COLUMBIA, S.C. - Gov. Mark Sanford's proposal to lower the state's top income tax bracket failed in the Senate Wednesday as a break for small business owners passed.

Sanford said his proposal to move the top rate to 4.8 percent from 7 percent during the next decade would spur economic growth by attracting wealthy retirees and executives while helping small-business owners.

The House had passed Sanford's plan, but last month the Senate Finance Committee dumped that proposal and it's $1 billion price tag in favor of lowering the rate only for small-business owners, who would pay the same 5 percent rate corporations use. That slimmed-down break costs $129 million yearly when fully implemented in four years.

Sanford's plan resurfaced as the full Senate took up the debate on Wednesday. The amendment failed with a 33-10 vote.

Senate Finance Committee Chairman Hugh Leatherman said his proposal for the small-business break made more sense. Sanford's was tied to economic growth and the break would not increase in years when the state's economy did not grow fast enough.

Leatherman, R-Florence, said he had never seen a tax cut that had a chance of being "started and stopped, started and stopped."

"I guess they'd have to depend on their accountants," said Sen. Scott Richardson, a Hilton Head Island Republican who argued for Sanford's plan.

"I don't know how you'd do that," Leatherman said. Accountants would not be much help because the tax break triggers wouldn't be set until the middle of the year - too late for businesses to plan.

Sanford's proposal has been widely criticized in some quarters because it would help only taxpayers on the top of half of the state's income ladder.

Richardson, who conceded that "the governor's plan was an awfully big bite," came back with an amendment that cut the top rate from 7 percent to 6 percent.

That would have cut state tax collections by about $500 million yearly when fully implemented in four years. With forecasts showing state tax collections growing by well above $200 million yearly, that is not "an unreasonable number for us to absorb," Richardson said. "I think it's a fair thing to consider," Richardson said.

The big question is "what appetite for a tax break do we have in this state?" he asked.

Little, said Sen. Verne Smith, R-Greer.

"Seems to me instead of us trying to have different kinds of ideas about tax breaks we need to think about getting enough money to have enough guards in the prisons and enough folks taking care of the patients in (the Department of) Mental Health and to fix our roads a little better," Smith said. "We need to figure out how to get some more funds to provide services to people instead of different ways to cut taxes."

After about two hours of debate, the bill passed on a voice vote and will get an automatic final Senate reading Thursday. It heads back to the House, where Sanford's proposal passed with a 73-39 vote on Feb. 2.

"We'll have to wait and see," House Speaker David Wilkins said.

The Greenville Republican said the House will decide next week whether to accept the Senate version, amend it or send the bill to a conference committee.

Sanford isn't giving on the wider tax cut.

"We're going to continue to push for a broader stimulus package," Sanford spokesman Will Folks said. That's particularly important given the state's status of having the nation's third-highest jobless rate, he said.