There has been a lot of talk among politicians and stories written by the press about the “Panthers Bill.” Adding an NFL team to South Carolina’s list of businesses that call South Carolina home naturally brings media attention.
It also has brought to light important questions about the use of tax incentives. Specifically, why does South Carolina have to use tax incentives to persuade the Carolina Panthers to move their headquarters 20 miles south from Charlotte to Rock Hill?
First, we need to understand the facts. The Panthers plan to relocate their operational base and headquarters to York County. They plan to invest $200 million of their money into building a practice facility and bring 150 jobs with a payroll worth $190 million to the state. The bill does not give any state taxpayer dollars to a pro football team, its players or its owner. Instead, the bill cuts the taxes that will be owed by the Panthers if, and only if, they follow through with their investment, and it makes their capital investment and the salaries paid eligible for the same incentives given to other businesses that have moved to the Palmetto State.
For decades, our state and local governments have provided tax incentives to businesses to effectively lower the tax rates for large projects that can transform a community. Those incentives accomplish two goals: One, they make South Carolina’s high tax rates more competitive when we are competing with other states and, two, they lower the cost of doing business for high investment projects.
To be clear, without tax incentives, South Carolina would be at a major economic disadvantage due to our uncompetitive tax climate. To change our need for tax incentives, we have to change our tax structure, and our Legislature can look to the Panthers’ current home state as a blueprint for reform.
Since 2013, North Carolina’s legislature has phased in a massive comprehensive tax reform package. North Carolina reduced its income tax rate from 7.75% to 5.25%, reduced its corporate tax rate from 6.9% to 2.5%, and repealed its municipal business license tax.
In stark contrast, South Carolina has sat on the sidelines with the highest marginal individual tax rate in the Southeast, the fifth-highest effective industrial property tax rates in the country, and one of the most burdensome business license tax systems in the country.
North Carolina’s reforms resulted in a dramatic improvement in its business climate on the Tax Foundation’s State Business Climate Index from 44th all the way up to 12th best in the nation. South Carolina is ranked a dismal 35th in this same ranking.
Having the Carolina Panthers headquartered in South Carolina would be a win for the region and the state. Economic development incentives have long been an effective tool to keep jobs and businesses coming and to allow businesses to expand in our state. If we want to reduce our reliance on incentives, we need policymakers to quit giving comprehensive tax reform lip service and actually do the tough work needed to reform our uncompetitive tax system.
Ted Pitts is president and CEO of the South Carolina Chamber of Commerce.