Seven FAQs About South Carolina Republicans’ Tax Cut Plan
1. What is actually in H.4216, the Republican Tax Cut Plan?
H.4216 is a conservative-sponsored plan to cut the top current South Carolina individual income tax rate from 6.2% to 5.39%, then on down to 1.99% if the economy stays healthy.
2. Who will benefit from the Tax Cut Plan?
Everyone will benefit from the Plan because when complete everyone will pay the same flat percentage of their income in state income taxes. It would be a flat tax with one bracket (3.99%) rather than the current progressive tax with three brackets (6.2%, 3.0%, and 0%). Everyone will also benefit from the more robust economy that will produce more investment into the state and more jobs (see #4).
3. What are opponents saying about H.4216?
Most everyone believes that wealthier citizens should pay more in dollars in state income tax than poorer citizens, but opponents think some income taxpayers should pay a higher percentage of their income. This is known as a “progressive” income tax and has long been advocated by “progressives” and “social Democrats.” Some opponents are opposed to current taxpayers paying 0% being required to pay 1.99%. (Social Security benefits and military retirement pay are exempt from the state income tax and there is a new “South Carolina Income-Adjusted Deduction” that applies to lower income earners.)
4. What is the economic impact of H.4216? Will there be more jobs?
The conservative Economic Research Center at The Buckeye Institute shows that in the first five years, flattening the state income tax to a two bracket 5.39% and 1.99% will lead to a massive economic expansion ($360 million to $1.25 billion) in South Carolina and at least 1,000 new jobs created in the first year alone.
5. How does H.4216 compare to individual income taxes in neighboring states?
Florida and Tennessee have no state income tax on individuals at all (0%). Georgia is cutting their tax rate to 4.99% flat. North Carolina is working down to 3.99% flat. The new SC rates would be 5.39% and 1.99%, and then a 1.99% flat rate in the future. Arizona is the lowest state income tax rate at 2.50% flat. So, H.4216 would make our individual income tax the lowest in the nation among states that have an income tax. Part of the reform will be to shift how South Carolina income tax is calculated. If we used Federal Adjusted Growth Income as the basis, South Carolina will have more control over its tax system.
6. How much will taxes be lowered under the Republican tax cut plan?
When fully in place at 1.99% flat, most taxpayers will pay less.
7. Isn’t H.4216 Speaker Murrell Smith’s bill?
Opposition or support for legislation should never be based on personalities but on facts. H.4126 will give South Carolina citizens the lowest income tax rate in the country of those that have income taxes. That is something all Palmetto State conservatives should get behind.
To read more about the tax cut plan, you can read the following articles for more detail:
