Economist: Sanford's income tax proposal helps just half of residents

COLUMBIA -- Gov. Mark Sanford's plan to reduce the state's income tax rate only helps the top half of taxpayers, South Carolina's chief economist said Tuesday.

Sanford's proposal, which is sponsored by House Speaker David Wilkins, R-Greenville, and backed by about 90 House members, would cut the state's top income tax rate to 4.75 percent from 7 percent during the next decade.

"Fifty percent of the taxpayers don't get anything," Bill Gillespie, the state's chief economist, said after the bill cleared a House Ways and Means subcommittee with few questions and no criticism Tuesday.

That chilled Rep. Bill Clyburn's support of the bill. The Aiken Democrat said he signed onto the bill thinking that the rates would be reduced for all taxpayers.

"I'm really disturbed by it," Clyburn said. His average constituent makes less than $12,000 a year -- not enough to reap big breaks from the tax cut. Gillespie said a person with state taxable income of $13,000 a year would get $1 dollar as the rate fell to 6 percent from 7 percent.

State taxable income is the amount left after federal income deductions, such as home mortgage interest and exemptions for children.

John Ruoff, research director for the public advocacy group South Carolina Fair Share, said the state's top earners benefit more than anyone else.

His analysis shows 5,470 of the state's 1.8 million taxpayers reap $89.4 million in tax cuts.

Clyburn, a Ways and Means Committee member, is deciding whether to pull his name off the legislation.

Rep. Shirley Hinson, R-Goose Creek, was surprised that opponents to the legislation didn't speak at the meeting.

But part of that may be tied to the public notice on the House's Internet site that the bill was coming up for debate. The subcommittee's agenda didn't show up on the Internet site until midmorning Monday. Hinson, who serves on the subcommittee, said she only learned Monday that the bill was coming up for discussion. "I think the public should be informed," she said.

"That's how we make good decisions," she said.

The short notice is "absolutely not fair and it points out that they know this bill will not stand up to any scrutiny," said House Minority Leader James Smith, D-Columbia.

The bill should have the "best and brightest" economists involved in the debate, he said.

Sanford, undeterred by the criticism, was pleased the bill cleared the panel.

He said the bill helps every South Carolinian because it will help create jobs.

"In an economy that's performing as well, everybody makes a little bit less than they otherwise would have," Sanford said.

"What we're aimed at is 'How do improve the underlying climate for jobs and economy in South Carolina?' and that's the bigger question for us."

Hinson asked Gillespie during the public hearing what economic benefits have shown up in other states from income tax cuts. "We haven't looked at other states," Gillespie said, noting other states haven't been cutting their income tax rates. There is "no way to judge if they've had economic growth," he said.

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