With South Carolina’s economy on a painful downslide and the public sector slashing budgets and hemorrhaging jobs, some state lawmakers are hoping a bill that would create an independent tax realignment commission will gain momentum as an attempt to help stop the bleeding.

The bill would create an 11-member TRAC to scrutinize every state tax exemption and determine whether it should be continued or get axed. The tax realignment commission would be modeled after BRAC, the federal Base Realignment and Closure Commission, which designates military bases to be shuttered.

S.C. Sen. Hugh Leatherman, R-Florence and chairman of the budget-writing Senate Finance Committee, is sponsoring a bill to create an independent commission that would scrutinize every tax exemption on the state’s books and recommend whether it should be continued or get axed. File photo

The tax exemptions total about $2 billion, according to Rep. Gilda-Cobb Hunter, D-Orangeburg.

That’s twice the amount the budget has been cut this year.

The TRAC would consist of non-lawmakers with experience in economics and business, according to a Jan. 22 news release by the state Senate Republican Caucus.

The bill’s author, Sen. Hugh Leatherman, R-Florence and chairman of the powerful budget-writing Senate Finance Committee, calls TRAC the most important legislation of the session.

Because many tax exemptions were put on the books decades ago when South Carolina had a more agrarian economy, some or many of them might be antiquated, Leatherman says.

The TRAC bill has been in the works for more than a year, says Sen. Bill O’Dell, R-Abbeville and chairman of the Finance Subcommittee on Sales and Income Taxation. “We need to keep pushing this plan forward to determine how to make our tax code more equitable for South Carolina’s taxpayers and businesses,” O’Dell says.

But not all lawmakers are cheerleading the proposal. 

Sen. Tom Davis, R-Beaufort, says the TRAC bill falls short of taking a comprehensive look at the way South Carolina taxes and spends. “A meaningful look at the way our state raises revenue is incomplete unless it is done so in connection with a simultaneous look at how much it should spend,” he says.

Davis also contends that any comprehensive tax reform debate must include Act 388, the 2006 sales tax for property tax swap, and TRAC doesn’t allow for that to be considered, either. “In my opinion, there have been some very serious unintended consequences from Act 388,” he says.

School districts, in particular, have felt the effects of the law as sales tax collections have declined amid the faltering economy.

As for Gov. Mark Sanford, his spokesman Joel Sawyer says TRAC is a good idea but probably won’t work. “Anybody whose ox gets gored in that process is going to unite to kill it,” Sawyer says.

The governor will look at any TRAC bill that passes but won’t invest much political capital in trying to shepherd the legislation through the General Assembly, Sawyer says. Rather, Sanford is focused on “rifle shot” tax changes that would be effective, such as phasing out the corporate income tax, he says.

The TRAC bill cleared the Senate Finance Subcommittee on Jan. 22 and headed to the Finance Committee, where Leatherman aimed to usher it through to the full Senate.