The Taxation Realignment Commission, created last year to recommend ways South Carolina can overhaul its tax code, is set to approve its final report next month.
The Commission will vote on the final draft of its recommendations in December, before sending the finished report to the State Legislature. Commissioner Kenneth Cosgrove said TRAC took its job seriously in trying to fix a tax code that is riddled with inconsistent exemptions and deductions.
It’s just the reality of 60 or 70 years of piecemeal tax legislation, where we add something here, take away something here, add a little something here. At the end of the day, there’s just a lot of things that need to be cleaned up and fixed so we can move forward and do what’s best for the people in South Carolina.
TRAC says more than 40 percent of South Carolinians do not pay taxes to the state. While high unemployment is part of the problem, commissioners say high deductions and personal exemptions are another factor. As a solution, TRAC is recommending a mandatory fee for anyone filing their tax return, even if that person does not owe any money to the state.
For filers who make between $5,000 and $49,999 in adjusted gross income (AGI), the fee would be $25. For those who earn between $50,000 and $99,999, the fee would be $50. Those above $100,000 would pay 75 dollars.
TRAC has already created controversy among some lawmakers, who accuse commissioners of trying to find ways to bring in more money for the state and hurting taxpayers in the process. Cosgrove says he hopes legislators will take the recommendations seriously and not judge the proposal before reading it. He admitted several lawmakers are “scared” of the report.
Besides the filing fees, TRAC also recommends eliminating the cap on the sales tax, which currently stops at $300 for any purchase. Commissioners also propose adding a tax on groceries, utility bills, and prescription medicine. Cosgrove says the increases would be offset by lowering the state sales tax percentage.
In a recent interview with SCRN, Lt. Governor Andre Bauer said he opposes ending the sales tax exemptions on prescription drugs and groceries. He said it would hurt seniors who have not seen a cost of living increase in their Social Security benefits for two years. Cosgrove responded that the recommendations are revenue-neutral, and aren’t an increase in the big picture.
There are parts of our bill that raise tax “X” and lower tax “Y.” So we’re not advocating a tax increase. The goal of TRAC is not to raise revenue for the state in these (low) budget times.
The General Assembly chose the commissioners last year from different fields in order to have a diverse group studying the tax code. No legislators are on the Commission. Cosgrove said this was intended to get different perspectives.
One of the things the legislators didn’t want to do is get 10 professors… to do this. They wanted to get a good mix of business folks… and experts from the community involved in the tax code.
Cosgrove himself works for Piedmont Petroleum Corporation, which operates a string of convenience stores in the Upstate.
TRAC is only a study commission that is tasked with making recommendations. The Legislature still has to approve any changes in the state’s tax law.