S.C. House approves plan that could eventually eliminate income taxes
COLUMBIA, S.C. (WRDW/WAGT) - A plan that could eventually eliminate income taxes in South Carolina earned key approval Tuesday at the State House.
The House of Representatives ed a bill that would initially lower costs for many, though about one in four filers would see their taxes go up.
Earlier this year, Republican leaders in the General Assembly ed the governor to unveil an income tax reform plan. But days later, a report was published that found their proposal would have initially raised costs for most filers.
The House pumped the brakes on it and spent the last few weeks reworking a new plan, which came up for debate late Tuesday night in the hopes of ing in the lower chamber before the legislative session ends Thursday.
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“This vote will put into statutory requirement a pathway to end the income tax in South Carolina,” Rep. Brandon Newton, R – Lancaster, said during Tuesday’s debate, which started just after 9 p.m.
South Carolina currently has three rates for personal income taxes — 6.2%, 3%, and 0% — and the top one is the highest such rate in the southeast.
This bill would lower the top rate to 5.39% for those with a taxable income of $30,000 or more, while those with incomes less than $30,000 would be taxed at a 1.99% rate.
A fiscal impact report found that about a quarter of filers in South Carolina would see their taxes go up at that point, while just over 40% would see a drop, and around one-third of filers would see no change in what they pay.
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of the ultra-conservative Freedom Caucus and most Democrats said those projected initial tax hikes would affect too many people to earn their vote for the plan.
“We don’t know who will get hit. This is a gamble,” Rep. Jordan Pace, R – Berkeley and chair of the Freedom Caucus, said.
But if state revenues allow, the two rates would combine into one flat rate at 1.99% that would gradually lower and could eventually result in the elimination of South Carolina income taxes.
Rep. Justin Bamberg, D – Bamberg, proposed an amendment that would immediately drop the rate to zero.
“It gives people more money to take care of their families. It gives them more money to deal with the troubles of the economy,” he said.
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Bamberg’s idea was not adopted.
“That would be a 40% deduction in the state budget in one year,” Newton said in asking to vote down Bamberg’s amendment. “I think the way that it was explained by Frank Rainwater in one meeting was everyone could take a prisoner home at night because we couldn’t house them in the Department of Corrections.”
The House ultimately approved the bill in a 68 to 46 vote after about an hour of debate, sending it to the Senate.
Senate leaders have already said they will not take this plan up this year, wanting to study it more in the coming months.
But this is the first of a two-year session, so they can pick the bill up when they return in January.
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