Last week brought a big step forward in reducing income taxes in South Carolina!
Members of the House Tax Policy Review Committee have introduced legislation that would substantially change our state income tax by making it flatter and fairer. The bill calls for reducing the state income tax rate 35-percent from 7% to 4.5% over 5 years. As many know, our entire state tax system is an antiquated, hodgepodge of unfair taxing policy that awards some and punishes others. Our Tax Review Committee has been working for a couple of years to develop policies that would make SC’s tax structure fairer and stimulate our state’s economy. Just last week they heard from famed Reagan administration economist Arthur Laffer who encouraged us to lower tax rates resulting in growth in the economy.
Currently, SC has five income tax brackets, topping out rapidly at 7 percent. That’s high and not competitive with our neighboring states. The bill filed last week would eventually slash the tax rate from 7% to 4.5%. Who pays more and who pays less under the proposal would depend on how many tax credits and deductions people currently take and how they make their money. The state’s current tax policy gives preferences to older people and gives breaks on certain kinds of income, such as profits from stock trades. Under the proposal, all income and ages are treated equally. Itemized deductions and income tax credits would go away. This is obviously a major change and one I will continue to monitor and review to make sure the bill “really saves people money” instead of just moving funds around from one group to another.
While I’m talking about tax savings, last month the House passed our budget that provided a taxpayer rebate ($50) for every taxpayer in our state. Basically we had $1 billion in “extra money” this year and, after making all the priorities we wanted in the budget (teacher pay increases, tuition freezes, etc) many of us in the House felt we should return some of YOUR tax dollars back to you. This $50 uses about $100 million of that “extra money” (which is just 10%). When you look at the $1 billion in terms of $500 million recurring and $500 million non-recurring. This means we actually are proposing to return 20% of the non-recurring money to the taxpayers. Do you agree with this or would you rather government spend that money on something else? My fear is that the Senate will spend that money on pork projects and so the taxpayer won’t get it nor would some deserving group – teachers, retirees, military, state employees, etc. Please call or email me and let me know your preference!
Another major item last week was Santee Cooper and how to salvage another blow from the VC Summer fiasco. Momentum is building in both the House and Senate for the sale of state-owned utility Santee Cooper. The House has issued a Joint Resolution authorizing the Public Service Authority Evaluation and Recommendation Committee which paves the way for the selling of Santee Cooper by continuing the committee process and evaluating bids before recommending a final offer to the General Assembly. And, just this week legislation was filed in the House that would increase transparency and accountability at Santee Cooper. I’ll keep you informed as those of you with MCEC as your electricity provider, will be interested in the outcome.
Lastly, we talked a lot about jobs last week. The House of Representatives voted overwhelmingly to pass legislation that would give the Carolina Panthers a tax breaks if it moves its headquarters and training facilities to Rock Hill, across the border from where they play in Charlotte. The reason legislation was needed is because current tax breaks in place for other businesses do not include “professional sports teams”. Simply put, if this was Panthers Manufacturing or some other service, the legislation would not be needed because it has already been in place for economic development situations similar to this. The bill does nothing if the Panthers do not move. If the Panthers do move, they would get a break on taxes – it would not be taking any current tax dollars and giving to them. As a reporter put it “i’ts not your dollars going to the Panthers, it’s the Panthers tax dollars going to the Panthers instead of state government.”
As always, let me know your thoughts on these topics or others by calling me at home (732-1861) or the State House Office (734-2969) or by emailing me at NathanBallentine@schouse.gov.
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