I may not share your interests, but if they are sincere and spring from our common humanity, I can respect them. Attitudes shift from adversarial competition to collaboration. The realization dawns that a better solution for all concerned can be discovered if we work together to find it, instead of trying to bully through our own position and block the opponent. The result is a few (if any) getting everything they might hope for, most getting enough to be really pleased, a few coming up a bit short but finding it still acceptable, and nobody left out in the cold. As a consequence, consensus support for the agreement makes it strong and enduring.
Further, the solution that results is better because it benefits from all the knowledge about the problem, all the expertise, and all the creativity embodied in all the collaborating participants. The solution will thereby be more effective in extinguishing the problem, and will be flexible, agile and adaptive to meet the unknown challenges of the future.
Shifting to the interest-based paradigm requires abandoning old habits and acquiring new ones. It also means a different style of leadership, and some different process mechanics. The new leader is facilitator of stakeholder participation and manager of the process. Leadership is definitely not about handing down a solution from the seat of authority, or advocating for one position over another. Nor is leadership the hero-genius who will somehow save us all through his/her brilliance.
The process mechanics stem from application of a couple of fundamental principles. These principles are manifest in many versions. Here’s my favorite.
First Principle: the Logical Sequence of Decisions
The first of these principles is that any process for reaching consensus on complex, technical issues must address decisions of certain types that are inherent in the process leading to consensus. These decision types are not optional. They cannot be evaded, nor should the be made out of order. The logical sequence of decisions leading to consensus about resolution of an issue may be expressed as a series of questions.
What is the issue?
Who are the stakeholders in this issue?
What are the interests of those stakeholders?
What is the Definition of Success that depicts the qualities of a good solution, and specifies the level of performance that constitutes success?
How are solution options generated?
How are solution options evaluated?
What is the preferred solution?
Is that selection valid, and why?
To test the validity of this stepwise logical approach, ask the following questions.
Can any of the questions in the sequence be omitted?
What if they were addressed in a different order?
This stepwise logic is not executed in a single pass. Rather, it is iterated, with more information coming out and better quality decisions made at each pass. The general approach on each pass is to achieve closure at each step before moving on, with full documentation and full stakeholder concurrence.
Second Principle: Form Follows Function
The Form Follows Function principle states, “First determine the Functions that a solution must perform, then select a Form which will perform those and only those functions.” The rationale for this principle is discovered by considering the consequences if it is not followed. The functions of a form are what the form does to extinguish the problem, and also extraneous functions that may be detrimental. The functions are inextricably associated with the form. When a form has been selected, all the associated functions, and none other, come with it. If a form is improperly selected, it may not deliver all the necessary functions. Worse, it may deliver undesired functions which cannot be avoided. Therefore it is better to first describe the solution in terms of all the desired functions it must deliver, and all the undesired functions it must avoid. Then select a form (or combination of forms) that does just that.
Returning to Mr. Wilson’s proposals, the approach I would recommend is to use the proposals as a jumping-off place for determination of a first-cut provisional statement of the problem, including context and collateral issues, as implicit in the solutions he offers. Then determine who the stakeholders are and structure an inclusive process to recruit stakeholders and elicit their deep and heartfelt interests. From that input, restate the problem, and proceed from there with the stepwise mechanics I’ve outlined above.
Larry Wilson, Bob Coble, and every other promoter development initiatives, should begin by defining the buzzwords they use, then try to discuss the subject without using them.
