Tax Reform Details

The House Republican Tax Reform package includes:

1) Eliminate special interest sales tax exemptions while preserving the ones that benefit SC families (We need to keep exemptions on gasoline, food, electricity, water, and medicine). This would eliminate about 2/3 of all exemptions and will be offset with a corresponding cut to reduce and flatten the overall sales tax rate.

2) Slash small business “active income” taxes. 95% of all businesses in SC are small businesses. Our bill would slash income taxes for small business owners from 5% to 3% so they can invest in, and grow their businesses. This would lower the average taxes paid by these employers by about $1,000.

3) Flatten the personal income tax. We collapse the current six tax brackets (0, 3, 4, 5, 6, & 7 percent) to three (0, 3, & 7 percent), making the tax code flatter, fairer and more coherent while also giving 4 out of 5 South Carolinians filing returns a tax cut.

4) Review all remaining sales tax exemptions every 5 years. The sales tax exemptions enacted by past General Assemblies probably all had viable and defendable purposes – at one time. In our review of all the current exemptions, we found most had outlived their enacted purpose. A Joint Tax Review Committee, operated by the House and Senate, will regularly review all remaining exemptions to see if goals are still being met.

5) Drop the property tax on commercial and rental property from 6% to 5%.

6) Cut the business property tax rate from 10.5% to 6%. The high 10.5% rate makes it more difficult to recruit new businesses and harder for existing businesses to stay competitive. It also hurts small businesses with expensive equipment – such as small manufacturers, construction companies, and companies with large technology investments.

7) Totally eliminate the corporate income tax. This would be achieved by cutting the rate 1.25% per year over four years and will free up capital to reinvest in our state.

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