Comprehensive Tax Reform Legislation Filed

The House Republican Caucus wants to change how everybody in South Carolina pays taxes. Rep. Tommy Stringer and the Caucus Tax Reform Study Committee filed a package of seven bills Monday after eight months of study.

“This is tax reform that gets to the heart of the Republican Platform: ‘support a tax policy designed to help the economy grow, not stunt the taxpayer,’” said Rep. Tommy Stringer, R-Greer, the chairman of the study committee. “Lower taxes and a more efficient government are THE core tenants of our beliefs and years of tinkering around the edges have created a state tax code that is dense, unwieldy, and unfair to many taxpayers. We aim to take a major first step toward reform with this legislation.”

The package consists of seven major reforms:
1) Cut the business property tax rate from 10.5% to 6%. The 10.5% rate is a problem for recruiting major manufacturers. It also hurts small businesses with expensive equipment – such as small manufacturers, construction companies, and companies with large technology investments.
2) Eliminate two-thirds of the special interest sales tax exemptions while preserving the ones that benefit families (gasoline, food, electricity, water, medicine). This is achieved with a corresponding sales tax rate decrease to offset the increased revenue collections.
3) Slash small business “active income.” Our small businesses need help. We will slash the business income entrepreneurs report on their personal tax forms from 5% to 3% so they can invest in, and grow, their businesses. This should lower the tax paid on these returns by about $1,000.
4) Flatten the income tax. We collapse our six tax brackets (0, 3, 4, 5, 6, and 7 percent) to three (0, 3, 7), which makes the tax code more coherent while giving 4 out of 5 South Carolinians a tax cut or no change in their liability.
5) Review all sales tax exemptions every 5 years. Nearly all of the sales tax exemptions given by the General Assembly had a viable and defendable purpose at one time. We call for this review by re-creating the Joint Tax Review Committee that operated in the House and Senate many years ago.
6) Drop the property tax from 6% to 5% on commercial and rental property.
7) Eliminate the corporate income tax. This is achieved by cutting the rate by 1.25% per year over four years.

“This package is not ‘revenue neutral,’ and if everything except the commercial property cut is included, this is a $220 million tax cut,” said committee member Rep. Bill Taylor, R-Aiken. “This package is ‘revenue negative’, which appropriately reflects both our insistence that the tax code is unfair and the core Republican principle that we are overtaxed.”

Rep Dan Hamilton, R-Greenville, said: “This is the first step in a long process. We need conservative activists, the Tea Party, and anybody who believes in the Republican Platform to help us. The legislative process is messy and sometimes maddening, but if we conservatives across the state come together, we can live up to the call of the Republican Platform to create “a Tax Policy which promotes prosperity.’”