Monday, Feb. 23, 2009

TRAC plan gives Legislature chance to repair tax code

TO HEAR SOME critics, you’d think the Legislature was about to hand a bunch of anonymous, money-grubbing extremists the power to tax us all out of house and home.

Seriously.

As absurd as it is to suggest that the S.C. General Assembly would willingly relinquish any authority (let alone the power to tax) to anybody, that concern is actually what’s driving opposition to the first realistic shot we’ve had in decades at replacing our loophole-riddled, special-interest-driven tax system with one that broadens our anemic tax base so it’s more stable and reliable.

Two changes have created this opportunity: The deepening recession is convincing many lawmakers who never before saw a need to do anything to taxes except lower them that they have created a serious problem — a code that exempts more than it taxes. As a result, tax rates have to be twice as high as they otherwise would be, and economic downturns drag down tax collections exponentially.

And after years of vowing to overhaul the system but never managing to accomplish anything — except make a few piecemeal changes, which made things all the worse — most legislators now acknowledge that the special interests clamoring to protect their own special tax breaks are simply too much to overcome. And so Senate Finance Chairman Hugh Leatherman and House Speaker Bobby Harrell want to create a Tax Realignment Commission to draft a tax plan, which could not be amended without at least a two-thirds majority in both the House and the Senate. The Senate plans to debate that legislation (S.12) this week.

That all-or-nothing approach has led to fierce opposition from some, who charge that it will inevitably result in tax increases. Nothing could be further from the truth. The only restriction would be on the Legislature’s ability to change one particular version of the bill.

If the commission recommends a tax increase and the Legislature passes that plan, that means the majority of our Legislature wants to raise taxes. But the Legislature is just as free to vote against a proposal that raises taxes — which we don’t even know that it will do. For that matter, there’s nothing to stop individual legislators from introducing the proposal themselves, or using it as a model for a slightly altered plan, and then having a normal, no-restrictions debate on that bill.

Creating a Tax Realignment Commission does not guarantee that the Legislature will overhaul our tax code. It merely gives the Legislature a fighting chance to pass a responsible plan, without the special interests eating it up, as they have done to our current code.

Where the critics have a point is when they say the Legislature shouldn’t have to bypass the normal law-writing process, which allow separate votes on any amendments anyone wants to offer. It’s the Legislature’s job to write our tax law, and its inability to do so without a special process is a great failure.

But when it’s clear that you’re not up to the job, it’s far better to acknowledge that fact and seek help than to continue to leave the job undone. Think of the alcoholic who can’t turn his life around until he acknowledges he has a problem and gets help. Certainly he would not be better off waiting until that mythical day when he’s able to dry up on his own. Neither is our state better off waiting on that mythical day when the Legislature can ignore all the parochial demands for carve-outs and overhaul our broken tax code.

Get The State newspaper delivered to your home. Click here to subscribe.