Every day there seems to be some conversation or issue raised about how South Carolina funds the government and its agencies. Most recently, there was the letter advocating registering and taxing utility trailers. That would generate income for the state and the local counties through vehicle property taxes and DMV fees but is not really a reliable recurring source of revenue.
I agree that all vehicles should be registered, more for identification and ownership issues than to generate income from property taxes. I can just imagine how complicated it would be in trying to determine the taxable value of some of these trailers. Who really knows how much income would be generated? It would be a silly, wild guess at best. Realistically, it is not the way to go.
South Carolina is the land of regressive taxes that are based on consumption, not income, including sales tax, personal property tax, vehicle purchase "fees," etc. They are all based on consumption and impact low-income families way more than the more affluent. The average tax load, based on $42,000 income for a single tax payer is more than $11,000. About $7000 of that is federally-mandated FICA and IRS deductions. The other $4000 - or 10 percent of income - is South Carolina C based taxes and fees, according to smartasset.com.
Just look at the current sales and use taxes. Sales taxes can go has high as 10.5 percent, while vehicle property taxes are 6 percent of some mysterious value. In fact, vehicle property taxes were challenged several years ago and found to use incorrect values in 50 percent of the calculations. That makes no sense at all when you have a mechanism in place that is based on complete transparency and absolute values.
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It’s called graduated income taxes, which is about as fair a tax as you can develop.
The median income in the state is about $45,000 per year. The state’s income tax rates are on a graduated scale, from 5 percent for about $12,000 a year in income, to 7 percent for those making more than $15,000 per year. Based on this scale, more than half of the state’s residents pay 7 percent. There are deductions and exclusions, but that’s the basics.
Surprisingly, South Carolina has about 68,000 millionaires (net personal value), according to netstate.com and Census information. So let’s say 50,000 of them earn $500,000 per year.
Just add a two percent income tax surcharge to that first $250,000 of income over $250,000 and you generate an additional $5,000 per filer; the state will generate another $300 million in tax revenue. Now that is recurring revenue! That $5,000 is a minor inconvenience to those in that tax bracket, who certainly have the ability to pay.
South Carolina had to cut millions from the budget this year due to over expectations of income. This is a very predictable source.
After a year of real-world experience, the state would most likely direct counties to stop collecting the property tax on vehicles and replace it with funds from state subsidies for education and transportation. Of course those 68,000 millionaires will oppose this, and I’m sure a lot them are the lawyers in the legislature who may even have a trailer.
Let’s not hitch another tax to a moving object.
The writer lives in North Myrtle Beach.