Shaking off opponents, Sanford-backed bill moves on to expected Senate struggle

A plan to cut South Carolina’s top income tax to 4.75 percent passed the full House Wednesday.

Its passage, by a vote of 73 to 39, gets Gov. Mark Sanford one step closer to his top legislative goal. But the plan faces an uncertain future in the Senate.

House opponents to the billlaunched an unsuccessful, daylong attempt to kill it Wednesday by offering up more than 20 amendments, many trying to link a property tax cut to the income tax plan.

In a rare move, House Speaker David Wilkins, R-Greenville, took to the floor and accused Democrats of being “Johnny-come-latelies” to the property tax issue and urged passage of a bill focused solely on income taxes.

The tax cut passed Wednesday would lower the state’s top rate to 4.75 percent from 7 percent over a decade. The cut would only come in years where overall tax revenue to the state increased by at least 2 percent. The cut also would not take effect if the state could not fund education and law enforcement at their current levels.

The state’s Board of Economic Advisors says the tax cut will take an estimated $959 million out of the state’s budget by the time it is fully implemented in 2015.

Supporters, including Sanford, say the cut will help small businesses who are taxed as individuals, a rate higher than corporations, and attract retirees to South Carolina.

“This is positively the most important thing we can do to improve our state’s underlying business climate and stimulate growth in our state’s economy,” said Sanford spokesman Will Folks.

Opponents say the tax cut is too costly and goes to the wrong people.

“This really doesn’t benefit the people who need it the most,” said John Ruoff, research director for the advocacy group S.C. Fair Share.

Under the plan, anyone with a taxable income of $12,650 will see some savings.

A couple with two children and who earn $100,000 in taxable income would save $1,507. The same couple earning $35,000 would save $52.

Democrats said Wednesday the income tax cut is misguided. They said more people are worried about spiraling property taxes, with some homeowners seeing double-digit increases after reassessments.

“People back home are demanding property relief,” said state Rep. Harry Ott, D-Calhoun, the Democratic minority leader.

Republican leaders in the House say they will introduce legislation in coming weeks that would limit property tax increases.

“We will debate property tax sometime in this session,” said House Ways and Means chairman Bobby Harrell, R-Charleston. “We weren’t able to do it last year, but this year’s a different story. The dynamic has changed.”

The income tax bill could get a much rockier reception in the Senate, which did not pass a similar bill last year.

Senate Finance Chairman Hugh Leatherman, R-Florence, has not publicly endorsed the cut. “One of my committees will be looking at it and I don’t want to prejudge their work.”

Sen. John Land, D-Calhoun, said he expects a big fight. “There’s a good chance it’ll pass over here, but it’s wrong for South Carolina.”