COLUMBIA, S.C. - Gov. Mark Sanford thinks lowering the state's top income tax rate from 7 percent to 4.75 percent over several years is a good way to draw wealthy retirees to South Carolina and help small business owners statewide.

The Republican governor says the move will boost the state's lagging economy and create jobs.

While people who represent small businesses say cutting taxes would be a plus, some retirees aren't sure it's a good idea and want to make sure government programs are protected.

Sanford has said lower tax rates are key to improving the bottom line for small businesses, which account for about 95 percent of the jobs in the state. Small businesses pay their taxes on personal income tax forms at the top marginal rate of 7 percent, while big businesses pay 5 percent.

"Any time you cut taxes for a small business person, you're going to help them," said John Lenti, state director for the Small Business Development Center at the University of South Carolina business school. "When the economy goes south or the rent changes, they don't have the kind of flex an incorporation has to absorb the losses."

With an income tax reduction, the money saved by small business owners would go back in the business, allowing them to expand by buying more inventory or paying more in salaries, Lenti said.

From a perspective of a retiree and former businessman, Maxey Love said the reduction would be a positive for both.

"One of the big costs of doing business is taxes," said Love, retired chief executive of AgFirst Farm Credit Bank in Columbia and current chairman of the Midlands chapter of the Service Corps of Retired Executives.

He said a lower income tax may very well attract a graying population. He noted that Florida - which has no state income tax - is a haven for retirees.

"It might help them make a decision whether to stay here or go someplace else," Love said.

Retired USC professor Roger Amidon agrees that a lower income tax is appealing to retirees on fixed incomes. Still, he has concerns about such a proposal.

"The difficulty is that all states are in a bit of a pickle, especially in regard to federal programs such as Medicaid," he said.

Amidon said he would want to see whether Sanford could ensure that Medicaid spending would be protected. "Reduced taxes have to be made up somewhere," he said.

The AARP, an advocacy group for people 50 and older, also has concerns about the proposal.

The association is opposed to income tax reductions when there's a budget deficit or programs need to be funded, said state AARP director Jane Wiley.

She maintains that South Carolina is low as far as total tax burdens.

"Most savvy retirees look at the entire tax package," Wiley said. "I'm not convinced this will be a big draw for retirees."

Critics of the plan say the state cannot afford the cut. The state would spend $6 million the first year, and when fully implemented in a decade, it would cost the state nearly $1 billion.

Supporters argue the break won't cost the state extra money because the tax would be reduced only in years when revenues increase by at least 2 percent.