S.C. tax proposals: Income tax bill would spark our economy

Last week, a bill that would lower South Carolina's state income tax passed its first hurdle when it met approval by a House budget subcommittee. And with 90 members of the S.C. House of Representatives actively supporting the 2004 Income Tax Relief Act, as well as Gov. Mark Sanford, who has long championed income tax relief, it is expected this bill will easily pass the House before the end of March and move onto the Senate.

This plan is the right answer at the right time. No doubt this will deliver the much-needed fuel our sputtering state economy needs to get fired up.

Over 10 years, our plan would reduce the state income tax rates by nearly a third, from 7 percent down to 4.75 percent.

But we'll do it the right way.

One of the lessons we've learned during the past three years of these hard economic times is to budget more responsibly in the good times so the lean times don't cut so deep.

That's why we've built a safety valve into our income tax plan. The economy must grow by at least 2 percent before the plan is triggered. That way we make sure state government gets what it needs to run effectively and efficiently but doesn't get more than it needs. That money goes back to the private sector where it grows the economy, generates jobs and improves the standard of living for all South Carolinians.

Since Republicans took over control of the S.C. House in the mid-1990s, we've been committed to tax reduction, as evidenced by the sweeping property tax rollbacks we passed in 1995. But there's a major -- and critical -- difference with income tax. The state -- not county or local governments -- actually controls the collection and the spending of income tax monies. So local governments should have little concern -- or complaint -- with the General Assembly's desire to cut this specific tax.

Reducing the income tax will make us far more competitive with other states whose rates are much lower. It will enhance our business climate overall, and most especially it will provide a very targeted break to the numerous small businesses across South Carolina that contribute so much to the quality of life here. An income tax for some of these small businesses could be the key that literally keeps them open for business.

Reducing the income tax is not the only thing we can do to improve our economy, but it is an important step in many that the S.C. House continues to take in protecting and enhancing our pro-business environment. In the first week of this legislative session, for example, the House passed two sweeping tort reform bills that greatly enhance the business climate in our state.

We will be hammering out an agreement on an economic development bill with the state Senate that, if passed, could mean the eventual creation of hundreds of jobs and millions of dollars pumped into our state economy.

Thanks to President Bush's tax cuts, the national recession he inherited is being turned into a recovery. We can do the same here in South Carolina, and the good news is we have a governor who understands the vital importance of growing the economy, because only the private sector can create the kind of wealth and opportunity that will improve our overall quality of life, impacting everything from education to health care.

The income tax plan is a worthy idea whose time has come. I hope in this important election year my colleagues in the state Senate will think likewise.

Doug Smith of Spartanburg

is speaker pro tempore of the S.C. House of Representatives.

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