Governor Nikki Haley today kicked off a statewide Tax Relief Tour during a Statehouse press conference with South Carolina Association of Taxpayers President Don Weaver, Colite International President Peter Brown and Columbia Tea Party leader Allen Olson.
"My number one goal is to put South Carolinians back to work," said Gov. Haley. "In my executive budget, I proposed $140 million of tax relief to keep our economy moving and create jobs. The House has a decision to make: spend the surplus money or create a $140 million tax relief trust fund that will send it back to the people and businesses of this state."
"If we are to invest in growing jobs and payrolls in South Carolina, surely the Legislature can find $140 million in tax relief -- especially when new tax dollars of six times that amount are now flowing back into state coffers," said South Carolina Association of Taxpayers President Don Weaver.
"Government should encourage an environment for economic growth, and that's what this is all about If our legislature is going to take up any issue, it should be this," said Colite International President Peter Brown.
"This is a step in the right direction. Taxes and mismanagement are what got me involved in politics Meaningful tax reform is essential for South Carolina," said Columbia Tea Party leader Allen Olson.
Gov Haley released a plan to deliver tax relief to South Carolina families and businesses in her FY2012-13 Executive Budget:
1. Phase-out the Corporate Income Tax over a four-year period.
Although South Carolina's Corporate Income Tax generates a relatively small portion of the state's overall receipts, eliminating this tax would send a strong signal that we want to attract jobs and businesses. Under this plan, a four-year phase-out would begin on January 1, 2013 with a reduction in the Corporate Income Tax rate from the current 5% to only 3.75%. Businesses would save $61.6 million in the first year, which they could then reinvest in jobs and infrastructure.
2. Consolidate six Individual Income Tax brackets into three, while cutting rates.
Collapsing six brackets into three would leave South Carolina with a fairer and flatter tax system and would provide an estimated annual income tax cut of $84 for filers with at least $5,600 per year of taxable income. Individuals currently in the 4%, 5%, or 6% bracket would all see their marginal rates reduced to 3.75% under the proposed model. In the plan's first year, this would represent a $78.2 million tax cut. South Carolina's individual income tax brackets are indexed for inflation under S.C. Code Section 12-6-520. Under the governor's plan, the transition between the current 3% and 4% brackets would be frozen in place at $5,600 and filers in the existing 3% bracket (with taxable income between $2,800 and $5,600) would be protected by a "hold harmless" provision to keep them from being subjected to the new 3.75% rate. Over time, inflation will continue to raise the income level that serves as the ceiling of the 0% bracket until ultimately, it reaches $5,600, and the "hold harmless"
provision is no longer required. This would leave South Carolina with three brackets, set at 0%, 3.75%, and 7%.
3. Amend the Constitution to establish Property Tax rates by statute.
Property tax rates are established in Article X of the South Carolina Constitution, making it a difficult and time-consuming process to reduce rates, such as for the crushing 10.5% Manufacturer's Property Tax. This plan proposes to begin by amending the Constitution so as to allow these rates to be set in statute, making it easier to reduce them in the future.
4. Require that the Board of Economic Advisors and the Department of Revenue publish biennial reports on the number of beneficiaries of each tax credit, deduction, and exemption, along with the impact on the State Treasury.
The State's current patchwork of tax credits, deductions, and exemptions often rewards targeted individuals, businesses, or classes at the expense of all other taxpayers. Extending preferential treatment to one segment of society reduces the overall tax base, driving up rates for those who are unable to obtain special status for themselves. Regular reporting on the number of beneficiaries for each tax expenditure, along with the impact on the State Treasury, would provide key decision-makers with the information they need to regularly reassess the merits of these incentives.