The new S.C. Republican leadership plan to change the state’s income tax structure away from a progressive model to a flat tax is classic deflection: Call it flat and fair to hoodwink regular people that they won’t be screwed. Guess what? They will.
This is a bad idea from the get-go. One big indicator is that state Republican leaders highlighted Grover Norquist at a March 25 unveiling of the plan. He’s the national anti-tax guy with Americans for Tax Reform who former Gov. Mark Sanford brought in years ago to try to sell his tax reform ideas. And he’s the guy who famously said in 2001 that he didn’t want to abolish government, just make it so small he could drown it in a bathtub.
The GOP’s half-baked new tax reform plan would overturn the state’s 6.2% income tax rate by setting a flat income tax rate at 3.99%, which Republican leaders crow joyfully about how everyone now would pay income tax. But the problem with all of that crowing is that it would shift the major burden of income tax from the rich to the working poor and many in the middle class.
In our taxing structure, sales tax is considered regressive because it’s essentially a flat tax on sales. Everybody pays the same amount. But it’s harder on people without wealth because a larger portion of their disposable income goes to pay the tax on stuff they buy in stores. Let’s say, for example, that a family of four has to spend $4,000 a year on clothes, which would create a tax burden of $300 a year in sales taxes. For a rich family, $300 is a drop in the bucket, but for a family earning $40,000 a year with rent at $2,000 a month, food at $1,000 a month and other expenses eating up the rest of their budget, paying that extra tax is a burden. It’s regressive because it’s harder on people at the bottom.
That’s why income tax came into being — to counter the regressivity of sales tax with a tax that hit the rich a little harder. It created an overall balance. But this new plan throws balance out of the window and gives yet another “help the rich” benefit at the expense of those who aren’t.
Right now, about two in five South Carolinians don’t pay income tax — because of the way that the progressive income tax is structured and because of the inherent balance that it has envisioned. But in an America that is becoming increasingly oligarchic, it’s not surprising that Republicans at the state level want to smash what’s worked for years just so rich people can have more money to spend on investments, vacations, fancy dinners and more.
Shifting the burden of taxation when there are so many people already who have so much is not only irresponsible and wrong. It’s immoral.
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(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
