Tom Davis, Sanford's co-chief of staff, spoke for more than an hour, outlining the governor's reasons for pushing the plan and answering questions.

Sanford's plan, which passed the House last month, would reduce the state's highest income tax bracket by .225 percentage points annually for the next 10 years, dropping the rate from the current 7 percent to 4.75 percent. It would also lower the small business tax rate from the current 7 percent to 4.75 percent, bringing them in line with taxes paid by major corporations.

The tax cut would not occur unless the state's general fund grows by 2 percent or more, based on projections by the state Board of Economic Advisors. If approved, the plan would take effect July 1, 2005, and would occur regardless of growth projections that year.

On Wednesday, Holley Ulbrich, a Clemson University economist, appeared before the committee to give her opinion of the four tax plans. She commended the governor's plan for tying the reduction to growth, but said 2 percent was too low, especially during the state's current economic crises.

Ulbrich called the plan regressive and said that the money taxpayers save would not likely end up back in South Carolina.

"You would more than likely stimulate investments and savings," she said.

The governor's plan, along with three property tax plans, was sent to subcommittee for further review.

Click here to return to story:
http://www.charleston.net/stories/040704/sta_07tax.shtml