Governor Cooper's Ann
Message to the Genera
Assembly.
Gentlemen of the General Assei
In my last message I said:
"The economic depression \
exists throughout the country
the world at this time, real an<
parer.t, can not be looked upon 1
ly. We have now recovered suffic
ly from the shock of war to be ab
determine approximately the c
tions with which we have to
Legislative programs and govern
tal activities, as well as busi
must be adjusted to meet cha
conditions. Questions which u
ordinary circumstances would b
only secondary importance are
demanding primary considerate
we deal with the situation in a
and statesmanlike manner, a g
deal can be done to strengthen
morale of the people and to stab
the unsettled economic conditi
This is no time for pessimism
no time for wavering of faith or 1
tation. We must meet the issues w
confront us with courage and ci
dence. There is universal dissatis
tion throughout the state with
present levy on real and persi
property. This dissatisfaction is '
founded, but I believe that we do
always direct our criticism to the
trouble. The per capita cost of {
ernment in this state is not high
comparison with other states,
difficulty is that the tax is not
tributed according to tax paying s
ity."
The past year has been, one of
most trying since the Reconstrucl
period following the Confedei
war. It is not necessary to discuss
many causes which have contribu
to our present condition. The f
is our whole economic system is i
state of chaos. This condition is
confined to South Carolina or to s
particular section of our counl
There has been no improvement
the financial depression during
year. On November 1, 1921, th
"was uncollected, from taxes of 19
practically $1,250,000. Some chai
in our tax system is imperative ?
that change must be made during t
session of the general assembly, i
less we propose to make a backwi
step. In my previous message I urf
upon you the adoption of measu:
which, in my opinion, would hi
given substantial relief. The rei
Justment which began more than
year ago was not fully appr?ciai
and few of us suspected it would
suit in lowering our standard of 1
ing to such an extent that the mi
of the actual requirements of a <
cent and progressive life would
difficult to pay.
Burden on Agriculture
Under our antiquated system
taxation the cost of a relatively i
expensive government and its ins
.tutions so vital to the life of the pe
pie falls heaviest as a rule on tho
who are least able to pay; name!
the agricultural element and t!
owners of tangible property. Oi
method of collecting revenue w
never a well devised system, but
this time its inequalities and iniqn
ties are especially emphasized. W
have adhered too long to a syste
which requires those who need tl
benefits of government most to bei
too great a burden of taxation. Sout
Carolina is predominantly an agr
cultural state. All other business i
dependent upon the production c
our soil. When the farmer is pros
jerous, business is good; there is n
fear of bank failures and the ghasl
ly spectre of bankruptcy is not see
In the land. But when our farms fai
-ito yield a profit the merchant is un
able to dispose of his goods or col
lect his accounts, the deposits in ou
banks decrease and insolvency
knocks at the door of us all.
Any tax system which is nol
based *on the principle of ability t:
pay is fundamentally wrong and is
. certain to be a continuous source ci
irritation and injustice. If conditions
"were different I would present to you
several important recommendations.
There are many measures I would
like to see enacted, but every other
question should be subordinated to
the one paramount issue of revenue
and taxation. We must determine
whether or not this state will take
Iber place among her sister states of
'this union by adopting a modern sys
tem of collecting revenue to pay the
necessary cost of government. The
adoption of such a system, based up
on the principle of ability to pay, will
assure the continuity of our social
and economic progress. Without its
adoption the arrest of our develop
ment is inevitable. I have in mind as
our ultimate objective the total ab
olition of the property tax as a source
of government and the substitution
of a tax on incomes, inheritances, pe
troleum products, occupations, pro
fessions, privileged licenses, luxuries
and hydro-electric power. The re
vision of our law relating to license?
for domestic and foreign corporations
with the view of increasing revenue
from this source, is earnestly ui
Income Tax.