Dear Mr. Warthen: I read with interest your article in which you summarized Larry Wilson’s plan to make us wealthier and wiser. The premise of the article and the points made were excellent and hard to dispute. However, even if South Carolina implemented all the initiatives identified but did nothing to focus on ‘health issues” we would find ourselves in a non-competitive position, albeit better than we are now, but non-competitive nonetheless. Putting healthcare into the equation is necessary and needs to be broken into two components. First, we need to look at the ‘health of our citizens,’ and second we need to look at the cost of our healthcare. For starters the United States spends approximately 50% more as a percent of GDP than any other country and yet we do not rank anywhere close to the top compared to other countries when using universal health indicators. Couple this with the fact that 47 million of us do not have health insurance and we have a ticking time bomb. Some outcomes of our system, from an economic standpoint are that companies like GM,Ford, some of the airlines, and other major corporations are virtully bankrupt because they cannot afford health insurance for their employees and still compete in a competitive environment. The solution is neither simple nor fixable in the short term. But if we do not address the major issues impacting our citizens and corporations with a well thought out strategy we will continue to lose business to companies and countries without the double burden of poor health and high costs. (My background is a Hospital CEO, who believes in education, wellness, and prevention and who has made a career change to earn my PhD (at the Univ. of South Carolina) in health policy with plans to teach.) I can be reached at 270-929-7385 or: gcarlson53@hotmail.com Sincerely, Greg CarlsonDear Mr. Warthen: I read with interest your article in which you summarized Larry Wilson’s plan to make us wealthier and wiser. The premise of the article and the points made were excellent and hard to dispute. However, even if South Carolina implemented all the initiatives identified but did nothing to focus on ‘health issues” we would find ourselves in a non-competitive position, albeit better than we are now, but non-competitive nonetheless. Putting healthcare into the equation is necessary and needs to be broken into two components. First, we need to look at the ‘health of our citizens,’ and second we need to look at the cost of our healthcare. For starters the United States spends approximately 50% more as a percent of GDP than any other country and yet we do not rank anywhere close to the top compared to other countries when using universal health indicators. Couple this with the fact that 47 million of us do not have health insurance and we have a ticking time bomb. Some outcomes of our system, from an economic standpoint are that companies like GM,Ford, some of the airlines, and other major corporations are virtully bankrupt because they cannot afford health insurance for their employees and still compete in a competitive environment. The solution is neither simple nor fixable in the short term. But if we do not address the major issues impacting our citizens and corporations with a well thought out strategy we will continue to lose business to companies and countries without the double burden of poor health and high costs. (My background is a Hospital CEO, who believes in education, wellness, and prevention and who has made a career change to earn my PhD (at the Univ. of South Carolina) in health policy with plans to teach.) I can be reached at 270-929-7385 or: gcarlson53@hotmail.com Sincerely, Greg Carlson
Larry’s ideas on education are right on target. Too many school districts (way too many). Year round education for 3rd graders scoring low on Pact tests are good starters. A statewide salary structure for teachers only makes sense.
The $300 tax on every car sold is ludicrous. Makes no sense. I don’t want to pay any but if I am going to pay, make it reasonably fair or at least some sort of sliding scale. (I know Andre Bauer loves it because he gets cash from the car dealers but Andre has no power so smart legislators can easily get around him).
Lee,
Atlanta is in Fulton County. Fulton has a 7% sales tax rate. ( included in that is 1% for local option, 1% for the Marta system, and 1% for education). Inside the city of Atlanta the rate is 8%. Most counties in Georiga have a 7% tax rate. No county in Georgia has 5%. Georgia’s income tax ranges from 1% to 6%. SC’s from 2.5% to 7%. North Carolina’s lowest income tax rate is 6%, highest is 8.25%.
New Jersey’s is 8.97% yet tons of companies are headquarted in New Jersey. Virginia’s highest rate is 5.75%.
SC’s corporate tax rate is 5%. NC’s is 6.9%. Georgia’s is 6%. Florida’s is 5.5%. Alabama’s is 6.5%. Tennessee’s is 6.5%.
Illinois has a corporate tax rate of 7.3% compared to SC’s 5%. So if that business is a corporation, your business owner is paying more taxes in Illinois than SC. If that corporation is in Atlanta, they are paying a lot more in taxes than they are in SC and so are their employees who have to pay 8% sales taxes when they go out at lunch and pick up a few things for their home.
