“The South Carolina Republican Party, the state party of opportunity, supports a tax policy designed to help the economy grow, not stunt the taxpayer. We realize that free people maximizing the power of free markets will do more to enhance the wealth and economic security of South Carolinians than any government program ever could. We therefore support policies that allow hardworking South Carolinians to keep more of their own money rather than be given to the State.”   – S.C. Republican Platform

Conservatives in the State House want to change how you, your business, and everybody in South Carolina pays taxes.

Lower taxes and a more efficient government are THE core tenants of the fiscal Republican Party Platform. Years of tinkering around the edges have created a state tax code that is dense, unwieldy, and unfair to many taxpayers. The result of that tinkering is a state tax code that resembles the tangled mess of Christmas lights you get out of the box each December.

This week, my Republican colleagues and I unveiled a comprehensive tax reform strategy that is a significant first step in unraveling our tax mess while lowering taxes and making our tax code fairer for everybody.

How did we do it? Seven simple ideas:

• Eliminate two-thirds of the special interest sales tax exemptions while preserving the ones that benefit families. We eliminate ones for porta-potties and keep ones for food, medicine, electricity, water, and gasoline. We don’t believe the necessities of life should be taxed. The sales tax rate will be cut
• Flatten the income tax. Our tax brackets believe you are “wealthy” if you make $14,000 a year. We don’t believe that. We collapse our six tax brackets (0, 3, 4, 5, 6, and 7 percent) to three (0, 3, 7), which makes the tax code more coherent while giving 4 out of 5 South Carolinians a tax cut or no change in their liability. The revenue reduction is estimated to be $51 million.
• Slash small business “active income”. Our small businesses need help emerging from the recession. Many of our smallest businesses – those run by sole proprietors as “s-corps” and LLCs, are double-taxed on their income. Many of these small businesses report their income on their personal income tax returns. We will slash the rate they pay from 5 to 3 percent so they can invest in, and grow, their businesses. This should lower the tax paid on these returns by about $1,000. The net revenue reduction is approximately $60 million.
• Cut the business property tax rate from 10.5% to 6%. The top business property tax rate is a problem for businesses of all sizes. The 10.5% rate is an obstacle in recruiting major manufacturers. It’s a problem for medium-sized businesses trying to expand without the political power to get exemptions. It also hurts small businesses with expensive equipment – such as small manufacturers, construction companies, and companies with large technology investments. The net revenue reduction is approximately $56 million.
• Review all sales tax exemptions every 5 years. Nearly all of the sales tax exemptions given by the General Assembly had a viable and defendable purpose at one time. We call for this review by re-creating the Joint Tax Review Committee that operated in the House and Senate many years ago.
• Drop the property tax from 6% to 5% on commercial and rental property.
• Eliminate the corporate income tax. This is achieved by cutting the rate by 1.25% per year over four years.

This package is not “revenue neutral” and actually lowers the state tax burden by more than $220 million. This package is “revenue negative”, which appropriately reflects both our insistence that the tax code is unfair and our Republican principle that we are overtaxed in general.

This tax reform proposal came after six months of study by a Caucus committee that studied the issues, listened to our constituents, and didn’t take testimony from special interests and their lobbyists. We intend most of these proposals to be implemented beginning in year 1 so we don’t kick the tax relief can down the road where future General Assemblies can derail with it. (The one exception is the business property tax rate, which is lowered over 4 years because of the impact to local governments.)

This year’s package of bills includes other pieces of legislation that we don’t believe will be passed this year, most notably: reducing the commercial real estate property tax rate from 6 percent to 5 percent. That item has a major cost to state and local governments that must be planned. The package also includes these core ideas as one bill and as separate bills, so if one idea fails, we can still get others through the process.

This is not the end of the debate. This is the first step in a multi-year process. The Republican Caucus is calling on conservative activists, the Tea Party, and anybody who believes in the Republican Platform to help us on this journey. The legislative process is messy and sometimes maddening, but if we are to live up to the call of the Republican Platform to create “a Tax Policy which promotes prosperity”, it will take time and effort on all of our parts.

We look forward to taking this journey together. Please do not hesitate to contact me with your input, ideas or questions.

The first several weeks of each legislative session are a flurry of activity – but mostly off the House floor.

Instead, House members sit in their committees and subcommittees debating legislation and holding multiple public hearings to learn more about the legislation before us. House committees held nearly two dozen hearings this week debating everything from restructuring the Department of Transportation to strengthening our Right to Work laws.

The House Ways and Means Committee split into its subcommittees and asked every state agency (or private entity looking for public dollars) to justify its budget requests.

Now, I won’t give you the full “How a Bill Becomes a Law” speech today, but several pieces of important legislation took first steps toward reality this week.

One major piece of legislation that moved this week was a new DOT reform bill that was approved by a House Judiciary Subcommittee.  This legislation eliminates the Department of Transportation Commission, eliminates the Joint Transportation Review Committee and makes the Secretary of Transportation as governing authority for the DOT.

The Secretary of Transportation would be appointed by the Governor and would become a member of the Governor’s cabinet. We began the process of reforming the DOT three years ago, and problems still persist at the agency.

