COLUMBIA, S.C. (AP) - The House on Wednesday approved a proposal pushed by Gov. Mark Sanford that would lower the state's income tax.
The bill, which passed on second reading by a 86-24 vote, would lower the income tax from 7 percent to 4.75 percent over the next decade.
The measure calls for the state to cut the state's top income tax rate by .225 percent in each of the next 10 years. The first year's reduction is automatic. Future decreases would depend on the Board of Economic Advisors forecasting growth in the state's economy by 2 percent or more in each of the ensuing years.
That 2 percent growth rate generates about $100 million. In the first full year, the tax break amounts to $50 million. By the 10th year, the state will have $959 million less to spend than if the reduction hadn't taken place.
Opponents have expressed concern that the BEA hasn't been accurate with its forecasts in recent years.
"This is election year politics at the expense of good government," said House Minority Leader James Smith, D-Columbia. "Economists ... will tell you this is the wrong idea at the wrong time."
Smith said he's concerned the reduction in revenue will negatively impact spending on core government functions like education, health care and public safety.
But supporters say the reduction will help create jobs and raise the standard of living.
"We know you don't raise the standard of living by raising taxes," said House Speaker David Wilkins, R-Greenville. "Instead you cut taxes, get government out of the way and let the private sector do what it does best - grow the economy and create jobs and opportunity. This income tax reduction plan is the first big step in doing just that."
Sanford praised lawmaker's actions.
"We've taken a huge step forward in helping realize our shared goal of creating jobs, attracting capital investment and raising income levels here in South Carolina," Sanford said. "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 our state's economy."
The bill faces a routine third reading on Thursday before heading to the Senate for debate.
The House on Wednesday also overwhelmingly approved two bills that would reduce or eliminate property tax reassessments.
The first bill eliminates property tax reassessments that critics say keep homeowners from ever truly owning their houses. Under that measure, the assessed values of homes could only increase when a house is sold. That bill passed with a 99-11 vote.
The House also approved a similar bill on 104-5 vote. The second bill caps the increase in assessed values to 15 percent during a five year period.
With both bills passing, the Senate will have to decide which is the best course for taxes, said Rep. Vida Miller, D-Pawleys Island and the author of the second bill.
But the Legislature had to act on the issue, said House Ways and Means Committee Chairman Bobby Harrell, R-Charleston.
"If we don't make a change in how we do reassessment, people are going to get taxed out of their homes," he said.
