South Carolina has the 37th most competitive tax code in the nation according to the 13th annual State Business Tax Climate Index released by an independent think-tank.
The Tax Foundation report looks at various taxes in South Carolina and compares their impact with other states.
“Changing your state’s tax system to make them more broad based and have lower rates is one of the things your legislators can do.to improve your quality of life in your state,” Director of State Projects Scott Drenkard told South Carolina Radio Network. “It’s something that’s within our control.”
The report breaks up the taxes into five major categories. The breakdown is as follows (1st is best, 50th is worst):
- Overall tax climate: #37
- Corporate tax structure: #15
- Individual income tax structure: #41
- Sales tax structure: #31
- Property tax structure: #26
- Unemployment insurance tax structure: #37
Drenkard said the index can also be used as a tool for identifying state tax trends. For instance, the report shows that a number of states are now opting to simplify their tax systems by consolidating individual income tax brackets, or even moving to a flat tax. Hawaii eliminated its top three individual income tax brackets in 2016 and reduced its top marginal rate from 11 to 8.25 percent, improving its overall rank from 30th to 27th.
Another trend is the tendency for states to shift away from taxes on capital. Pennsylvania, for example, has now completely phased out its capital stock tax, boosting its property tax component ranking six places, from 38th to 32nd, and improving its overall state ranking from 28th to 24th.
“Substantive state tax reform has gained a lot of momentum over the past few years,” said Drenkard. “The stagnation of our federal tax code means that policymakers are turning to state codes to boost their national and global competitiveness. The state codes are ripe for reform and it’s encouraging to see so many states taking action