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Article published Mar 27, 2005
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Senate's tax cut plan isn't the broad stroke the governor asked for, but it's a
beneficial move u
The South Carolina Senate isn't willing to
go along with the broad income tax reduction Gov. Mark Sanford had asked for,
but it is agreeing on a smaller step that would boost the state's
economy.Senators indicated that they were uneasy about the massive revenue
reduction the state would face in approving Sanford's plan.The governor wanted
to gradually reduce the state income tax for individuals and businesses from a
maximum of 7 percent to 4.8 percent. Those with a taxable income of more than
$12,650 would have gotten their taxes cut. But the plan was expected to cost the
state $1 billion over 10 years.The state House approved the governor's plan, but
senators couldn't bring themselves to go that far, despite the governor's
assurance that the reduction would result in economic growth that would cover
the lost revenue.So they are taking a smaller step. A Senate Finance
subcommittee approved a bill sponsored by the full committee's chairman, Hugh
Leatherman, R-Florence. That plan is to cut taxes for small businesses from 7
percent to 5 percent over four years. That would give small businesses the same
tax break that larger corporations enjoy. It is expected to reduce state
revenues by $128 million.Small businesses create jobs. Lowering their taxes
would make them more profitable, enhancing their chances for success and
providing stable employment.This plan probably wouldn't generate the economic
growth in the state that Sanford's plan would have, but it would certainly
create a better climate for small businesses and give the state an economic
boost.Although his plan seems to be dead in the Senate, Sanford can and should
claim the success of Leatherman's bill as his own success. He is the one who got
lawmakers thinking about an income tax reduction. The Senate wouldn't give him
all he wanted, but he has spurred them to make a significant reduction in the
income tax.The bill should be approved by the full Senate. The problem will come
in reconciling the Senate's action with the House's. It is clear that senators
won't go along with the broader bill passed by the House. House members should
approve the Senate bill. A smaller tax cut is better than none.