Governor Mark Sanford, Republican of South Carolina, and one of the few governors to be against the bailouts, has proposed a comprehensive taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. reform package that includes a move to an optional flat individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. of 3.65% with no deductions starting in 2010, as well as a phase-out of the 5% corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. over the next ten years. (Staff Economist Josh Barro goes into more detail in this December 9 blog post.)
Last Friday, the Greenville News reported that the Speaker of the South Carolina State House, Bobby Harrell, came out against Sanford’s proposal to eliminate incentives within the corporate income tax code to offset phased-out elimination of the tax itself.
Gov. Sanford responded with a column in the Greenville News today, citing Josh’s original blog post.
“According to the Tax Foundation, the net effect of our proposal is that it would move us from being the 25th-most competitive state in our business tax structure to being the sixth-most competitive. It’s tough to excel when you’re in the middle of the pack, and our plan would move us to the front.”
You can read the full column here. We’ll be coming out with more analysis of Gov. Sanford’s plan soon, so check back with us often.
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