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Mar 05, 2014

South Carolina Tax Reform: Man on the Moon in 2016

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John F. Kennedy gave NASA one goal. It was an ambitious goal, unthinkable even. It was very specific and had a deadline. They achieved it. This is the type of singular vision and dedicated effort we need currently from South Carolina Legislators.

I propose that the South Carolina legislature clears the docket for 2015 and resolves to do one thing – the most important thing they can do.

I went to York County Day 2014. It was a nice event. It’s an opportunity for York County civic and business leaders to engage with our state level delegates in a meaningful and serious venue. There were good and relevant presenters, healthy Q&As, and room for camaraderie and interaction. Eventually, we were able to have a frank conversation with a few of our representatives.

Inevitably, the conversation with delegates turned to Comprehensive Tax Reform, as it should. No matter what our great challenges are, they always come back to our tax structure because the ability to levy taxes and determine spending is the legislative ability to govern. The implementation and operations is for the executive branch. So, the number one thing the legislature needs to do is to be the CFO of the state, so to speak.

Currently, we have an unsustainable situation. I don’t say this as a lack-luster hyperbole. I say it as a commonly understood and referenced fact. We literally have an unsustainable fiscal reality that will have to change or will fail.

One of our most visible challenges is that we desperately need to improve our road systems – through maintenance, repair, and new construction. We have the 4th largest roadway system in the nation, and one of the lowest budgets for it. We have around 50% of secondary roads labelled as “poor” condition, and we have many more headed that way. Plus, we have a list of bridges about to hit the 50 year mark, which dictates certain work and spending, as well. We need to fund this work, or we will suffer for it. We need more money to do it. The most obvious answer in the short term is to increase the Gas Tax. But, ultimately, this needs to be permanently solved through Comprehensive Tax Reform.

We also need to shore up the imbalance between residential taxes versus business taxes. We need to listen to the presentations of Mark Farris with York County Economic Development. We need to establish simple metrics that apply unilaterally. North Carolina seems to have a simple, equitable solution to this. We need to stop and acknowledge that we are simply set up to operate in the red. We spend about $1.30 on services for every $1 collected from the residential property. Yet, we pay about $.30 in services for every $1 collected from business. We are one of the highest taxing in business and lowest taxing in residential. A short term “solution” is to repeal Act 388, as it has done much damage and repealing it would be a logical move. But, that’s really only a patch. It doesn’t solve the problem. The problem needs to be solved through Comprehensive Tax Reform, the one thing we need to do above all else in 2015.

So, we posed the question, What if congress dedicated 2015 to Comprehensive Tax Reform and nothing else? What if that was our man on the moon? Could we do it? Is there an appetite for that kind of singular vision in the legislature?

While I had a list of people comment to me after the event was over that the delegates didn’t answer the question, I feel upon reflection that they did. They each put forward frank and relevant information and perspectives to the issue. I thank them each for that.

Senator Peeler said no, there’s not, there’s not an appetite for tackling Comprehensive Tax Reform. Though, he did agree that pecking at the tax system was not a solution, and he acknowledged that reform is needed, but he pointed out that the term “tax reform” is usually a veiled term for “tax increases” – thus illuminating one of the disconnects at play.

Senator Hayes made a good point about going into such a process with handcuffs. He explains the phenomenon that if you say it has to be revenue neutral, then you end up beating a bunch of people up for tiny effect when aggregated more equitably, and therefor you don’t ultimately solve the big problems. I agree with him that I don’t think this thing can be revenue neutral. Though it may look like decreases or washes to some, depending on the specifics of the changes, I imagine that there will have to be an overall increase in revenue for the state. Of course, that needs to be examined and not assumed. I’m just basing it on a general cost of living increase type of thinking – again, this needs scrutiny.

Representative Norman pointed out that part of the difficulty is the process of going around goring oxen. Who is going to have what tax exemption taken away? Who is going to lose? He frankly put forward this very real concern of how this would play out. This illustrates the strong silo-driven self-interest at play that anyone trying to do the work of reform would be immediately overwhelmed by. Self-interest is a reality, of course, but I believe that when a sense of team exists, then self-interest is co-dependent on common good. You can therefore achieve synergy, to use an overused term (unfortunate… it’s actually a great word).

So the take away is that we need a sense of team to do this work. That’s what JFK created for NASA. He made the moon be the World Series. Can we do that? Can we create that same sense of awe? Can we be the 1980 US Olympic Hockey Team?

We maybe we can… but it’s hard to do this with tax reform because it sounds so freaking boring!

Though, what if we sought innovative collaboration based on interest and passion in this process? In other words, we drew from our population innovative people intrigued by solving this problem in a collaborative, creative way.

What if we don’t ask Congress to do this work? What if we allow interested citizens to create models? What if there were prized-based challenges like DARPA? Could we have the success that DARPA brought to the Internet, the driver-less car, and a list of things we’ve never heard of? What if there was an online application for interactive crowdsourcing of the problem of our tax code? Can we have the success scientists had with using this process to map the human genome?

Maybe we need congressmen and women to propose models based on selecting from the models created through crowdsourcing and not doing the work of arguing every item… you can’t get anywhere that way.

If you want to explore, participate in, or help support such a project, please contact me.

Author Details
Jason
Jason Broadwater

Jason is a keynote speaker and project designer for economic development and community collaboration in the New Economy. Jason is also founder of RevenFlo (an internet marketing and application development company).

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