McMaster calls Trump’s tax reform “a great victory” for taxpayers
The S.C. House fast-tracked a tax-conformity bill Thursday, including a provision to keep the tax bill of South Carolinians from rising more than $200 million.
The proposal now goes to the state Senate. But it will be hard-pressed to pass the bill during the three days left on this year's legislative calendar.
In December, President Donald Trump signed into law changes to the federal tax code, including repealing personal exemptions. Those changes impact South Carolina, which every year ties its tax code to federal law.
The House voted 100-0 on Thursday to conform the state's tax code to the new federal tax law. The House proposal also reinstates a $1,525 personal exemption for individuals on their state income taxes — a move that would eliminate any windfall to the state from S.C. taxpayers, lawmakers said.
Lawmakers said the bill is revenue neutral, meaning the state would not make any additional money because of it.
"But we do avoid the chaos of having two separate tax systems in South Carolina," House Speaker Jay Lucas, R-Darlington, said Tuesday.
Since the mid-1980s, the state has passed a perfunctory bill every year to conform the state's tax laws to federal tax law.
But, because of the new federal tax law, doing that alone this year could cause S.C. taxpayers to pay more than $200 million in additional state taxes next year, according to a state analysis.
The hardest hit would be South Carolinians who earn between $50,000 and $75,000 a year — the largest group of taxpayers.
Gov. Henry McMaster urged House and Senate leaders Monday to pass tax conformity. With time running out in the session, the Columbia Republican asked legislators to address the issue when they return to Columbia briefly this summer to take up gubernatorial vetoes and finish any remaining business.
"If we do not conform, compliance and state revenues may decrease due to the complexity of completing the South Carolina return," said Hartley Powell, head of the state Revenue Department.
But senators — Republicans and Democrats alike — appear unwilling to quickly pass the bill.
"I'm not against increased revenue for the state of South Carolina, but if we're going to do it, we need to do it the right way," state Sen. Vincent Sheheen, D-Kershaw, said Tuesday.
"We cannot effectively deal with this conformity issue by simply saying we need to pass a bill that conforms or doesn't conform," state Sen. Sean Bennett, R-Dorchester, said Monday. "That's going to create problems, either way you do it."
During its April budget debate, the Senate attached a one-year law that would send any added state tax revenues to a trust fund, to be returned to S.C. taxpayers.