COLUMBIA--The House of Representatives is poised this week to pass a bill reducing state income taxes, a move that ultimately would cost state government nearly $1 billion a year.

The bill, one of Gov. Mark Sanford's key agenda items, is expected to face a tough fight in the Senate.

The proposal generally matches the governor's plan that breezed through the House last year but died in the Senate.

The stakes are high. Sanford says income tax relief is central to jump-starting the state's economy.

His supporters say tax cuts will stimulate spending and economic growth. They also would make the state more attractive to businesses and people looking to move here, they say.

Opponents contend the bill, which would gradually reduce the state's top personal income tax rate, will benefit the wealthy and do nothing for those who need help the most. Many opponents would prefer cutting property taxes.The bill breezed through committee last week with little debate and likely will land on the House floor on Wednesday. There, it's expected that Democrats will put up a feisty but futile fight.

Republicans hold a 74-50 majority in the House, and lawmakers say it will take only a day or two to pass the bill.

The showdown will be in the Senate, where Republicans hold a 26-20 advantage. Many senators don't expect voting to adhere to party lines, and they say it's uncertain which way a vote would go.

THE PROPOSAL

The bill aims to whittle the state's top tax bracket from 7 percent to 4.75 percent over 10 years. The cuts would come only in years in which revenue is forecast to increase by at least 2 percent.

State economists estimate the cut would reduce tax collections by $6 million the first year. In 10 years, it would cost the state $959 million a year.

Rather than a cost, Rep. Bobby Harrell, R-Charleston, sees the cut as an investment. Harrell, chairman of the House Ways and Means Committee, and other supporters say lower taxes will stimulate more than enough economic growth to offset the revenue loss.

"It's definitely the right thing to do if we are going to grow the economy," said Harrell, who expects the bill to win quick passage in the House. "I do hear from folks who also want us to address other taxes, too, but cutting income taxes is what you need to do now. It makes us more competitive with other states and will help the folks that live in this state."

Rep. James Smith, D-Richland, says the income tax focus is a "big ruse." He plans to offer a series of amendments, one of which would shift the focus to property tax relief.

"It's a fallacy that this is somehow going to give us a shot in the arm," said Smith, former minority leader in the House. "Every economist I have talked to or read about in the paper says this sort of stimulus simply doesn't work ... this is all about politics and is something that could conceivably bankrupt the state."

Smith says since education funds have been slashed because of tight budgets, local governments have had to raise property taxes to pay for schools, hammering homeowners.

WHO'S RIGHT?

Those for and against the bill have reams of data to support their claims. Depending on whom you believe, the cuts would either kindle an economic boom or cause a massive deficit.

Sanford's plan is based on his acceptance of the "supply-side" economic tenet: Lower taxes spur growth. He relies on studies by anti-tax, libertarian-leaning groups such as the American Legislative Council.

The Washington, D.C.-based group says states that cut income taxes during the 1990s prospered, while those that didn't fell behind.

Opponents say that logic confuses the proverbial chicken with the egg. Those states didn't prosper because of the tax cuts. Rather, they were already thriving and could afford the cuts, not the other way around.

One independent study by David Brunori, author of the book "State Tax Policy," says the 15 or so states that lowered income taxes in the 1990s now face revenue shortfalls and budget crises.

The American Legislative Council maintains that states with low or no income taxes, such as Florida, lured small businesses from neighboring states. A rallying cry for the governor and his supporters is that such cuts would encourage small business, the bulwark of the state and national economies.

Unlike big corporations that pay a 5 percent tax, small businesses typically pay the top personal rate of 7 percent.

Opponents say 7 percent is the rate in name only. The "effective" tax rate, determined after stripping out credits, deductions and exemptions, is a lot lower, they say.

While opponents agree that small businesses are vital, they say a bill aimed at helping them shouldn't include individuals.

Groups such as the left-leaning South Carolina Fair Share, for instance, contend only the wealthy will benefit from the bill. Statistics provided by the group show that 81 percent of taxpayers, collectively, would receive just 18 percent of the cut.

The lost tax dollars would have to be replaced, they say, perhaps with a higher sales tax.

THE SENATE STAGE

Sen. Glenn McConnell, R-Charleston, accepts the governor's logic.

"The historical data the governor has provided so far seems to indicate that this is one tax adjustment that can have a major impact on the people," said McConnell, president pro tem of the Senate.

McConnell is eager to ease property taxes but says he'll support the bill because it's "good for the economy of the state and ultimately for jobs."

That said, he isn't sure the bill will get through the Senate.

"If we can get it to a vote, my guess is that the governor will win," McConnell said. "The big question is, 'Can we get it to a vote?' even with the new rules."

At the start of the session, the Senate enacted new rules that make it more difficult for one member to hold up legislation. Many say the tax bill failed last year because clever use of the old rules created such a logjam in the Senate.

Sen. Brad Hutto, D-Orangeburg, says he knows fending off the bill will be a "tough challenge," but he reckons his side has the votes to do it.

"People who talk to me about tax reform never mention income tax. Some talk about sales taxes, others about property (taxes). But never about income tax," Hutto said.

"Even though these cuts are based on the economy growing in the future, the whole thing still doesn't make sense," he said. "If we earmark all of our state growth for tax relief, then how are be going to expand our services as our state expands? How will we be able to afford more schools and more teachers," he asked.

Sen. Clementa Pinckney, D-Jasper, put it more viscerally: "Anything that benefits the rich at the expense of the poor, plain and simple, makes no fiscal sense."