Haley pays $300,000 for pro-business ads

Opponent Sheheen says corporate tax is already low
Republican Nikki Haley's latest TV ad calls for lower taxes to help businesses create jobs. The Plan ad campaign began Friday.

COLUMBIA --- In her latest ad, South Carolina GOP gubernatorial nominee Nikki Haley focuses on her ideas to create jobs by cutting taxes and promoting small businesses.

"If we cut taxes and get government out of the way, we will create jobs," she says in the ad.

Titled Plan, it began running Friday on cable and network channels statewide, and stations in Augusta and Savannah, Ga. Her campaign says it's spending almost $300,000 to air the ad.

Haley, a state House member, has repeatedly said a top priority is eliminating the corporate income tax, an idea legislators rejected earlier this year because many thought the economy was too uncertain. Though it's a top revenue source, at about $200 million a year, Haley points out that it accounts for less than 5 percent of general fund revenue.

"Priority No. 1 is we need to eliminate the small business, or the corporate, income tax because when you give businesses cash, when you give them profit margins, the first thing they do is hire people," she said recently.

Though she has referred to the corporate income tax as the small business tax, those terms are not synonymous. Tax officials say the bulk of small businesses are set up differently, with profits taxed as personal income. So the idea won't help them.

Her opponent, Democratic state Sen. Vincent Sheheen, says it's a bad idea to eliminate the corporate income tax because it would put most small businesses at a disadvantage. He notes that, at 5 percent, South Carolina's corporate income tax rate is already the lowest in the Southeast.

Only four states have no corporate income tax: Texas, Washington, Wyoming and Nevada, according to the Tax Foundation, a nonpartisan tax research group. Its policy director, Bill Ahern, argues that because South Carolina's collections for the tax are comparatively low -- ranking 44th per capita -- repeal is a good idea because it would get rid of the bureaucracy required to keep track of it.

"We are big fans of eliminating taxes that don't produce a lot of revenue," he said, while acknowledging any cuts would be tough when the state could face a $1 billion budget hole next year.

Ahern said such a move would help major corporations, and distinguish South Carolina as the only state east of the Mississippi River without one. But he noted that it wouldn't help small, non-corporate businesses.

If the legislature does eliminate corporate income taxes, small businesses will come back for equal treatment, said Frank Knapp, the president of the state's Small Business Chamber of Commerce. Four years ago, lawmakers lowered the personal income tax rates for small business profits from 7 percent to 5 percent.

Haley's ad also says she wants to "stop junk lawsuits." That references her support for a loser-pays requirement for medical malpractice suits, and a cap on punitive damages. The House passed a bill in March that would limit the amount juries could award to punish a person or business for negligence, but it got nowhere in the Senate.

It would have expanded a 2005 tort reform law that capped pain-and-suffering awards for medical malpractice lawsuits at $350,000.

Haley's campaign tries to brand Sheheen as a "liberal trial lawyer." But Sheheen voted for the law, and was the primary sponsor of a law limiting the scope of asbestos lawsuits.

"The issue at hand is Nikki Haley has nothing else to run on, so she's trying to scare people," said Sheheen's spokesman, Trav Robertson.

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