Tax-Conformity Bill Sent To Senate

House heads off $200 million tax increase

South Carolina Radio Network
May 06, 2018 - 5:13 pm

MAY 4, 2018 BY MATT LONG (South Carolina Radio Network)

SCRN File Photo

House Majority Leader Gary Simrill, R-Rock Hill (File)

The South Carolina House has sent a tax-conformity bill to the Senate, trying to prevent South Carolinians’ taxes from rising by more than $200 million automatically.

At issue is that Congress late last year changed the federal tax code, which South Carolina’s own income taxes were based on. Since the new law eliminated several provisions — and did not extend others — that meant they would expire in South Carolina, as well. However, while Congress voted to double the standard deduction, South Carolina’s remained the same.

So simply conforming to meet the federal tax code — as South Carolina has normally done each year since 1986 — would have led to a $253 million increase in taxpayer revenue.

House leaders wanted to prevent that hit. “Our goal is to keep our citizens whole,” House Majority Leader Gary Simrill said. “And this would be no increase in the coffers of state government for the conformity.”

The House voted unanimously Thursday to create a $1,525 personal exemption for individuals on their state income taxes, which budget analysts believe would offset any potential gains by the state.

“So there would be no windfall to government to government, only for the citizens of South Carolina and the deductions they had before,” Simrill said. “They would be able to keep those.”

The measure now reaches the Senate, where procedural rules could create a tight deadline with only a week remaining in this year’s regular session. However, the House has indicated it would push for tax conformity to be included in any special session should lawmakers return to take up budget vetoes this summer.

While analysts believe the changes would no longer create a net interest in tax revenues collected, some individual filers would pay more while others would owe less. Simrill admitted those earning $150,000 or less would see a slight decrease in their taxes from conformity, while upper brackets would see an increase.

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