South Carolina gubernatorial candidate Nikki Haley said Wednesday the state must eliminate corporate income taxes and pass comprehensive tax reform in order to lower its seventh-in-the-nation unemployment rate.
During a visit to a marketing and printing firm in Columbia, the GOP candidate pledged to work with legislators to "look at all taxes, all fees, all exemptions" and "make sure the very first year we have tax reform rolled out."
"The goal is to make it a very business-friendly tax structure," said Haley, who worked as a bookkeeper for her family's clothing store. "The first thing we want to do is eliminate the corporate income tax."
For years, legislators have talked about the need for wholesale tax reform without ever accomplishing it. A commission formed by the legislature has come out with a proposal to tax more things while lowering the tax rate. A public hearing on their plan is set for Friday. Haley said she would look at the work they had done.
Haley insisted that the way to help businesses hire employees and bring down the jobless rate is to cut red tape and business taxes. In June, the state's unemployment rate was 10.7 percent.
Economic reports in recent months have shown that businesses are uncertain about the strength of the nation's recovery, so firms have been sitting on record piles of cash, loath to use the money to hire new workers and expand operations.
During a morning visit to the Columbia firm Spectra Integration, Haley released a package of proposals she said would lead to job creation. The package mirrored many of the bills that were passed in recent months by the House.
Earlier this year, the state House passed a bill to eliminate corporate income taxes over 10 years. But the Senate removed that provision, saying the economy was too uncertain to further reduce state tax collections. Lawmakers have enacted a host of tax cuts in recent years, which economic experts say have exacerbated the state's budget crisis.
The state's 5 percent corporate tax rate is the third-largest source of state revenue behind sales and individual income taxes.
Haley said she believed the current sluggish economy presented an opportune time for the state to change its ways and that she had the political will to "make some tough cuts" in state spending and "give the legislature cover" politically if they follow her lead.
Haley said she would reform government agencies and put business leaders in charge of making them more aware of the impediments they might put in front of companies. For example, she said companies should not have to get separate permits to work in each of the state's 46 counties.
She also called for mandating drug tests for those receiving unemployment.
Like her mentor, Gov. Mark Sanford, Haley has been critical of incentives to bring companies into the state, saying it is unfair to current businesses. However, she said she would look at incentives for low-cost air carriers if it would translate into lower air fares for travelers. As governor, she said, she would become the state's "ambassador" and promote its business-friendly qualities.
In an interview, Haley's opponent, Democrat Vincent Sheheen, said her plans amounted to "a cobbled-together approach over the last eight years with Mark Sanford that hasn't worked, and I see this as a continuation of those failed polices."
Sheheen said he has worked for years in the General Assembly on comprehensive tax reform and that Haley had never proposed any such legislation as a lawmaker.
"What you've seen under the last decade under Sanford and Haley is a much more hands-off approach that has resulted in one of the highest unemployment rates in the entire nation," Sheheen said.
He added: "Pulling one piece out of the tax system, like the corporate income tax, and claiming that that is comprehensive tax reform is exactly the piecemeal approach that has led to the detriment of the state over the last decade or so."
Sheheen said the state chamber of commerce has endorsed him because of his work to "achieve a fair and equitable property tax system that doesn't unfairly place the burden on businesses."
The 39-year-old Camden lawyer said he wants the state to highlight its port system and its technical colleges. He says he would foster small-business growth and wants more cooperation among regional economic development efforts so different parts of the state stop competing with each other. That competition has occurred because of a lack of leadership from Sanford, Sheheen said.
Sheheen, who is serving his second Senate term after two in the House, said the state's health care industry could be a critical job generator. Health care providers recruit out-of-state nurses, while applicants are trying to get into state colleges for training, he said.
He also backs boosting jobs in alternative energy and said some of the state's shuttered textile mills could be turned into biofuel plants.
Walter Kohn, the president and co-owner of Spectra Integration, said he appreciated Haley's visit and liked her proposals.
He said he disagreed with the state chamber of commerce's endorsement of Sheheen.
"She's right," said Kohn. "They are wrong."
If the state got rid of its 10.5 percent corporate property tax, he would put it toward hiring more workers. He now employs 24 people full time and up to 12 additional on a part-time basis, he said.