Today, South Carolina Republican gubernatorial candidate Nikki Haley unveiled her first major policy proposal of the general election campaign — a jobs plan that centers around a complete elimination of corporate income taxes. “The first thing we want to do is eliminate the corporate income tax,” Haley said. “To be able to say we are a right-to-work state and a no-corporate-income-tax state is going to cause businesses to want to come, and it will create jobs in the process.”
South Carolina collects about $260 million each year in corporate income taxes, which amounts to 4.5 percent of the general fund. A similar proposal to eliminate corporate taxes was tabled by the state senate earlier this year, due to concerns over declining revenues. These fears are well-founded: a recent report by the Center on Budget and Policy Priorities outlined deep cuts South Carolina has made since the recession began, including:
— Eliminating a program that helps seniors pay for prescription drug costs not covered by Medicare part D.
— Reducing funding for programs that serve people who have disabilities or are elderly.
— Cutting state education grants to school districts and education programs, along with higher education operating funding and financial aid.
— The South Carolina Department of Juvenile Justice has lost almost one-fourth of its state funding, resulting in over 260 layoffs and the closing of five group homes, two dormitories, and 25 after-school programs.
Though Haley claims eliminating corporate income taxes will spur job growth — something the CBO has consistently said doesn’t work at the federal level — revenue shortfalls in South Carolina are already directly threatening state worker jobs. The last state budget left 3,000 state workers facing layoffs, with even more facing furloughs.
Haley’s new plan doesn’t completely disregard state revenues, however: it notably does not include her primary campaign proposal to reduce small-business income taxes, which she now says would be addressed after corporate income taxes are eliminated. She also favors eliminating sales tax exemptions on groceries, saying that the exemptions “didn’t create one job.”
Sadly, Haley’s reckless attitude towards state tax revenue is not surprising — she has repeatedly failed to file her own income taxes on-time.