The Governor make an excellant point in his veto message yesterday of the Cigarette tax.
First, the current tax structure still largely resembles the same rate we had 60 years ago. At that time, former Sen. Strom Thurmond was still a freshman in the U.S. Senate and computers took up floors, not desktops. Yet, the annual median income meant that working families were near the bottom of the tax brackets. Today, we have what economist Dr. Russ Sobel calls, “the highest flat rate income tax in the U.S.”
Tax Rate Beginning Income (1959) Beginning Income (2008) 1959 Brackets Adjusted for Inflation 2.5% $0 NA $0 3% $2,000 $2,670 $14,797 4% $4,000 $5,340 $29,595 5% $6,000 $8,010 $44,392 6% $8,000 $10,680 $59,189 7% $10,000 $13,350 $73,986
and closes the message:
If the General Assembly sends me legislation that increases the cigarette tax, but offsets it with cuts in other places, I would sign it immediately. I encourage you and your colleagues to reject the notion that we can ask more from our taxpayers without delivering lower cost government and encouraging economic activity. We remain committed to working with you and the General Assembly to accomplish these goals in the weeks and months ahead.
For these reasons, I am vetoing and returning without my signature H. 3584, R. 193.
Many have said that it is an embarassment that SC has the lowest cigarette tax in the nation. My questions is it is more of an embarrassment that we have the highest income tax burden in the nation. What about the embarrassment of the 2nd highest unemployment rate in the nation?
I will support the veto, as I’ve given these reasons before:
I have supported raising the tax on cigarettes under certain circumstances. As a health care provider, I witness daily the health problems caused by smoking. Cigarette smoking costs the taxpayers millions of dollars a year, and I know that this extra cost is unfair the non-smoking taxpayer. I also witness a tremendous amount of waste in health care, and will continue to use my experience as a pharmacist, to reform our system.
I favor raising the tax on cigarettes and coupling that tax increase with an equally valuable tax decrease on personal and or corporate income. Such action would not only depress the incidence of cigarette smoking and its related health care costs but would also ignite our anemic economy.
During the debate of H. 3584, I offered an amendment to offset the cigarette tax with a cut in the top rate of income taxes. This would cut taxes for everyone in South Carolina making over $13,000. Not only would this tax cut benefit individual returns, but most most small businesses. Among the businesses affected would be LLC’s, LLP’s, sole proprietors, S-Corps and others. Most will agree that small businesses are the economic engine of our economy. Small business tax cuts have always resulted in job creation as proven by history time and again. Unfortunately, this amendment failed. I also supported amendments cutting taxes for agriculture property, property taxes for manufacturing, residential and commercial property taxes, and finally, I supported an amendment to eliminate the capital gains tax. Unfortunately, all of these jobs creating tax cuts failed.
comments