Election year brings flood of tax plans

COLUMBIA, S.C. - Legislators have filed more than 170 bills in this election year to change the state's tax code to reduce some levies and increase others.

Gov. Mark Sanford has made several tax cut proposals, including two last week that would give parents breaks when they send their children to private schools and that would cut income taxes.

"There are two things you can expect in an election year: long speeches and tax cut proposals," said state Sen. Darrell Jackson, D-Hopkins, who said he doesn't expect many of the proposals to even reach Sanford's desk.

This week, the House takes up two bills that limit local governments' ability to increase tax collections by reassessing real estate values. The House Ways and Means Committee is expected to approve Sanford's plan to cut the state's top income tax rate to 4.75 percent from 7 percent.

Other bills that could come up later in the session include plans to cut or eliminate levies on homes and cars by increasing the sales tax. Although they aren't getting as much attention as last year, there still are several plans to increase cigarette taxes.

Lawmakers say they have good reasons for each proposal.

"A lot of people, me included, think that reducing taxes in a bad economy may help spur recovery," Ways and Means Chairman Bobby Harrell, R-Charleston, said.

House Majority Leader Rick Quinn, R-Columbia, says the state's tax structure isn't competitive with neighboring states. "I think a lot of people are motivated to fix that problem."

House Speaker David Wilkins, R-Greenville, said lawmakers' interest could have been sparked by two years of studying the state's tax system. "I think that is a good sign that we're looking at the equity of the tax structure," Wilkins said.

New leadership in the governor's mansion is a factor, too, said Michael Fields, state director of the National Federation of Independent Business. "You've got a governor who is bringing these issues to the forefront," he said.

First up are two plans to keep local governments from increasing property taxes by increasing land value. One plan caps reassessments at 15 percent every five years and the other says higher property values are only applied after a sale or transfer. Rep. Bill Cotty, who will steer House debate on those measures, says both are likely to pass, giving the Senate a choice of which measure moves forward.

Fields said his group supports those changes, but said there's no guarantee the Senate will pass them in the same form.

Next will come Sanford's income tax reduction plan, which has Wilkins as chief sponsor and 90 of the House's 123 sitting members as co-sponsors. Sanford says the cuts will help create jobs and spur economic growth that benefits everyone.

But last week, the state's chief economist said half the state's taxpayers - those with lower incomes - would get no direct benefit from the proposed cuts. That has prompted one of the handful of Democrats who signed as a co-sponsor to reconsider. "It certainly doesn't look that good right now," Rep. Bill Clyburn, D-Aiken, said.

Other plans address property tax rates.

_ Quinn proposes eliminating business and residential property taxes by adding another two cents on the dollar to the sales tax and eliminating some sales tax exemptions. The tax increases would raise $1.5 billion, Quinn says.

_ Sen. David Thomas, R-Fountain Inn, wants to eliminate home and car taxes by raising $1 billion through an increased sales tax - also two cents on the dollar. Thomas would keep current exemptions.

_ Harrell wants to eliminate car taxes with $600 million gained by increasing the sales tax to 6 percent from 5 percent, eliminating some sales tax exemptions and cutting lottery operating costs.

In the Senate, however, leaders aren't as excited about tax cutting.

Constituents are "saying, 'How in the world are you all talking about a tax cut when you can't even fund the schools; when you can't even fund the prisons; when you can't fund your Medicaid program?' " said Minority Leader John Land, D-Manning. "It's laughable that we're even talking about tax cuts."

Majority leader and Finance Chairman Hugh Leatherman, R-Florence, says he has supported cutting taxes when the economy was good, but for three years, the economy hasn't been good.

"We've got a lot of needs in this state," Leatherman said. "We've got a lot of catching up to do."

Rep. Gilda Cobb-Hunter, D-Orangeburg, says just paying for a property tax cut passed years ago takes almost $500 million - about 10 percent - out of each year's budget. She disagrees the state needs more cuts. "We can't afford all of this stuff," she said.