I'm not a very strict disciplinarian and always try for the positive -- I'll pay him for a good day or I'll buy him a slushy or we'll go out somewhere. I have now started to threaten him with telling his father or taking away his TV privileges. What do you suggest?
With your son's input, decide on one or two behaviors on which you can work first. Put your expectation in positive terms: "Johnny will talk nicely to others". Then determine the reward he will earn when he does this for a day and the consequence he will receive when he does not. Rewards don't have to cost money -- talking nicely to others for one day can earn an extra bedtime story or a walk around the block just with you, while talking nicely to others for two or three days in one week can earn having a friend over to play on the weekend. Be sure to set the goal at an achievable level, then increase the amount of time required to earn it as your son's behavior improves.
The key to any system like this is consistency. You must enforce the rewards and consequences every time in the same way. Also, talk with the school counselor -- she may be able to give your son some individual attention.