Entry tax proposal in South Carolina

A South Carolina State Senator has now proposed what could be the first entry tax for moving-in residents. He expresses a reasonable-sounding motive: asking new residents to pay for the State’s infrastructure. But he blithely assumes that his tax will not deter people from moving into his State. When he does that, he betrays a shocking ignorance of economics, considering the Party to which he belongs.

Details of the entry tax proposal

Reportage on the entry tax proposal came yesterday morning from The Gateway Pundit, who got the story from Fox Business. State Senator Stephen Goldfinch, a Republican, proposed one-time $250 fees for new driver’s licenses and vehicle registrations. This fee would apply only to someone moving into South Carolina, not to anyone born in the State. It would amount to a $500 head tax – but would not take the form of a head tax.

The bill, S. 208, permits South Carolina counties to impose these fees, since counties, not the State, handle driver’s licenses and vehicle registrations. This bill has passed the Senate Finance Committee in amended form. It allows counties to hold referenda on whether to collect the fees or not. The fees would then apply to any person moving from another State into South Carolina, who:

• Surrenders a valid driver’s license that another State has issued, and/or
• Re-registers a motor vehicle he had previously registered in another State.

This fee would not apply to anyone moving into South Carolina from a foreign country.Furthermore, anyone moving into the State who does not drive, would not pay the new entry tax in either form. Otherwise, one might avoid the entry tax only by moving into a county that did not pass a referendum to collect the entry tax. The law does not seem to cover the case of one who, after moving into a “non-collecting” county, subsequently moves into a “collecting” county.

Commentary on the proposal

Local wags dub this the Yankee Tax, because South Carolina has attracted many move-ins over the last several years. Most of these, the Fox News report hints, come from the Northeast – classic “Yankee lands.” But this bill has no language indicating that it discriminates against any particular State or region of the country.

Senator Goldfinch protests that he is not trying to stop people from moving into South Carolina. But he wants new residents, especially new drivers, to “catch up with the rest of us” in paying for infrastructure. Infrastructure here means roads, bridges, schools, parks, and “green spaces.”

When someone asked about whether his entry tax would discourage people from moving in, he denied that.

I find it hard to believe that $250 is going to dissuade anybody from coming.

Of course that would be $500 – $250 for a driver’s license and another $250 to register a new car.

The senator claimed the support of South Carolina residents.

Our quality of life has been diminished by the almost 4 million people that have moved here in the last decade. And we anticipate another million people moving here in the next decade. Everybody is concerned about their quality of life.

He offered no further details. But his claim of support might have some justice. The Senate Finance Committee did report his bill favorably, 11-6, according to the Associated Press.

Analysis

Again, this is the first proposal for a State (or county) entry tax. The Fox report claimed that California and New York have proposed exit taxes against people leaving. Rep. Marjorie Taylor Greene (R-Ga.) seemed to echo Commentator Pedro Gonzalez’ idea for an entry tax for moving from blue States into red States.

How anyone could think that any new tax or fee would not deter new move-ins, is beyond our comprehension. Absolutely any tax or fee dampens demand – or, as in this case, deters immigration, interstate or international. That’s Economics 101. The only questions are:

• What countervailing influences would induce someone to move in anyway, and
• Where else might someone go who wants to move out of the Northeast or any other blue State or region.

Senator Goldfinch might have chosen the wrong rationale for his entry tax. The true purpose is not to have new residents “catch up with the rest of us.” A far better rationale would be to ask new residents to support the new infrastructure their presence would require. This would include new residential streets, new roads or widening existing roads, new bridge spans, etc. So far no one has studied whether this entry tax would significantly support such new projects.

This last is the proposal’s greatest weakness. The Senator who “finds it hard to believe” that his tax would stop people from moving in, should study the problem – and study whether his tax would work as he claims.