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October 25, 2006 | South Carolina Headlines


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Dulling Ben's Pitchfork
Jonathan Pait
August 30, 2002

Part I of A Tax Is A Tax By Any Other Name

South Carolina is behind the eight ball.

We are in competition with other southeastern states for international business as well as businesses seeking to relocate from other parts of the country. Problem is that our competition has the advantage of a corporate tax rate that is half that of our state. Very often we are at nearly a 5% disadvantage.

It all goes back to a man named Ben. Benjamin Tillman (1847-1918) served as the Governor of South Carolina as well as U.S. Senator. You may know him better as “Pitchfork Ben,” a name he received by threatening to go to the White House and “poke” Grover Cleveland with a pitchfork.

He also stuck a pitchfork in our state constitution.

Do some research on Tillman and you read all kinds of interesting things about the man. Much is made of his Jim Crow approach to the state. One you would really enjoy reading is found on that starts off with “The Carolina Clemson rivalry began in 1896. The rivalry evolved out of the stormy politics of the post-reconstruction reform era, known by South Carolina historians as the Tillman Era. Benjamin Ryan Tillman, or 'Pitchfork Ben,' was the father of Clemson and is still loved by Clemsonites.”

Yet, there is more about Tillman that has had a lasting effect on our economic growth. He worked to place in the South Carolina constitution a clause that placed a 10% tax on industry moving into the state – meaning industry coming into the agricultural South from the North. Simply put, he wanted to penalize anyone who sought to bring industry into South Carolina.

Now we are saddled with this clause that can only be done away with by instituting a constitutional change. Any industry that we seek to recruit automatically faces a 10% property tax. When industry comes knocking at the door of our neighboring states, they can find property tax rates much lower. They can expect at least a 6% tax.

Enter the phrase we often hear and cause many to bad mouth our county council, “Fee In Lieu of Property Taxes.” The animosity many feel toward this system can also be traced back to Pitchfork Ben. Tillman was known as a master of class warfare. He pitted the whites against blacks and the “common man” against the “Bourbons.” His legacy continues as we pit the “residents” against the “businesses.” How dare those council members take away the tax money we could be getting from these companies! We pay our taxes and all those businesses have to do is pay a fee!

Most counties and municipalities in states have the ability to adjust taxes in order to win business. For instance, a county may collect an 8% tax on industry. In a tight battle with another state they may give the industry a “tax break.” Now, instead of paying 8%, they may be paying 4% to 6%. The business is still paying a tax – probably even a higher tax than residents.

South Carolina is different. By law, Greenville County cannot use the tool of “tax breaks” in the competition. The answer is to use fees. What we end up with is a tax disguised as a fee. The law allows the county to charge a fee instead of a tax. So, Greenville County, in a tight battle with a location in another state may charge the industry a fee instead of a tax. Now, instead of paying a 10% property tax, the industry pays fees the equivalent of a minimum tax of 6%.

This means that in reality, these businesses are not “getting out of paying taxes.” They are still putting money into the county – just as they would have if Greenville County were giving a tax break. It all boils down to would you like 10% of nothing or 6% of millions and possibly billions of dollars? That is not mentioning the jobs and other benefits industry brings to our state. Fees in lieu of taxes is a good thing! Remember that the next time someone trashes on a company like BMW for “getting out of paying taxes.”

But how does it work? Stay tuned . . .

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