Step up to challenge of fixing tax system

info@islandpacket.comAugust 30, 2013 

Recently, there have been stories on business license fees and financial incentives offered to businesses to relocate in Beaufort County.

Add to this the fact that businesses pay real estate taxes at a significantly higher rate, and you have a recipe for a slow growth local economy for businesses and the community at large.

These issues are all tied to a very disruptive and dysfunctional local, county and state tax system.

The license fee to do business in Beaufort County, whether it is in Bluffton, Hilton Head Island or unincorporated areas of the county, is a horrendous, regressive tax that squeezes businesses of all sizes, whether they make a profit or not. It is based on gross income. When a business starts out -- particularly a high-revenue, low-margin business or a start-up -- and ends the year with a loss, that business is still forced to pay the fee based on total revenue. In effect, we are kicking a business when it is down and most vulnerable. Even the federal government doesn't do that. Why isn't the business license fee a flat fee even if it is scaled? At least then, it would be predictable for business owners developing their budgets in the fall for the coming year.

On top of the injustice of the license fee, Beaufort County (directed by state law) assesses commercial property at a rate 50 percent higher than the rate for residential property. The personal property tax on business assets increases the tax pain a little more. Why must our business community live with this "taxnado" day after day?

Small businesses in the U.S. provide the majority of jobs even with a high attrition rate. They diversify an area's economy so that a community isn't dependent on one or two large employers. They provide a competitive field to help hold down prices and give us a wider selection of goods and services to purchase. Businesses help hold down taxes for residents through a broader tax base, and they are the lifeblood of any community.

But here we are spending our tax dollars to create and provide financial rewards to get businesses to move here when the same rewards are not available to our own loyal and local businesses. Why lure them with tax-supported incentives only to have them try to grow in a hostile tax environment?

We all hear the cheers for entrepreneurship and small business. What the business community needs is action by the cheerleaders to change the economic and financial landscape to something that will foster growth and provide incentives to grow all businesses in our county. If they are done properly, we won't need to use our tax dollars to for incentives; the tax structure itself will provide incentives.

So where do we go from here?

We have talented and experienced business people working on economic development. They can help us develop viable solutions for these issues. Our local legislators, who are well aware of the problems that our current system poses for area businesses, could not afford to hire staff with the backgrounds and experience of some of these individuals. We need to get these issues on the agendas of these people so that our legislators will have the credible horsepower to drive the solutions to local governments and to the Statehouse.

Our end goal should be:

  • A competitive economic landscape that welcomes all businesses with a predictable tax template that works for new and existing businesses.

  • A challenge to our most talented problem-solvers to help make the transition and reallocation as seamless as possible, with the least disruption and cost.

  • A challenge to our elected officials to carry the solutions to local, county and state entities and encourage them to work quickly toward enactment.

  • The end result should be:

  • A tax system in our county that is fair to all businesses.

  • A tax system that encourages relocation to our area with minimal or no financial incentives and sets the stage for those in the community who want to start a business here to put together a predictable business plan for success.

  • A tax system that helps promote growth through new employment, increases payrolls and increases payroll and sales tax collections and ultimately results in a broader tax base.

  • A license fee that is flat and predictable, if not based on net income.

  • A property tax system that doesn't penalize business and spreads the tax burden fairly throughout the county and state.

  • Don't our business people and their families deserve better than a dysfunctional tax system to live and work under? Doesn't our community deserve better?

    We can do this.

    Don Brashears is chairman of the Greater Bluffton Chamber of Commerce board of directors.

    The Island Packet is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

    Commenting FAQs | Terms of Service