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Anderson Observer Editorial Board
During public comments on the upcoming one-percent Capital Gains Tax for roads and bridges in the county, several citizens and a pair of members of the Anderson County Legislative Delegation suggested that perhaps there would be roads for transportation infrastructure if not for tax incentives used in recruiting and maintaining major industrial concerns using tax incentives.
For decades, the state of South Carolina has grappled with the delicate balance of attracting industry while maintaining a stable tax base for its counties and schools. A central and often misunderstood tool in this equation is the “Fee In Lieu of Tax,” or FILOT, a program that has become a powerful, if sometimes controversial, instrument in economic development. While the term itself may sound arcane to the average voter, its impact—particularly in counties like Anderson—has been transformative, fueling a manufacturing boom and providing a lifeline during economic downturns.
The history of this fiscal dance is rooted in a late 19th-century S.C. Legislature, composed largely of farmers who set a high 10.5 percent assessment ratio on manufacturing properties to protect their labor force. This ratio, still on the books, has made South Carolina less competitive for large-scale industrial investment without significant incentives. To counter this, the state has introduced several options over the years, with FILOT emerging as a pivotal tool.
FILOT agreements allow counties to negotiate tax incentives with companies, offering a crucial lifeline to manufacturers who, according to former Michelin president Pete Selleck, would otherwise face a property tax burden higher than “any other place on the planet” if they located in the state. These agreements are not just about attracting new businesses; they are also vital for retaining existing ones. As Anderson County Economic Development Director Burriss Nelson notes, large international companies “won’t hesitate to turn the lights off and move somewhere else if they don’t feel they are being appreciated and being taken care of when it comes to their bottom line.” This stark reality underscores the importance of FILOT in a globalized economy where jobs can be moved with alarming speed.
The most compelling case study for the FILOT program’s power may be the story of First Quality Tissue. In the throes of the 2008 recession, with Anderson County’s unemployment near 14 percent, a billion-dollar investment and the promise of 1,000 new jobs were on the line. The county’s strategic use of a FILOT agreement was the deciding factor, leading to a new facility on a brownfield site and positioning Anderson as a national leader in recession recovery. According to Nelson, “Without FILOT we would not have First Quality.”
While other tax options exist, such as a state-funded valuation discount, they often come with their own complexities and potential shortfalls, such as slower reimbursement to counties. The FILOT, by contrast, offers a more direct and reliable mechanism for both the county and the companies, often giving preference to those that bring high-paying, skilled jobs. The program also helps South Carolina remain competitive with neighboring states like Georgia and North Carolina, which offer their own aggressive incentives. Georgia offers zero taxes when recruiting industry in counties along the border of South Carolina.
In a state where manufacturing remains a cornerstone of the economy, the FILOT program is not merely a tax loophole; it is a strategic necessity. With over 2,000 active agreements statewide and a gross investment of $85 billion, the program demonstrates its effectiveness. For counties like Anderson, these agreements are not just a tool for growth, but a critical part of their economic survival, ensuring that the lights stay on and the jobs remain in South Carolina.
Such agreements have little to do with the issue of funding Anderson County’s roads and bridges, and to suggest as much, is either uninformed or duplicitous.
The Anderson Observer Editorial Board is composed of of five journalists with a combined 200 years in the newspaper business.
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