KEY THINGS TO KNOW ABOUT THE SOUTH CAROLINA TAX CUT PLAN 

H.4216 would set South Carolina’s individual income tax—currently at 6.2%—on a path to 0%. No state has eliminated its income tax in 45 years, but H.4216 would set South Carolina on the road to repeal. H.4216 would also shift South Carolina to a federal AGI-based income tax calculation. 

1. Flattening tax rates is the clear trend in America. States are moving to flat taxes and away from graduated (progressive) systems. Six states adopted flat tax rates from 2021-24.  
2. Georgia and North Carolina already have flat, low income tax rates, and they are scheduled to go even lower by 2029 and 2027 respectively.  
3. Georgia commentators are already writing that if passed, South Carolina’s H.4216  would be a threat to Georgia’s economic development efforts. 
4. South Carolina’s tax plan is unlike other tax-cutting states because H.4216 doesn’t raise sales taxes or property taxes to pay for it. 
5. When H.4216 is fully implemented, all taxpayers will “pay” a 0% individual income tax rate. Until then, every citizen should pay something (with carve-outs for seniors, veterans, etc.). Right now, about 40% of South Carolina’s citizens pay $0 in income tax. The top 10% of taxpayers pay a whopping 65% of income tax collected. 
6. South Carolina cannot move to a single 0% individual income tax rate in one giant multi-billion-dollar step. But the state can cut expenditures over time to get to 0%. An expenditure limitation bill should be next. (Florida has no individual state income tax but Florida utilizes other taxes besides personal income taxes, which is why the Tax Foundation rates Florida as having a greater state & local tax burden than South Carolina.) 
7. South Carolina is one of only five states that links to the federal tax code by using Federal Taxable Income (TI) as the starting point for state taxes rather than Federal Adjusted Gross Income (AGI) as most states do. This complicates tax calculations and provides the state less control over our own tax code. North Carolina and Georgia both use Federal AGI. H.4216 shifts South Carolina to Federal AGI. 
8. Moving to two-tiered tax system, 5.39% and 1.99%, will, in just the first five years, bring South Carolina…
   – $360 million – $1.25 billion GDP growth
   – Between 1,000 and 3,000 new jobs every year
   – Up to $400 million annual consumer spending increase
   – $170 – 550 million yearly investment in South Carolina