COLUMBIA, S.C. — Another round of better than anticipated economic news in South Carolina has the Republican governor and House leaders agreeing to work toward a bigger income tax cut than they originally proposed.
South Carolina Gov. Henry McMaster and Republican House leaders laid out their proposal Tuesday afternoon.
The plan would spend about $600 million to cut income taxes on all but about 120,000 of the 1.5 million people and couples who pay taxes. The proposal would cut the state’s highest tax bracket at 7% down to 6.5% immediately.
The 6%, 5% and 4% tax brackets would all be cut to 3%. About 1 million taxpayers don’t pay any South Carolina income tax at all.
"When you reduce the taxes on the people, what happens?" South Carolina Gov. Henry McMaster said a at news conference Tuesday afternoon touting the effort. "They keep their money, they invest their money, some save their money which allows it to be lent out to others who need money. More money is circulating, the velocity of money speeds up, and the economy goes up."
The governor's office says the Board of Economic Advisors new economic forecasts for this year's state budget include an additional $621.5 million in recurring funds and an additional $921 million in nonrecurring funds.
That kind of growth won't last forever — it is coming in sales taxes and corporates taxes boosted by federal stimulus and COVID-19 relief money, said state Revenue and Fiscal Affairs Office Executive Director Frank Rainwater.
But there is no question the state is also growing outside of the federal money with higher wages boosting income taxes, Rainwater said at an agency meeting Tuesday.