Income

SC Senate ups the ante to $2 billion in income tax cut debate

COLUMBIA, SC (AP) — South Carolina’s Senate finance leader proposed nearly $2 billion in income tax cuts and refunds on Thursday, adding even bigger numbers to the tax-cut debate which is heating up in the General Assembly.

Almost everyone who pays income taxes in South Carolina would get something back under Senate Finance Committee Chairman Harvey Peeler’s proposal.

The plan would cut the state’s top tax rate from 7% to 5.7% when people file their returns next year. It would cost nearly $900 million.

Peeler also wants to give $1 billion in one-time taxpayer rebates, but the Gaffney Republican said he’s still working out those details.


Peeler’s plan came two days after House members joined Gov. Henry McMaster with their own plan to cut the top rate – which more than four in 10 state taxpayers pay – from 7% to 6, 5% now and possibly 6%. It would also push all other taxpayers into the bottom 3%, which would cost about $600 million in total. This was a larger initial cut than originally proposed by the Governor or House leadership.

Peeler said he has been working on a plan to cut taxes since becoming Senate finance chairman in December and has lobbied for them for most of his 40 years in the Senate. But he winked at Tuesday’s announcement by the governor and members of the House that didn’t include any senators.

“You can’t cut Harvey Peeler’s taxes, so let’s get to the negotiating table,” he said.

Peeler’s plan also had something the other ad didn’t – the Democrats. At least three Democratic senators immediately asked to co-sponsor the bill after Peeler introduced it.

The growing tax cut proposals came the same week state economists predicted there would be an additional $1.5 billion to spend in next year’s state budget thanks to unprecedented increases in sales tax and corporation tax.

Lawmakers were already trying to figure out how to spend an extra $3 billion from the saved money in case COVID-19 wrecks the economy and even more windfall tax revenue.

McMaster and House Speaker Jay Lucas said they were both pleased to see the Senate enter the debate with its own proposal.

“Now is the time for this proposal — and we’re about to make it a reality as the Senate joins the ongoing conversation,” said Lucas, a Republican from Hartsville.

A spokesperson for McMaster said the governor was pleased to see both houses of the General Assembly join the call for tax cuts he has made for five years.

“If a tax cut hits his desk, he’ll sign it into law and then he’ll push for even more cuts,” spokesman Brian Symmes said.

Democratic Rep. Gilda Cobb-Hunter said she hopes Republicans won’t just focus on income tax cuts, but other relief like an earned income tax credit or credits. tax for child care.

“Democrats are all for tax relief. It depends on what type,” she said.

While the tax cuts apparently seem popular with lawmakers from both parties, some members of the General Assembly want to do more.

Senator Sean Bennett said he appreciates Peeler’s tax cut plan, but said the booming economy and additional revenue gave the state a transformational chance to tweak all kinds of taxes to align with the current functioning of the economy.

“Our income tax is broken, Our property tax is broken. Our sales tax is broken, let’s not miss this opportunity. Don’t swim after the shining lure,” the Summerville Republican said in the Senate on Wednesday.

Democratic Sen. Mike Fanning of Great Falls supported the call, which said the state could cut the top tax rate to 4%, coupled with a number of income tax exemptions, while receiving roughly the same amount of income.

“If we were to tackle comprehensive tax reform, wouldn’t you agree, we could not only lower the income tax rate to the lowest in the county, but we could lower each of our rates? “, Fanning said.

Peeler said he would listen to any proposal that would end up lowering taxes. But he doesn’t want to delay an income tax beyond this session, which ends in May.

“It’s the act of the possible,” Peeler said. “We can do it now.”

Cobb-Hunter said she hopes all the talk of tax cuts doesn’t lead lawmakers to a bidding war over which chamber can provide the biggest return, taking money away from everyone. other needs of the state, from education to health care to his personal crusade. pay more to all state employees, especially those who are the lowest paid.

“I’m not just talking about a raise this year for state employees, I’m also talking about bonuses,” the Orangeburg Democrat said. “Because they are the ones doing all the work.”

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Follow Jeffrey Collins on Twitter at https://twitter.com/JSColinsAP.