Governments impose taxes to raise sufficient revenue to provide the public goods and services desired by their citizens. But there is no one best tax or revenue system. The composition and size of state and local tax bases differ from state to state, as do the rate structures used with each tax.

This working paper compares South Carolina's combined state and local government tax system with those of other states, and particularly eleven southeastern states. Comparisons are made on the basis of tax structures and rates.

This working paper also explores the pros and cons of various measures of combined state and local tax adequacy, tax capacity, tax burden, and tax effort. Tax adequacy is measured using tax revenue per capita because population is a rough proxy for the demand for public services. Tax capacity is a state's ability to raise revenue based on its taxable resources. Tax burden estimates the sacrifice the average resident has to make in order to pay for the public services received from state and local governments. Tax effort assesses how much the state actually collects in taxes as a percentage of how much it could collect, given its tax capacity. South Carolina's rank among the states is low on a number of these measures. The working paper concludes with a discussion of interstate tax competition.

Appendices provide detailed information on all measures for all states and the District of Columbia.

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