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Story last updated at 7:13 a.m. Tuesday, April 8, 2003

Sanford beats drum for income tax-cutting stimulus plan
BY JOHN P. MCDERMOTT
Of The Post and Courier Staff

Gov. Mark Sanford visited businesses in North Charleston and two other cities Monday to drum up support for his economic stimulus plan, a proposal that includes cutting the state's income tax rate to 5 percent from 7 percent over 15 years.

"It's something we're pushing hard, but we're not able to cross the bridge on it in Columbia," Sanford said at Knight Press, a 25-year-old printing company on Rivers Avenue.

Companies like Knight Press are at "a competitive disadvantage" compared with businesses in most other states, he said. That's because South Carolina has the second-highest income tax rate in the Southeast and the 13th-highest in the nation, he said.

The changes he proposes would provide relief to the companies that create the bulk of the jobs, said the governor, who also made stops at Bose Corp.'s Blythewood plant and at ScanSource's headquarters in Greenville.

"What we want to do is to point the rifle at tax changes that will have an impact on the entrepreneurial world and the small-business world," Sanford said.

"These are the companies that need the incentive to take on additional risk, expand their business or hire a couple of extra workers," he said.

Sanford's proposal is tied to a 53-cents-per-pack hike in the cigarette tax.

Some House Republicans are opposed to raising any taxes, and other lawmakers say they won't support one targeted at a minority -- smokers.

On Monday, Sanford pointed out that South Carolina workers fall into the 7 percent tax bracket if they earn more than $12,200. By contrast, North Carolina wage earners have to make $120,000, or nearly 10 times more, before their pay is taxed at the Tarheel State's top rate of 8.5 percent.

Sanford said his plan would generate $875 million in additional economic activity in South Carolina over four years. It also would mean an additional $800 annually for a household earning $40,000, he said.

"Most notably, small businesses and individual income earners will benefit by having more dollars to put back into their pockets," Sanford said. "That in turn drives job growth and personal income -- two of the keys to revenue growth in South Carolina."

Sanford provided figures suggesting that 15 states that have trimmed income taxes have had higher growth rates in those categories.

"It's not a causal relationship; there are some correlations there," he said. Because the cuts would be phased in over 15 years, the state's income tax revenue would not drop below current levels, Sanford said.

During his campaign last fall, Sanford touted an ambitious plan to abolish the state's personal income tax over 18 years.

"That's a bridge too far in these economic times," he said Monday.

Knight Press owner George Rask said a reduction in the state's personal income tax rate would help offset his company's skyrocketing health insurance costs.

"Every two years we have to change carriers," Rask said. "After you sign up, they jack up the prices, and you have to shop around again."

Should the state's cigarette tax be raised by 53 cents a pack, Sanford's projections show that the move would generate $150 million a year, money that would go to covering Medicaid system shortfalls. South Carolina's 7-cent-a-pack cigarette tax is the third-lowest in the nation, and it has not been raised in 25 years.

Sanford, however, said he will veto the proposed increase if it is not coupled with an income tax cut.








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