Not that bad.
Much has been written this past week about Stone Brewing Co.’s decision to remove South Carolina from its list of potential East coast expansion plans. Decisions such as Stone’s are usually based on a multitude of factors, including personal preferences of the owners and operators of the business. We in South Carolina should not be disheartened by this decision.
South Carolina competes well from an economics and labor perspective bringing with it an extremely business friendly approach. Yes, our excise tax is a bit high, and we have quirky distribution rules, but a variety of tax incentives and abatements available at the local, state and sometimes federal levels can offset other operational costs and improve bottom lines.
Depending on the situation, any new capital investment (from small to large) or creation of jobs could garner potential operational savings for new or expanding businesses in South Carolina.
Property tax reductions/abatements
One of the most widely used incentives only requires that a business make a capital investment of at least $2.5 million in its project. Depending on the specifics of the deal, owners can reduce their property tax burden by 10-50%, coupled with a fairly aggressive statutory depreciation rate of 11% for breweries and distilleries, resulting in a net property tax burden that is very reasonable and workable into a profitable business model.
Job creation rebates, credits and grants
In addition, South Carolina may be able to provide wage withholding credits and grants for certain investments that further reduce the overhead and startup costs for a new project or expansion. The credits and incentives vary by county, but can be up to 5% of a company’s wage withholding taxes, and can be used to offset a wide variety of capital expenditures and even training and relocation costs for employees. As an added perk, the state also allows by statute for a company to claim income tax credits for every new job created (ranging from $1500 to $8000 depending on where the jobs are created).
Rehabilitation tax credits, rebates, and reductions
Other opportunities, particularly for smaller investments, are available if a business locates in an abandoned building, old textile mill, historic building or deserted retail facility. Each of these opportunities can generate additional benefits to a project by returning 10-25% of the upfit or rehabilitation costs through the form of tax credits and property tax abatements. This is in addition to opportunities to freeze property tax assessments at pre-renovated values in certain circumstances. Some of these credit opportunities are even transferable to third parties who may help bring much needed equity and resources to a new deal.
In short, South Carolina is a great place for a new brewery or distillery to locate or expand as South Carolina has the tools and business friendly environment to help just about any new business succeed.