I wish to elaborate somewha
the subject of a tax on inconn
have found, somewhat to my surp
that there is probably more op;
tion to this particular tax than
others recommended. The income
is not only satisfactory in yiel
revenue but it is collected dir?
from the person whom it is intel
to tax. Its yield is certain and is b
upon tax paying ability. It mus
borne in mind that the objectioi
the present property tax as being
just and oppressive can never a;
to a tax of incomes. A property
falls upon owners of tangible p
erty and becomes a crushing bui
when paid by a farmer who
placed his faith, his labor and mc
in a crop which fails to y;eld a pi
or upon a merchant when he is
able to dispose of his merchandisi
a profit. It becomes exorbitant w
it asks for payment upon prop?
which has been a loss. The propc
tax asks a contribution of a man "\
has worked for a year and b
awarded with a deficit-debts inst
of profirs. (
On the other hand, the income
asks noihing of a man who has
income; it exacts nothing of him v
a small income. It requires noth
of anyone unless his or her net
come above all legitimate expense:
adequate to support the taxpayer
oidinary comfort. There is no du
cation of burden or injustice in 'si
a scheme. The income tax is lev
on ability to pay from profits and :
from principal, and it can not
press the taxpayer as he is now f
quently oppressed by the gene
property tax. The administration
an income tax law should not
more difficult in South Carolina til
it is in other states, where it has be
found practicable and satisfactory
I am sure the federal government v
?cooperate with the state in supplyi
certain data which will remove ma
of the .administrative difficulties,
trust and most earnestly urge tl
you will enact at this session the
come tax bill now on the house cale
dar, or substitute for it a bill bas
-upon the federal law. It has be
conservatively estimated that a mc
erate tax on incomes will raise in tl
state from $1,000,000 to $2,000,0
per annum.
Inheritance Tax.
A tax on gifts and inheritanc
is an important part of any well co
sidered tax system. Its yield and a
ministration Las been so entirely BI
isfactory that every state in the u
ion, with the exception of about fo
or five, has .adopted it as a source
state revenue. The validity of su
a tax is unquestioned. The wisdo
of it, it seems to me, does not adm
of argument. The advisability of
tax on inheritance is well expresse
in an opinion of H. B. Seager whi
he says:
"The law properly protects tl
owner of property in its full enjo;
ment during his lifetime. When li
dies, however, the disposition of th
property which he preferred to r<
tain as his own to the very end, a?
sumes large social significance. Th
imposition of an inheritance ax i
simply the assertion by the state o
a right tb share in property left a
death under the conditions set fort
in the tax law. If the share taken b;
the state is moderate, there is ever;
reason to think that the heirs wil
accept it as a matter of course an<
think gratefully of the part that i:
left to themselves rather than grudg
ingly of the part which they do noi
receive. There thus appears gooc
ground for the claim that moderate
inheritance taxes, increasing from 1
per cent on inheritances from a cer
tain amount left to direct heirs even
to as much as 20 per cent of very
big estates passing ?to collateral heirs
or strangers, do not impose a burden
that is consciously felt by anyone."
The inheritance tax bill passed by
the house of representatives at its
last session, and now on the senate
calendar, will yield large returns at
a very small cost, and I earnestly
recommend its passage. It is esti
mated that this bill will raise any
where from $200,000 to $500,000 per
annum. It is very probable that had
this bill become a law last year the
state would have received from this
source during the year 1921 approx
imately $500,000, and yet, again it
?may be observed, as in the case of a
tax on incomes, the levy is placed al
ways where there is tax paying abil
ity.
Tax on. Petroleum Products.
