South Carolina House committee amends Senate tax cut bill

(The Center Square) — South Carolina’s Legislature moved a step closer to an anticipated discussion over tax cuts on Thursday when the House Ways and Means committee amended the Senate’s tax cut bill.

Earlier this year, the House and Senate passed competing tax cut bills. On Thursday, the House committee amended S. 1087 by making it nearly identical to their version, H. 4880, and then unanimously recommended it to pass.

“It creates accountability, creates sustainability,” said House Majority Leader Gary Simrill, R-York.

If no agreement is reached between the versions, it could go to a conference committee.

The House version of the bill would cut the state’s top tax rate from 7% to 6.5% for the 2022 tax year. The House bill also would lower that top rate by 0.1 percentage points each year, starting in 2023, until it reaches 6%.

Simrill said that he felt both are $1 billion tax cuts, but the House version cuts $600 million in the first year and then slowly lowers the rate with safeguards if the economy does not continue in a positive direction. It also would combine the tax brackets that previously were at 6%, 5%, 4% and 3% into one 3% bracket.

The state would then move from a 3.1% effective income tax rate to 2.54%.

“If you look at the first year of this plan, those who make under $50,000 save more under the House plan,” Simrill said. “It does more for South Carolina citizens than the other.”

The bill the Senate passed included a $1 billion rebate on 2021 state taxes, with rebates between $100 and $700 per state tax return. The 43% of South Carolina residents who do not pay state tax returns will still receive $100 in tax rebate payments this year when they file taxes, which will amount to $116 million of the payments.

Anyone set to pay up to $100 in taxes will receive the $100 rebate and that rebate will grow along with tax liability up to a cap of $700 per tax filing.

The Senate version also included $1 billion in recurring income tax cuts, and would cut the state’s top two tax tiers (7% and 6%) to 5.7% for tax year 2022, a plan that would cost $887 million annually.

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