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Study says South Carolina schools miss out on $318 million a year because of corporate tax breaks

Dec. 8, 2018
Report from advocacy group Good Jobs First says the money is enough to hire 6,365 teachers at $50,000 a year.

A study says South Carolina public schools are missing out on at least $318.2 million a year because of corporate tax breaks that were granted to spur economic development.

The Charleston Post and Courier reports that the study from the advocacy group Good Jobs First says the money in question would be enough to hire 6,365 teachers at a median salary of $50,000 a year.

Alternatively, school districts could have spent it to buy 3,850 new school buses.

Instead, municipal and county governments have granted the tax incentives to many companies in a bid to bring jobs to their communities.

That may be a self-defeating strategy in the long run as employers relocating to South Carolina discover that local schools are graduating students who are unprepared for basic math or other skills needed for a modern job.

One in three South Carolina students graduates from high school unprepared for most jobs, according to state test results. In some rural and poor districts, where the state’s long legacy of under-funding and neglect has done the most damage, entire high school graduating classes fail to produce even a dozen career-ready alumni.

Among the states the study examined, South Carolina came second only to New York in the subsidy losses it reported. Schools in 28 states missed out on a combined $1.8 billion because of corporate tax incentives during the 2016-17 fiscal year, according to the Washington D.C.-based group’s calculations.

“With K-12 funding still lagging pre-recession levels in many states, tax abatements merit close scrutiny lest they undermine the skills of America’s future workforce,” the study’s authors wrote.

In South Carolina, as in many states, school district leaders do not get to vote on certain tax incentives that hurt their bottom line. The schools must educate the children of all the families who come to work in their area, but the new employers often pay little in taxes, and state law prohibits the use of homeowners’ property taxes to fund schools as well.

Berkeley County Schools reported the most losses of any South Carolina school district and the seventh-highest figure in the country—about $43.5 million per year.

The county has lived up to its slogan of being “Open for Business” by providing tax breaks since 2015 that brought in an estimated $3.5 billion worth of economic development and 8,500 new jobs, including a $1 billion Volvo plant and a $600 million expansion of Google’s data center there. 

Some county residents have begun to push back against the massive tax breaks as the county’s roads, sewer system and schools struggle to keep up with booming population growth.

Burnie Maybank, who served as state revenue director under former Govs. David Beasley and Mark Sanford, says the current tax system that funds public schools needs revising. He said local governments often feel they have to offer tax incentives because the standard tax rates are too high.

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