Senate finance panel weighs $400 million in tax cuts as part of roads deal
After taking “baby steps” Tuesday, senators will try Wednesday to work out a deal on a road-repair bill.
Senators on a transportation panel agreed Tuesday to give the governor control of the commission that oversees the state Department of Transportation. The Senate’s full Transportation Committee will take up that proposal Wednesday.
Meanwhile, the Senate Finance Committee discussed raising an added $665 million a year for road repairs by increasing the state’s 16.75-cent-a-gallon gas tax by 12 cents and hiking other driving fees. The committee also considered cutting nearly $400 million in income and business taxes.
“This is about taking baby steps towards a consensus, and I think we took a couple of baby steps today,” said state Sen. Joel Lourie, D-Richland.
Even if the proposals survive the Senate — where some members may filibuster, saying a gas-tax hike is not necessary — they face an uncertain future.
The Senate plan meets some of the demands of a three-part roads deal set by the S.C. House and Gov. Nikki Haley. For example, it would give the governor control of the Transportation Department, now controlled by legislators.
However, the House passed a far different roads plan last year, proposing a 10-cent-a-gallon gas-tax hike to raise just more than $400 million a year for road repairs. The House plan, now before the Senate, also includes smaller tax cuts.
Also, Haley has insisted any gas-tax hike be offset by a larger income-tax cut.
The Senate Finance Committee will consider its tax-cut proposal again Wednesday. When fully phased in, after three years, the proposal that would cut income taxes paid by S.C. residents by $314 million, including reducing the state’s top income tax bracket to 6.8 percent, down from 7 percent.
The proposal also would adjust the state’s tax brackets so that a taxpayer would begin paying taxes after earning $3,710 in taxable income, up from $2,920. If passed, the highest tax bracket also would be revised upward, kicking in for taxable income above $18,500, up from $14,600.
Other proposals include:
▪ Adjusting upward the state’s tax credit for two-wage-earner families to include taxable earnings up to $45,000 from $30,000, increasing the maximum credit to $315 from $210.
▪ Increasing the credit for college tuition to $1,500 a year, up from $850 a year for students in four-year colleges and $350 a year for students at two-year colleges.
▪ Making the tax credit for students with special needs who attend private school part of law, instead of requiring its renewal each year as part of the state budget.
▪ Cutting about $84 million in business taxes, including dropping the property tax on manufacturers to 8.5 percent from 10.5 percent.
▪ Establishing a state earned-income tax credit, mirroring the existing federal credit, for low-income taxpayers. Roughly 500,000 S.C. tax filers would get an average credit of $85, based on 2013 federal statistics.
The proposed earned-income tax credit ran into opposition from state Sen. Larry Grooms, R-Berkeley, who said income-tax relief should go only to taxpayers. Someone should not get a refund for more than the amount that they pay in taxes, he said.
However, state Sen. Darrell Jackson, D-Richland, said low-income S.C. residents, who would qualify for the tax credit, would be paying higher taxes in the form of the higher gas tax.
Cassie Cope: 803-771-8657, @cassielcope
How much would you save?
A panel of senators is discussing cutting the income taxes paid by South Carolinians by $314 million. At the same time, however, they would increase the state’s gas tax by 12 cents a gallon. A look at the proposed income tax cuts:
$42: The amount South Carolinians with taxable income of between $5,000 and $10,000 would save annually
$191: The amount a S.C. taxpayer with taxable income of between $40,000 and $50,000 a year would save
$11,985: The amount the state’s highest income taxpayers — those with taxable income of more than $2 million a year — would save
This story was originally published January 26, 2016 at 8:41 PM with the headline "Senate finance panel weighs $400 million in tax cuts as part of roads deal."