Democrats and Republicans praise South Carolina tax cuts


COLUMBIA, SC (AP) — The Republican-dominated South Carolina House unanimously passed a $600 million income tax cut Wednesday in less than 15 minutes of debate, with Democrats having spent much of that time praising the idea.

Between the state’s booming economy and the money saved from previous budget years in case the pandemic causes an economic meltdown, South Carolina lawmakers have an additional $4.5 billion to spend this session.

With all that money, calls have been made to build new schools and a new state health lab, raise salaries for teachers and other state employees, and speed up plans to widen the cramped freeways of South Carolina. But so far, nothing has had the same support as the income tax cut.

“It’s the best thing since sliced ​​bread for the working man in South Carolina,” said Democratic Rep. David Weeks of Sumter.

The House plan cuts the state’s top tax rate from 7% to 6.5% next year and continues to cut it to 6% over the next five years if the economy continues to weaken. grow. About 1.1 million of the state’s 2.6 million eligible people pay this rate. All other taxpayers would be grouped into a 3% bracket.

House Republican leaders joined Gov. Henry McMaster in his office on Feb. 15 to announce their plan. They finished eight days later.

“Middle-income people are getting the biggest drop. I think for us this is a real win,” said House Majority Leader Gary Simrill, a Republican from Rock Hill.

The proposal is heading to the Senate, where Finance Committee Chairman Harvey Peeler has suggested an even bigger cut – spending $2 billion to cut the top tax rate from 7% to 5.7% and also return $1 billion in state revenue as rebates with exact details to be determined.

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

Many Republicans in South Carolina have wanted tax cuts for more than a decade. But their more cautious colleagues have always won by saying the state needs too much to cut revenue, citing examples like Kansas, where tax cuts passed a decade ago were repealed a few years later. have caused huge budget deficits.

Over the past 10 years, South Carolina has added 500,000 people and many of them have been well off. Median household income rose from $43,000 to over $56,000 during the same period.

The amount of money the state collects each year in taxes and fees that the General Assembly can spend the following budget year is $11.5 billion. At the end of the Great Recession less than 15 years ago, the Legislative Assembly had only $5.5 billion to spend.

There have also been calls to tie tax cuts to reforming the state’s entire tax system with dozens of sales tax exemptions and a property tax cap that leaves many homeowners longtime landowners pay taxes well below the value of their rapidly rising homes. But that seems to be waiting another year.

South Carolina lawmakers are also trying to decide whether to spend an additional $2 billion in federal COVID-19 relief and fines the US government owed the state after it failed to meet deadlines to remove plutonium from the site. of the Savannah River after a plan to turn radioactive material from nuclear bombs into nuclear reactor fuel failed.

All that extra money left Democrats feeling that their concerns about education, schools, state employee salaries and other needs would still be met even with the tax cut.

Democrats and Republicans in the House gave Republican Leader Simrill and House Ways and Means Committee Chairman Murrell Smith a round of applause after a 110-0 vote.

As soon as voting began, dozens of names lit up green on the board and House Republicans achieved what they had wanted for nearly 20 years.

“I don’t know, Murrell. Sounds close,” joked Rep. Kirkman Finlay, a Republican from Colombia.


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