Sanford tax cut plan wins House OK

COLUMBIA -- Gov. Mark Sanford's plan to slash the state's income tax won approval in the state House Wednesday afternoon.

The proposal would cut the state's top income tax rate from 7 percent to 4.75 percent over 10 years. The tax would be reduced by .225 percent each year that the Board of Economic Advisors projects growth of at least 2 percent in tax collections.

The plan would take effect on July 1, 2005, and the reduction would be guaranteed the first year.

The House voted 86-24 in favor of the bill on second reading. It is expected to receive final approval today.

"The comforting part is that, for the first time since I've been here, we're now actually addressing a tax that we (the state) collect and spend," said House Speaker Pro Tem Doug Smith. "We've got to reduce the income tax to be competitive with other states."

Smith said the overwhelming support sends a clear message that the House and Sanford are "working hand-in-hand to create economic opportunities for all South Carolinians."

The cut would cost the state about $50 million the first year, and an estimated $959 million in the 10th year. But the 2-percent growth threshold would mean the state would take in an extra $100 million each year to offset the cost, Sanford said when he introduced the plan.

Sanford has lobbied for reducing the income tax since taking office, saying it would spur capital investment and create jobs.

House Minority Leader James Smith, D-Columbia, called the plan "election year fodder."

"We're ignoring the responsibility we have to address the issues facing the state when it comes to funding education, health care and law enforcement," Smith said. "You can't take $900 million in revenue out and not impact funding. It's just not possible."

Sanford called the House vote a "huge step forward in helping realize our shared goal of creating jobs, attracting capital investment and raising income levels here in South Carolina."

"This income tax relief plan is absolutely essential to our efforts to build a stronger business climate here in our state, one that will grow and expand the small businesses that form the backbone of the state's economy," he said.

Robert W. Dalton can be reached at 562-7274 or

bob.dalton@shj.com.

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