Governor, House Speaker Announce Plan To Lower Income Tax

COLUMBIA, S.C. -- If two state leaders have their way, your state income taxes will be more than one-third lower within the next 10 years.

Gov. Mark Sanford and House Speaker David Wilkins unveiled their plan at a press conference in Columbia Tuesday morning.

The plan would reduce the current 7 percent tax rate to 4.75 percent in a 10-year time span. The cuts would be made in small increments during fiscal years when the state's revenue increases by 2 percent or more.

"That is one of the lessons we have learned during hard financial times, to budget more responsibly during good times so lean times don't hit so hard. One thing we have learned, you don't tax your way out of a recession," Wilkins said.

About 90 House members have signed on to Sanford's plan. The overwhelming majority in the 124-member House makes it likely the proposal will pass the House.

Sanford said the change is essential to the state's economy in encouraging growth by small business as the state recovers from its worst years of job loss since the Great Depression.

The real problem we have with the state budget, more than anything else, is the fall off in the number of jobs in South Carolina. You can't lose 44,000 jobs and have good things happen to the budget," Sanford said.

Sanford said lowering the income tax will help move the state from economic dependence on big manufacturing plants which are now frequently moving abroad.

The Legislature would have to agree to put $62 million a year into paying for the reduction. No other taxes would be raised to make up the revenue. Some experts have expressed concern with the plan, saying services could be put at risk.

Democratic lawmakers unveiled their own tax plan after Sanford's press conference. The Democratic plan would cap property taxes at 15 percent during reassesment years.