Businesses locate in particular areas for many reasons – sometimes the tax rate isn’t nearly important as quality of life issues- good roads, entertainment offered in the area, top schools, recreational opportunities in the area, great health care, great nearby unversities, etc.
David:
The tax rates and brackets are the most basic information. That’s all the bureaucrats want you to compare. The real tax rates are what smart people look at, and smart people run companies. They decide to move or stay.
SC has not indexed its tax tables to keep up with inflation, as required by law. Anyone just out of the official poverty bracket is in the top bracket in SC. A person with a very high income would pay about 3% in Illinois, and 7% in SC.
I have worked in and paid taxes in many states, so I have the calculations for all of them vs SC.
Most importantly, the supposed lower taxes of SC, which only apply to those making under $25,000 a year, mean nothing compared to the higher wages and salaries in Atlanta(+50%), Charlotte(+40%), and New York City(+100%). Cars, food, medicine, etc cost the same. Housing costs more, but you can buy less house, or buy more if you are making $250,000 vs $70,000 in Columbia.
Greg, Many factors are in play re the high costs of medicine. Tort reform is probably the single best improvement that could be applied to lower medical costs. You can probably cite many more examples than the rest of us with your medical experience and mgt. background. Trial lawyers (the ambulance chaser types) keep filing litigation that in many cases should be tossed out of court. Yes, their clients are right there with them, hoping to hit a jackpot payoff because of a medical procedure that didnt work, a mistake before or during an operation, etc. How many self indulgent idiots will be lining up to sue for Viagra blindness, when they probably didnt need to be taking the blue pill anyway? The trial lawyers have managed to drive the vaccine makers in the US out of business or out of the country, and now we have vaccine shortages. Most doctors and nurses work harder than most people I know, and are more dedicated to their profession, but our legislatures, packed with trial lawyer types, are reluctant to address this issue. Some forward (minor) progress has been made on the federal level thanks to the Bush administration but much more must be done. It would be interesting to hear your thoughts on this topic.
Lee,
I realize the taxes in SC are higher for some things.
Atlanta is an expensive city to live in as compared to Columbia. The company I work for is based right outside Atlanta. They didn’t pick the area because of low tax rates. My boss complains about the high cost of living everytime we get into a discussion about it. They picked that location for various other reasons. I don’t think they got any tax break to locate where they did.
Even so, I realize that South Carolina isn’t an attractive state to do business in – some of it may have to do with our tax rate but a lot of it has to do with quality of life issues.
Just lowering your tax rate doesn’t get you a lot of businesses wanting to come to your state. It doesn’t hurt but there are some people out there, believe it or not, that look at other issues besides how low the taxes are at the current moment.
South Carolina is low on almost every quality of life issue there is to be ranked. We are high where we need to be low and low where we need to be high.
Your employer’s choice of location in Atlanta makes my point about Columbia:
1. 1% tax rate difference is trumped by 50% higher salary and wages in Atlanta, which means that Atlanta and Charlotte drain the high-tech talent out of Columbia.
2. Atlanta is not more expensive than Columbia. You can work in midtown and rent a nice condo for under $700 a month, furnished with no long-term lease. You can walk to 1,000 great jobs, 100 restaurants, and ride MARTA to more. Appartments in the suburbs, like Marietta, are the same as Columbia, under $500. Commute from Marietta to GA Tech is faster than commute from Irmo to USC.
A major stumbling block to Innovation or attracting modern industry is the non-competitive wage structure in Columbia. Most businesses pay too little, and expect to little from employees and from themselves. They can get away with that as long as their competitors are local operators like themselves. The businesses that Coble, Sorensen, Larry Wilson, etc et al claim to want here will have to compete with Boston and Palo Alto. To do that, they will have to attract the same level of employee and pay the same salaries and benefits, which are off the scale for Columbia.
We learn on the Opinion page of the Sunday STATE (11/27/2005) that one of Larry Wilson’s so-called “investment” firms has been receiving over $300,000 in subsidies from Mayor Bob Coble’s discretionary funds.