More than 1 million SC filers could see a tax cut in 2022. Here’s what to know
House lawmakers put an income tax cut proposal that would reduce taxes on more than 1 million filers on the fast track Tuesday.
The proposed cut would cost $600 million the first year and more than $1 billion per year once fully implemented after five years, if revenues continue to grow.
House members planned to set the tax cut proposal for special order, which allows it to move ahead of other legislation. Debate and a possible vote on the bill are expected to take place Wednesday, House Majority Leader Gary Simrill, R-York, said.
The Revenue and Fiscal Affairs Office has not estimated how the bill would affect a typical taxpayer because the amount someone pays depends on their marital and head of household status, deductions and how they earned their income.
Under the proposal, about 1.4 million income tax filers would see a reduction in taxes as the state collapses its tax brackets into two main rates, one at 3% and one at 6.5% in the first year. The maximum tax rate also would gradually be reduced to 6% over a five-year period, as long as state revenues continue to grow by at least 5% a year.
“It’s what’s the best fiduciary policy we can have that protects what people expect from their government to be able to operate by providing tax relief to the citizens,” Simrill said.
The push for the tax cut comes as state economists predict lawmakers will have an additional $4.6 billion in available money to allocate in their annual spending plan.
“We have the dollars to do this,” Simrill said.
The Ways and Means Committee on Tuesday moved the tax cut proposal to the House floor in a 22-0 vote.
“This gives relief mainly to middle filers in South Carolina, which is a positive for those that are that are working and paying most of the bills in South Carolina, and that was our goal and the purpose at the same time bringing that top rate down,” Simrill said.
House members will debate their proposal as the Senate has its own proposal that includes reducing the top rate to 5.7% from 7% in one year, along with a cut on property taxes for manufacturers. The bill pushed by Senate Finance Chairman Harvey Peeler, R-Cherokee, would mean about $1 billion kept of state coffers in the first year. It also includes sending $1 billion back to taxpayers in a rebate.
“The good news is we’re more aligned than than not,” Simrill said. “Both plans have to be debated and defended and work through the process. But at the end of the day, 2022 means income tax reduction in South Carolina for our citizens.”
Previous plans to address tax cuts in 2005 passed the House but stopped in the Senate as credit ratings agencies said the state’s credit rating would decrease, Simrill said.
“The House has been for tax relief for a number of years. This is not a new experience for the House. (I’m) glad to see that the Senate is now trying to join in on this relief,” said state Rep. Gilda Cobb Hunter, D-Orangeburg.
This story was originally published February 22, 2022 at 1:58 PM.