A large number of the states have
placed a tax, ranging from one to
two cents per gallon, on gasoline and
other petroleum products, and it has
been found generally that this tax
yields large returns. In practically
every county of the state there is a
special levy on property for con
struction and maintenance of high
ways, and it is, therefore, not unfair
that the state should impose a small
tax upon petroleum products, for as
i matter of fact, the owners of m
vehicles receive the greatest bei
and pleasure from these imprc
highways. The tax on p^troli
products should go to the gen
fund of the state, and be used *
means, of reducing the present 1
upon property. It is not impon
that a special tax- be expended f (
special purpose, but it is imporl
that^we have a tax system which
yield sufficient revenue to carry
all of the activities of the state. 1
so-called gasoline'tax bill now on
calendar of the senate will yield
least $500,000 per year, and I :
commend its immediate passage.
Occupation and Privilege Licens
South Carolina receives a. sma
percentage of its revenue from oe
pation and privilege licenses tl
any' other Southern state. I do
think it is necessary to go into a
tailed exposition of the principle i
operation of this form of revenue
has been tried with satisfactory
suits in a great many states. It sec
to me. that it can be easily justifi
Many persons, engaged in professi
and certain occupations operate vs
out invested capital, but are prote
ed in the practice of their privilej
professions or occupations by
laws of the state, and it is not i
reasonable that a moderate fee
paid the state for this privilege z
protection. A bill will be submit
on the subject, and I urge its adi
tion.
An examination of the laws n
in force in the states of Georgia a
Virginia, and other states, will ;
you materially in arriving at a sal
factory conclusion dh this matter,
is estimated that from this source
may be expected approximat
$200,000 per annum. While 1
amount is somewhat small, it v
nevertheless cause many persons w
are practically escaping taxation
pay a reasonable share of the <
penses of the government. Whate\
the amount received from this ?oui
may be it will certainly aid us in o
effort to relieve the heavy burd
now resting upon , visible property.
Tax on Luxuries.
A well considered measure impc
ing a tax on luxuries* it seems to n
should appeal to every fair mind
person. One is not compelled to i
tend the movies, or to indulge his a
petite for soft drinks. It is possit
for a person to enjoy reasonal
health and at the same time absta
from the use of tobacco. A persi
who can afford to pay ten cents for
cigar, 25 cents to attend the movi<
and six or seven cents for a glass
coca-cola, will not be materially i
convenienced if a small tax is impc
ed by the state on these amusemen
and non essentials. I do not mean, <
course, to confine the luxury tax/
tobacco and soft drinks and movir
pictures. These are only mentiont
for purposes of illustration. The la
should include all forms of amus
ments and luxuries. It is certain!
fair to tax a luxury, and by so doin
you reduce the tax on the necessity
of life. The luxury is usually enjoye
by those who can afford it, or b
those who are determined to indulg
their appetites and desires to the de'
riment of their own well being. I
either case the argument in favor o
this form of taxation applies wit
equal force.
Hydro-electric Power.
I would not for a moment recom
mend the passage of any measure cal
culated to discourage the develop
ment of our'water powers. Naturi
has wonderfully blessed South Caro
lina in this respect. I commend th<
wisdom and foresight of those wh(
are devoting their talents and mean!
to the development of our natura
resources. But since nature has pro
vided the chief assets of these devel
opments, a small rate per kilowatt
hour on the hydro-electric power can
certainly be justified and yield con
siderable revenue. The main argu
ment in the support of other special
taxes applies here. Electric current
is used in industry to light our homes
and offices, because it is cheaper or
preferable to the use of other power
or method. Its use is made possible
by reason pf the water in the stream,
which is the property of the state.
Surely this state may properly im
pose a small tax for the use of its
own property for commercial purpos
es. It may be argued that the state
would receive no revenue from this
source, except for the capital invest
ed in these developments. This ob
jection would apply to any special or
other tax.
Constitutional Amendment.
I wish to again urge the passage of
the proposed amendment to our state
constitution, which is necessary be
fore you may properly classify prop
erty for the purposes of taxation.
This matter is so thoroughly discuss
ed in the report submitted one year
ago on revenue and taxation, that it
is unnecessary to add anything fur
ther here.
I have recommended the passage of
these measures in order to raise sui
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