SC Senate to consider even bigger tax cut than pushed by House GOP, governor. What to know
The South Carolina Senate’s top budget writer on Thursday pitched his own tax cut proposal, one that is even bigger than a plan pushed by the House GOP and the governor.
Cherokee Republican Sen. Harvey Peeler proposes refunding some $1 billion to taxpayers through a one-time rebate and instituting a tax rate cut that would result in about $900 million less income tax revenue for the state in its first year. How the rebate money would be distributed would still need to be determined by lawmakers.
Peeler wants to combine the state’s two top tax brackets of 6% and 7% into one tax bracket where people would pay a 5.7% tax rate.
Peeler, who took over as the Senate Finance Committee chairman in December, also wants to cut property taxes on manufacturers, “putting us in line with other states in the southeast,” he said in a statement.
This plan follows a proposal from Gov. Henry McMaster and House Republicans, who called for simplifying the state’s income tax system into two brackets, with the top tax rate lowered to 6.5% from 7% the first year and then incrementally lower it to 6% over the course of five more years.
The House proposal, which comes in a year when the governor and the entire chamber are up for reelection, would result in about $600 million less income tax revenue flowing to the state in the first year and eventually would keep $1 billion a year out of state coffers by the time the tax cut is fully implemented.
Both proposals also would exempt military pensions from state income taxes.
“The governor is thrilled to see that after 5 years of him leading the charge on cutting the state’s income tax, leadership in both bodies seem ready to get the job done,” McMaster spokesman Brian Symmes said in a statement. “As the governor says, now is the time to be bold and transformative — that includes giving South Carolinians much-needed tax relief. If a tax cut gets to his desk, he’ll sign it into law, and then he’ll push for even more cuts.”
The House proposal cleared its first hurdle Thursday, as a Ways and Means subcommittee passed it along to be considered by the full Ways and Means Committee, which oversees the writing of the first draft of the state’s annual budget.
The tax cut proposals come as the state budget writers have more than $4.5 billion in additional money available to spend when putting together next year’s budget.
Current law
▪ $3,200 to $6,410: 3%
▪ $6,410 to $9,620: 4%
▪ $9,620 to $12,820: 5%
▪ 12,820 to $16,040: 6%
▪ More than $16,040: 7%
Peeler proposal
▪ $0 to $3,200: 0%
▪ $3,200 to $6,410: 3%
▪ $6,410 to $9,620: 4%
▪ $9,620 to $12,820: 5%
▪ More than $12,820: 5.7%
