Let’s stretch our imaginations for just a bit.
What if we discovered that every horse in the state was suffering from a disease that only affected horses? But the cost of the needed medicine was too much for horse owners to afford.
So a legislator running for a higher office, realizing that everyone loves horses, takes the issue straight on.
“We need to help promote the health of our horses,” she says. “So I propose that state government give a tax credit for medicine given to zebras, animals that I like to call horses.”
Huh?? “Ok, so zebras kind of look like a horse and they are genetically related but they are not horses. So how can giving a tax credit to medicine for zebras help horses,” everybody asked the political candidate?
“How dare you question the candidate,” lectured the candidate’s handler. “She visited zoos as a child and has watch plenty of old cowboy TV shows. She’s a big horse supporter and her proposal will help those important animals.”
The other candidate protested, the press pressed for an explanation and horse experts tried to explain to the uninformed that zebras were not horses so a medicine tax credit for zebras wasn’t going to help horses.
The moral of this bizarre story is that you can call a zebra a horse all you want but that doesn’t make it a horse.
This is where we are today with Nikki Haley and her proposal to help small businesses by eliminating the corporate income tax, something she likes to call a small business tax.
HORSE, HORSE, HORSE
Listen to this horse owner.
Very few small businesses, defined as those with 100 or fewer employees (97% of South Carolina’s businesses) pay corporate income taxes. The reason—we’re not set up as C-corporations for tax purpose. We’re S-corps, LLC’s, and sole-proprietors. Any profit we get from our business is reported on our personal income tax returns not a corporate tax return. So eliminating the corporate income tax won’t help most small businesses.
Haley can call the corporate income tax a small business tax all she wants but it doesn’t make it a horse.