South Carolina’s highest income residents will not pay more in state income taxes.
The state Senate voted overwhelmingly Tuesday to not conform a portion of South Carolina’s tax code with the federal tax code. Making the two codes agree would have resulted in a $200 tax increase, on average, for the state’s wealthiest residents.
Whenever the federal government changes its tax code, South Carolina usually does the same. Conforming the two makes it easier for people to file their tax returns. But, this year, the federal government increased the tax rates for single people with taxable incomes of at least $250,000 a year and married couples earning at least $300,000 a year.
If South Carolina changed its tax code to do the same thing, then about 15,000 people – accounting for less than 1 percent of the state’s 2.1 million tax returns – would have been affected.
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But the state Senate – controlled by Republicans, many of whom have taken pledges to not raise taxes under any circumstances – decided not to conform state law with the new higher federal income tax rate. If it had become S.C. law as well, that higher rate would have added about $3.1 million to the general fund.
Senators did choose to conform other parts of the state tax code with the federal tax code to preserve 33 existing tax breaks, including the deduction for interest on student loans, the $250 deduction for teachers’ classroom expenses and deductions for state and local sales taxes.
State Sen. Brad Hutto, D-Orangeburg, opposed the bill, trying to amend it to cut lawmakers’ salaries by $3.1 million to make up for the sum the state would lose in revenue.
State Sen. Kevin Bryant, R-Anderson said: “Some of my colleagues feel like if there is a person that’s got money and they are successful, then there is something wrong with them and we’ve got to be sure we take as much money from them as possible.”
Lawmakers had hoped to pass the bill before April 15, the deadline for taxpayers to file their state and federal tax returns. But the bill was delayed in the Senate for several weeks because of the tax increase issue.