SC senators set to show how to pay for $2 billion tax cut plan

State Sense. Harvey Peeler, R-Gaffney, left, and Luke Rankin. R-Myrtle Beach, right, speaks during a debate on a resolution calling for a convention to propose a balanced budget and term limit amendments to the U.S. Constitution Wednesday, March 9, 2022, in Columbia, SC.Jeffrey Collins/AP

COLUMBIA, SC (AP) — The South Carolina Senate Finance Committee is gearing up to work on the state budget with a big question to answer — how will it pay for the $2 billion in cuts and income tax refunds offered?

The committee will work this week, beginning Tuesday, on the state’s nearly $14 billion spending plan for the next fiscal year. MPs are expected to include much of what was in the House spending plan, such as increases for state employees and numerous law enforcement officers and lots of money to expand highways, repair bridges and repave roads.

But the House plan included just $600 million for an income tax cut to raise the state’s top rate from 7% to 6.5% and cut all other rates. at 3%.

Senate Finance Chairman Harvey Peeler is proposing a $2 billion cut and the Senate has already unanimously agreed. Half would be used to reduce the highest income rate from 7% to 5.7%. The other $1 billion would provide rebates of up to $100 to anyone who files a tax return, whether or not they end up paying state income tax.

The extra money will have to be found somewhere to pay for the Senate plan. The South Carolina General Assembly must pass a balanced budget.

Even Democrats have been at the forefront of talk about cutting taxes, as a combination of growing populations and the booming economy, federal stimulus funds and savings in case the economic downturn in the COVID-19 would be catastrophic gave lawmakers an additional $4.5 billion to spend in the 2022-23 budget. About $3 billion is in one-time money, while the rest is in taxes and royalties that the state can expect to collect each year.

Chances are neither the House nor the Senate will accept the other chamber’s plan, so a small group of lawmakers will negotiate the differences as they also hammer out the state’s $14 billion budget. next month.

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