Sanford signs business tax break into law

COLUMBIA, S.C. - Gov. Mark Sanford hailed the House and gave the Senate the cold shoulder as he signed a tax break for small businesses into law Thursday.

Sanford called the legislation, which was shaped by Senate defiance of his income tax reduction plan, "a third of a loaf."

The legislation lowers taxes on small business profits from 7 percent to 5 percent and will cost $129 million when fully implemented in four years.

The Republican governor heaped praise on the House, whose members embraced his whole loaf. He wanted to cut the state's top income tax rate from 7 percent to 4.8 percent during the next decade. The proposal, tied to economic growth, would have meant $1 billion less in tax collections. It targeted small business owners and was intended to attract wealthy retirees and executives.

The governor's plan went nowhere in the Senate.

Sanford's proposal "would have cost the citizens of our state a billion dollars and jeopardized" the state's credit rating, Senate Minority Leader John Land, D-Manning, said. Two credit rating agencies cited Sanford's proposal as a reason for keeping a negative outlook on the state's debt.

Critics also said Sanford's rate cuts would have benefited only those on the top half of the state's income ladder.

On Thursday, Sanford said, "I feel good about the House. I'm really proud of what they did."

It was second year the House had stood with him "for the idea of a more significant income tax (reduction) rather than a smaller one," Sanford said.

While a mass of House members gathered for the bill signing, only a few senators showed up. Sanford called them "a handful, if you will, of brave senators" who stood by his plan.

Now the governor is ready to push for more. With small business owners getting a break, the workers they employ also deserve one, Sanford said.

Sanford will hit the campaign trail Friday with stops in Greer and Aiken. He plans to talk about how lower income tax rates will help address the state's jobless rate, which is the nation's third-highest.

House Speaker David Wilkins, R-Greenville, agreed more is needed.

"We stand with our governor in wanting even greater income tax relief," Wilkins said. "But we know that this particular bill targets our state's small businesses and it's a huge boost for our small businesses and a very important first step."

Wilkins also has said legislators have a higher priority: cutting property taxes. Sanford's not against that, but he said the Legislature should be looking at statewide taxes before tinkering with taxes local governments assess.

As Sanford shops for the rest of his loaf, small business owners expressed appreciation for their slice.

Bobby Sheridan, owner of SMS Sports World in North Augusta, said the lower taxes could help hire a person to work the sales floor at his business and increase sales.

"As a small business owner, every little dollar you've got in the bank, it doesn't sit there," Sheridan said. "It makes it a lot easier to make a decision to hire new employees, to expand, to give better benefits to your employees."