The DOT reform bill is also part of our ongoing effort to streamline and reform our sometimes disjointed state government. Last year, the House approved a number of measures to consolidate agencies under a Department of Administration. The House also approved ballot measures that would give the voters of South Carolina the opportunity to make the state Superintendent of Education appointed by the Governor and to make the Lieutenant Governor appointed by the Governor. All of these bills are currently in the state Senate.

My House colleagues were pleased to hear this week that the Senate followed our lead and approved legislation that reverses the decision by the DHEC board to approve the dredging of the Savannah River to benefit the Port of Savannah. The bill will now come back to the House for a procedural vote before going to the Governor’s desk for her signature. The Governor’s spokesman said in a newspaper this week that she will veto the bill. Since the measure passed both chambers unanimously, the bill should be easily overridden.

The legislation reaffirms an existing state law requiring the DHEC Board to gain the approval of the Savannah River Maritime Commission before taking action on any matter pertaining to the navigability, depth, dredging, sludge disposal and other collateral issues in regard to the Savannah River.

One of every five jobs in our state is directly tied to our ports, and overwhelming evidence presented by DHEC scientists showed the dredging would cause irreversible environmental damage. With so much at stake for our state, it is no time to allow neighboring ports any advantage whatsoever in the important fight for every advantage for jobs.

I appreciate the opportunity to serve you. As always, you can contact me directly through this site if I can ever be of assistance to you.

**The building pictured above is the Blatt Building on the State House grounds. This is where all members of the House have offices as well as where all the committee work is completed.

Economic Outlook – South Carolina v 4 Issue 8 August 2011

Two legislative scorecards issued by pro-business groups gave Rep. Dan Hamilton perfect 100% scores for his pro-business record during the 2011 Legislative session. The South Carolina Chamber of Commerce and the National Federation of Independent Businesses (NFIB) each gave Rep. Hamilton 100% pro-business ratings.

The scores are based on votes cast during the most recent legislative session on issues such as lawsuit abuse reform, charter schools, government restructuring and unemployment insurance reform. Both groups track key roll call votes to determine an overall score for each member of the General Assembly during each legislative session.

Both scorecards can be found online:

South Carolina Chamber of Commerce Legislative Scorecard

National Federation of Independent Businesses State Legislative Scorecard

General Appropriation Veto Letter

A few items that have caught my eye so far…

1. Vetoes 6 & 7 (Greenville Tech – University Center) The University Center’s appropriation has often been a target for vetoes in the past. I will vote to override this veto as the University Center has proven over the years to be a solid return on investment by giving professional adults the opportunity to earn advanced degrees while remaining in the workforce. South Carolina already lags behind our peer state in college graduates per capita and University Center fulfills a unique niche to help close that gap.
2. Veto 12 (University of South Carolina — Small Business Development Center) Have you ever attempted to start a new business? There is a lot of red tape and potential pitfalls and most new businesses fail before they can flourish. The SBDC exists to assist and mentor entrepreneurs get their businesses off the ground. Just last year with a budget of less than $500,000, the SBDC’s assisted in 2,735 Jobs Created & Saved; $54,700,000 in Capital Formation; $117,900,000 in Government Contract Awards; 105 New Businesses Started; and 6,096 Individuals Served. Enough said. I will vote to override this veto.
3. Vetoes 27 & 28 (Election Commission Carry forward) This veto would prohibit the State Election Commission from using approximately $700,000 money left over from last fiscal year to help offset the cost of the First in the South Republican primary in 2012. The entire cost to run a secure primary election is approximately $1.5 million. Both the Republican and Democrat primaries in 2008 were funded by state tax dollars. I will vote to override this veto, too. I believe elections are a core function of government, not to mention the economic impact to our state of having multiple campaigns spend lots of money in our state on television, radio, hotels, transportation, etc. The return on investment is huge, plus it gives a small state like South Carolina a chance to have a real voice in nominating a potential United States President.
4. Vetoes 30 & 31 (State Conservation Bank) This veto would remove the general fund appropriation of $2,000,000 to the state conservation bank fund. We already have a mechanism for funding the conservation bank through deed stamp fees when properties transfer. I agree with Governor Haley that additional funding the conservation bank is not a good idea at this time and will vote to sustain this veto.

Governor Haley will be briefing House members in the morning on her vetoes. I look forward to hearing from her and you as we debate these vetoes tomorrow on the House floor. Feel free to watch us live on your computer.

The video below of Bill Gates’ talk at Ted 2011 was shown at today’s event. His topic was timely for me given that the South Carolina House just passed our state budget and sent it to the Senate this week.

While I don’t agree with some of Mr. Gates’ conclusions, I appreciate that he is working to raise awareness what is happening around the country with state budgets. Take a look and let me know what you think:

So, what do you think? A couple points worth note:

1. States typically do not use Generally Accepted Accounting Principles (GAAP). How do citizens know if their elected representatives are actually balancing the books or playing budget tricks that would make Enron blush?

2. California’s budget deficit of $25 billion (yes, BILLION) is $4 billion more than the entire amount of government spending in South Carolina for 2010-2011.

3. The astounding lack of scrutiny of the $100 billion spent on government in California as compared to the spending of large corporations like Microsoft and Google.