By Don Weaver | South Carolina has lost 80,000 textile jobs since 1980, or more than 6 percent of all the jobs that existed in the state that year. It’s enough to have broken some states, but not ours. Instead, the Palmetto State is an internationally-recognized example of how local economies can thrive in the modern, globalized economy.
For example, South Carolina is one of the leaders among U.S. states in bringing jobs from high-wage industries. No other state has a higher share of its workforce (8.4 percent) employed by foreign companies, and its exports compose a much higher share of its economic output than the nationwide average. “Few states have been more nimble than South Carolina in adjusting to global competition,” The Wall Street Journal wrote earlier this year.
All of this is relevant because of a burgeoning national debate over inversions and the tax increases designed to punish companies from moving their administrative headquarters out of the U.S. to jurisdictions with lower tax rates. Hillary Clinton, following the lead of her socialist rival, Sen. Bernie Sanders (I-VT), has threatened to make U.S. firms “pay a price” for daring to seek lower taxes. Liberal commentators have been even more unhinged, alleging “economic treason” and other overheated phrases for what is typically a routine business transaction.
Contra Clinton, the South Carolina experience shows that government’s heavy, punitive hand is the last thing you want to retain businesses in the modern economic climate. Behind the South Carolina success are laws that give workers a choice in whether they want to join a union, low taxes, sensible regulatory policies and fewer ultra-liberal judges inventing new “penumbras” to enact their favored policy by fiat.
The end result is a business climate that is attractive to the people deciding where to put a new multi-billion dollar factory. You might have heard the phrase, “you catch more flies with honey than vinegar?” It’s generally the same when it comes to one place competing with another for businesses to relocate within their borders.
That’s why Hillary’s favored policy would be a disaster.
Already, U.S. firms are competing with companies overseas tilted against them because we have the highest corporate rate of the developed world. Add in the byzantine tax code and the billions of dollars wasted on tax compliance each year, and it’s really only because of the U.S.’s historical economic might that we remain in such good relative standing.
To compete effectively in the modern economy, we need the exact opposite of a tax “moat” that Hillary proposes. Instead we should be simplifying the code and lowering rates.
South Carolina has emerged as a success story from embracing free market policies even when global competition caused us severe growing pains. It’s time for our state to export its policies to the federal government as well.
Don Weaver is the president of the South Carolina Association of Taxpayers.
We Can Do Better, South Carolina!