SC Senate unanimously passes income tax cut and rebate
COLUMBIA, S.C. (AP) — The South Carolina Senate unanimously passed a $2 billion income tax cut and rebate bill, setting up what will likely be intense negotiations with the House over the $1 billion tax cut it passed last month.
Thursday’s vote came just three weeks after Senate Finance Committee Chairman Harvey Peeler first proposed the cut.
The proposal would send a rebate of at least $100 to everyone who files an income tax return in South Carolina, regardless of whether they pay any taxes. Taxpayers who do owe state income tax would get that amount back in 2022 up to $700. It would cost about $1 billion.
The other $1 billion would go toward cutting the state’s top income tax rate from 7% to 5.7%, trimming the property tax paid by most manufacturers from 9% to 6% and eliminating income taxes entirely on military retirement income.
Peeler has long made his goal cutting taxes. He had the good fortune when he took over the committee in December of having a combination of a booming economy, federal stimulus money and savings in case the COVID-19 economic downturn was catastrophic. All that left a $4.5 billion windfall in the state’s bank accounts.
Peeler was soaking in the moment as every senator voted “aye” during Thursday’s roll call that he almost missed the chance to vote himself.
“I’m like a dog playing poker. When I get dealt a good hand, my tail starts wagging,” said Peeler, a Republican from Gaffney.
Senators cheered Peeler after the vote.
After one more routine approval, the bill heads to the House, which has already passed its own tax cut package which includes the military income tax exemption and reduces the top income tax rate from 7% to 6.5% next year and keeps cutting to 6% over five years. It also collapses all other tax brackets to the lowest group at 3%, costing about $600 million in the first year, and $1 billion when fully implemented.
Chances are neither chamber will agree to the other’s plan, so a small group of lawmakers will negotiate the differences, likely as they also work out the state’s $14 billion budget later in the spring.
Senate Majority Leader Shane Massey left no doubt which version he thought should prevail.
“I like he’s doing it all at one time. You’re not messing around,” the Republican from Edgefield said of Peeler’s plan. “We have the resources. Let’s just do it.”
Follow Jeffrey Collins on Twitter at https://twitter.com/JSCollinsAP.