COLUMBIA, S.C. (AP) — The constant push to cut income taxes in South Carolina accelerated significantly Tuesday as the Republican…
COLUMBIA, S.C. (AP) — The constant push to cut income taxes in South Carolina accelerated significantly Tuesday as the Republican governor and leaders of the House and Senate came together to promise to pass an ambitious bill to charge one flat rate for all taxpayers.
The details of the bill weren’t released at a news conference, but every speaker made sure its goal was known — take the 6.2% top income tax rate down to 3.99% for everyone by the end of 2026.
If the economy keeps growing and the tax base is increasing, the plan would cut $200 million from income taxes collected until that flat rate is 2.49%.
Republican leadership also promised not to increase other taxes, such as those on sales and property, to offset income tax reductions, like other nearby states have done.
South Carolina would be one of a number of states looking to find a way to cut taxes. Mississippi and Louisiana are considering a swap of sales taxes or gas taxes to offset revenue lost. There are proposals to cut taxes on tips or Social Security benefits in several states and Kentucky has already lowered its income tax rate from 4% to 3.5%.
Mostly unsaid at the Statehouse news conference Tuesday was the exact mechanism to get from 6% to 3.99%, outside of a promise that everyone with taxable income would pay something.
Now, some residents make more than $1 million but pay no South Carolina income tax, said Republican House Ways and Means Chairman Bruce Bannister.
“There will be some people when we take away the gaming of the tax system — they will pay more. But we think 3.99% is a legitimately good fair tax to charge them,” Bannister said.
Figures from about five years ago when the income tax was first cut suggested about one-third of all people who filed a South Carolina income tax return paid nothing. Most of them were low-income residents.
Republican Gov. Henry McMaster said it’s only fair that even the lowest income earners pay something outside of sales tax and perhaps property tax.
“I look forward to a tax system in our state that is viewed as low, broad, fair, flat — doesn’t take too much from anybody but everybody has to pay something, a little something, to be part of this great state of South Carolina,” McMaster said.
South Carolina can afford the income tax cut for now thanks to its booming economy and population, which has grown by 1.5 million people since 2000 to a total of 5.5 million residents. Many of them have been well-off retirees.
The goal is to have one of the lowest income tax rates in the Southeast, lawmakers said. Bannister pointed out the 2.49% rate would be less than Georgia, North Carolina, Virginia and Alabama.
South Carolina has less than two months left in the 2025 session to get the tax cut plan through the House and Senate and to the governor’s desk. Legislative leaders said that can be done.
No Democrats were seen among the several dozen lawmakers who flanked the governor and House and Senate leaders, although they have supported tax cuts before. They support the state’s program to cut the top rate of 7% down to 6%, which should reach its goal next year.
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