South Carolina's economy is dynamic. It changes in response to trends in the national and global economies as well as to population trends within the state. Over time, shifts take place in the types and quantities of goods and services produced in the state, in the levels and nature of employment, and in the components of personal income. These ongoing structural changes in South Carolina's economy influence government revenue collections as well.

This working paper provides an overview of historical trends in the South Carolina economy since the 1970s, and then examines the relationship between those trends and state and local government revenue collections. Growth in state personal income -- especially the wages and salaries component -- was found to be an important determinant of revenue from the individual income tax, for example. Revenue collections from other sources, such as selective sales taxes, were relatively unaffected by changes in state personal income. These relationships provide information to policymakers as they look to the future of the state's revenue system.

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