By John Temple Ligon
Photos by Warner Montgomery

Ed Sellers, CEO, SCBlueCross/BlueShield

For most of last Monday, a couple of hundred SC business leaders met at the Marriott for the 25th Annual Economic Outlook Conference. The conference was sponsored and managed by the Moore School of Business at USC and The Palmetto Institute.

In the morning session, economics professors Donald Schunk and Doug Woodward opened and opined with an overall outlook for the SC economy. Essentially, the two agreed SC was doing almost all right relative to the recent past, but SC is still too far behind in national standings to rate anywhere near average. A magnificent leap is needed, and soon, the economists noted. The idea is to not target the average as a goal but the top tier as SC’s future position in the national economy.

A pre–lunch panel of four convened on the stage. Moderated by Moore School Dean Joel Smith, the panel consisted of Ed Sellers (CEO, SC BlueCross/ BlueShield), Mack Whittle (CEO, Carolina First), Don Herriott (head, Roche Global Chemical Manufacturing), and Bill Barnet (mayor, Spartanburg). Smith began by reminding the audience of the Palmetto Institute’s recently published report of its evaluation of the SC revenue system.

Mack Whittle, CEO, Carolina First Smith emphasized three criteria to divide the report: adequacy, equity, and efficiency.

Adequacy asks if there is enough revenue to support desired public services. Equity demands fairness across the board, an even– handed collection among the population at all levels of income. Efficiency entails encouraging productive activities and discouraging undesirable ones.

Sellers worried the most challenging subject, the most difficult topic, was the state’s revenue system. Overrun with myths deduced from limited data, the general population and its political bias might not let SC improve. Sellers bandied terms like “im-paired competitiveness” and suggested the “devil is in the denominator” when discussing tax collections and SC’s relative position in the country.

Whittle urged the audience to look at what other southeastern states were doing. SC’s contiguous neighbors were SC’s natural competitors, and a pro– growth tax policy superior to the surrounding states would make a big difference.

Don Herriott, Roche Global Chemical Manufacturing Herriott warned that reconsidering tax collections was still a zero–sum game. Assuming the total take came out the same, someone was bound to win at the expense of someone else when the tax policies were altered.

Barnet offered how essential was the concern for relationships figured into the revenue system, and that system for SC should be seen as a single revenue integrated revenue system. What impact changes in collections had on the individual at the local level and what corresponding impact occurred at the state level needed to be identified. The 90s rollback in car taxes was probably not a good idea once the impact was felt throughout the state, assuming the total collection was stable.

Barnet called for an independent commission to further study SC’s revenue system to get on with the task of tax reform while maintaining a clear vision of adequacy, equity, and efficiency.

Sellers and Barnet agreed it was easier politically to collect stealth taxes like user fees than to collect income taxes, but user fees were regressive. Fees cost the same to the user regardless of income. And the problem with sales taxes is they don’t necessarily parallel the rate of growth in individual income. Property taxes are more stable, the panel agreed.

Bill Barnet, mayor, Spartanburg Speaking of property taxes, Barnet said SC had way too many taxing districts. In Spatanburg County alone there are 240 taxing districts.

Moderator Smith asked the panel and the audience to study the report by The Palmetto Institute, www.palmettoinstitute.org, where a conclusion read, “Tax policy decisions should result from considering proposed changes in taxes or fees in a context of state and local revenue as a single integrated system. Policy makers will make more informed choices if they think about revenue both as a holistic system and as the underpinning for the state’s goals for economic development and the quality of life.”

Don SchunkJoel SmithDouglas Woodward