South Carolina Gov. Henry McMaster and House leaders proposed income tax cuts Tuesday that would drop the state’s effective income tax rate from 3.1% to 2.34%.
Tuesday’s proposed cuts are a more aggressive form of what McMaster proposed during his recent state of the state address, and House Ways and Means Committee Chair Murrell Smith, R-Sumter, said the legislation would pass along with this year’s budget, creating a $1 billion income tax cut for South Carolina residents.
“More money in the pockets of our people to spend is a catalyst for even more economic growth in South Carolina,” House Speaker Jay Lucas, R-Darlington, said. “We are in a unique situation this year where we have the opportunity to provide tax relief to every South Carolinian while still maintaining the economic success that we have experienced in the past. Now is the time for tax relief.”
The tax cut would cut the current 4%, 5% and 6% rates for income between $3,200 and $16,040 to 3% and would lower the rate for any income above that from 7% to 6.5%. The plan is for the top rate to drop to 6% within five years.
“This is a pay rise for everyone who is working for a living,” McMaster said. “This tax cut will start an avalanche of change and prosperity unlike anything we have seen and add one more reason for South Carolina to have great success in the future.”
The South Carolina Board of Economic Advisors released its new economic forecast for this year’s state budget, which included an additional $621.5 million in recurring funds and an additional $921 million in nonrecurring funds.
Those estimates mean the new total for recurring funds for the fiscal year is $1.519 billion, and the new total for nonrecurring funds is $2.9 billion.
“It is a basic Republican principle that we keep taxes low, and I believe when there is a surplus of money flowing into our coffers, it needs to be returned to the taxpayer,” Lucas said. “We are in a unique situation this year where we have the opportunity to provide tax relief to every South Carolinian while still maintaining the economic success we have experienced in the past.”
