Deciding that some tax relief was better than none, the state House on Tuesday passed a Senate proposal that will lower income taxes for South Carolina's small businesses.

Gov. Mark Sanford, whose more ambitious plan to cut income taxes for all South Carolinians ran into considerable opposition in the Senate, had urged lawmakers to embrace the alternative small-business bill and was expected to sign it into law.

"It was not worth the risk of trying to get more and end up with less," said House Speaker David Wilkins. "We decided to take the bird-in-the-hand with the Senate's version."

The bill will lower the income tax rate paid by small businesses from 7 percent to 5 percent over the next four years, a move that will cost the state $129 million a year.

That's a far cry from a bill pushed by Sanford. That legislation, passed the House in February, would have reduced the state's top personal income tax rate from 7 percent to 4.8 percent over 10 years. Its price tag neared $1 billion.

Sanford had repeatedly said he would fight for the deeper cuts. But he met with Wilkins last week and asked the speaker to urge legislators to go with the Senate bill.

"Small businesses in South Carolina are going to be a lot more competitive once this bill takes effect," Sanford said in a statement. "That's clearly a huge win in a state where 95 percent of our companies are small businesses and where small business is clearly the lead economic driver and the backbone of job creation."Small business groups were thrilled with the proposal, which they said will put them on an equal footing with big corporations, at least in terms of their tax obligations.

Big businesses typically are classified as C-corporations, which are taxed at 5 percent. But small businesses usually are classified as S-corporations, limited liability corporations, partnerships or sole proprietorships, which are taxed at 7 percent.

The bill passed Tuesday reduced the rate for those companies to 5 percent.

"We finally have a level playing field," said Frank Knapp, president of the South Carolina Small Business Chamber of Commerce. "Small businesses can keep more of their profits, invest them back into business and help them grow."

Michael Fields, director of the South Carolina chapter of the National Federation of Independent Business, said the legislation will give small businesses an incentive to create more jobs.

Fields called the bill a "great first step" toward Sanford's goal of reducing the state's top income tax rate.

The governor has made income tax reductions a centerpiece of his administration.

Sanford believes that reducing the tax rate will stimulate the economy and create jobs in a state with the nation's third-highest unemployment level. He argues that growth will more than offset the loss in tax revenue.

The House passed Sanford's proposed cuts in each of the past two sessions, but Sanford struggled to get the Senate on board. Economists worried the governor's proposals would lead to revenue shortfalls. Also, two bond rating agencies said the proposal could hurt the state's credit rating.

Last month, a Senate subcommittee replaced the House version with language from a bill authored by State Sen. Hugh Leatherman, R-Florence, that focused purely on small businesses. That bill passed the Senate earlier this month.

House leaders last week appeared ready to send Sanford's legislation to a conference committee to work out differences with the Senate. The risk of getting hung up in committee, however, prompted Tuesday's action.

Bill Moore, a political science professor at the College of Charleston, said Sanford had little choice but to support the scaled-back bill.

"It was obvious his plan was not going to go through," Moore said. "It didn't have support in the Senate. What he is getting is tax relief for small businesses. Frankly, that's as much as he's going to get on this issue at this time."

With the legislation now moving on to the governor, Wilkins said the House will focus on property tax relief through a handful of proposals now in committee before the May 1 deadline for bills to cross between the House and Senate.

But he said the full income tax proposal is "not dead forever." And Sanford vowed to keep fighting for the full version.

"Getting that done will continue to be a top priority of this administration," he said