SC House approves bills cutting income taxes


COLUMBIA, S.C. (AP) — The South Carolina House approved two bills Tuesday cutting state income taxes for residents and small business owners.

Legislators overwhelmingly approved both bills 104-3. The one that got more debate collapses the state's tax brackets from six to three, giving all residents who pay taxes a modest break. Budget advisors expect it would reduce state revenues by $78 million.

The vote on a bill reducing income taxes that small businesses pay on their profits followed quickly with little discussion.

Both bills are part of a tax-cutting package introduced last month by the House Republican Caucus. Another perfunctory vote in the House on Wednesday will send them to the Senate. A third bill in the package, eliminating some sales tax exemptions, is up for debate Wednesday. Several other bills in the package are stuck in committee, dead for the year.

House Speaker Bobby Harrell said the approved bills help create a tax code that is flatter, fairer and more competitive.

"This will allow businesses to invest more of their resources into growing their business and creating jobs for our state," said Harrell, R-Charleston.

The personal income tax measure received bipartisan approval after House Minority Leader Harry Ott put up an amendment delaying the cut until next year. He argued the House shouldn't create a $78 million hole in the budget plan it approved last month without identifying corresponding cuts.

"It's unconservative. Conservatives I would think would want to identify where that cut's coming from," said Ott, D-St. Matthews.

He also argued that passing a tax cut that puts its budget plan for 2012-13 so far out of whack also makes its chances in the Senate slim to nil. He then successfully offered the change, saying he'd gladly support something that wasn't a political sham.

"Do the right thing. Don't do the political thing that says we're going to do something we know is not going to pass," Ott said.

Rep. Bill Taylor, R-Aiken, applauded Ott's amendment, saying the change was easy to endorse. "You make sense," he said.

Speaker Harrell strongly disagreed with Ott's sham assertion. He said he supported the one-year delay, however, because it led to nearly unanimous support in the House and improved the bill's passage in the Senate.

Previous tax cuts became law after the House passed its budget. The full Senate Finance Committee is working this week on its version of the state spending plan for 2012-13. Debate on the Senate floor is expected in mid-May. Differences in the two chambers' plans will be worked out in a committee of House and Senate members.

The bill cutting the tax rate on small business profits from 5 percent to 3 percent would reduce revenue by $15 million in 2012-13 and $65 million annually when fully implemented, starting in 2015-16. Legislators say they hope that estimate is offset by small businesses creating jobs and those employees paying more taxes.