‘Historic’ Tax Relief in South Carolina? Not Hardly…

Getting your Trinity Audio player ready...

by WILL FOLKS

***

South Carolina’s “Republican” supermajority sent a massive bait and switch on taxes to the governor’s desk this week mere moments after House members approved a budget that massively expanded the state’s bloated, unaccountable bureaucracy.

The unambiguous message sent by these two votes? GOP lawmakers care much more about the interests of the Columbia, S.C. swamp than they do the interests of individual income earners – or the increasingly fragile economy we are struggling to prop up.

Moments after blowing more than $42.6 billion of taxpayers’ money on the coming year’s budget – an increase of $3.43 billion (8.75%) from the current year’s spending plan – the “GOP-controlled” House of Representatives concurred with Senate amendments on a pittance of tax relief for an estimated 42.8% of Palmetto State taxpayers.

Meanwhile, 34.6% of taxpayers will see no change in their bill and 22.6% will actually see their obligation increase under the proposal, per a fiscal impact study (.pdf) prepared by the S.C. Revenue and Fiscal Affairs (SCRFA) office.

***

You read that right: a majority of taxpayers will see either no relief or will see an increase in their bill for the Palmetto State’s ever-expanding, results-challenged government, yet the fiscally liberal GOP leadership had the audacity to tout this as some sort of “historic” success.

“House Republicans are delivering real results — lowering taxes, supporting families, and building a more affordable South Carolina,” a statement from the caucus noted.

All told, the bill approved by these so-called “conservatives” contained only $308.7 million in tax relief – or less than three-quarters of one percent of the budget they passed. The average reduction in liability? A meager $112.

Sadly, that’s much better than the bill the House passed – which included only $119.1 million in relief with an average reduction in liability of only $44.

Lawmakers insist tax relief will extend years into the future – but that’s only if projected revenues to the state expand above a certain percentage.

“The impact of the tax rate changes in future years will depend on projected revenue growth and the changes in the tax rate that result from the projected growth,” the fiscal impact report stated. “The actual revenue reduction will depend on income growth in future years and how quickly the rate is reduced.”

In other words, only a small percentage of surplus revenue will be earmarked for relief – and only to a select few – based on government estimates of state income tax revenue growth. If these government estimates fall below five percent annually, there is no annual tax reduction for anyone. If they exceed five percent, then an estimated $200 million in annual relief would be provided to some taxpayers.

***

RELATED | ‘REPUBLICANS’ FOIST $42.6 BILLION BUDGET ON TAXPAYERS

***

But not all… or even most.

Also worth noting? Unlike a rebate based on actual tax collections – something FITSNews has consistently championed for years – this so-called cut is based entirely on what the government projects it will take in. In other words, politicians can lowball growth estimates on the front end to avoid having to return money on the back end.

So… who benefits from this plan? And who is left holding the bag?

A look at the fiscal impact report shows taxpayers earning between $150,001-$200,000 annually will bear the brunt of the burden for this pittance of relief, with 55.4% of their returns experiencing an increase in liability to the tune of $38.7 million.

A majority of taxpayers earning between $50,001-$150,000 will see relief totaling $221.5 million under the plan – or anywhere between $294 and $351 a year per the average return. However, these same income brackets will see $56.8 million in new taxes levied against them – ranging between $174 and $357 a year per the average return, per the fiscal impact analysis.

How would your bracket fare under the bill? Take a look…

***

***

Meanwhile, taxpayers will have to shell out $3 million in added bureaucracy just to administer all this reshuffling.

Who voted for this nonsense? Glad you asked… here’s the roll call vote in the S.C. House from yesterday (.pdf) and the vote in the S.C. Senate on it from last month (.pdf).

Our audience will recall the initial GOP “tax relief” bill was far worse than this bait and switch – and was only revised after legislative leaders were called out by true fiscal conservatives in the S.C. Freedom Caucus. In fact, the caucus’ leader – Jordan Pace – attempted to improve this tax shift several times prior to its passage, but each of his amendments were defeated by the governing uni-party.

Meanwhile, as evidenced by the latest budget, “Republican” lawmakers continue to fund all manner of political pork, corporate welfare subsidies and unnecessary, inefficient and duplicative bureaucracy rather than give the people real tax cuts.

A month ago, we called on S.C. senators to amend the House tax plan “in such a way that 100% of tax filers receive substantive relief from South Carolina’s oppressively high tax rates as opposed to a third of them getting a pittance back from the state.”

Like the House, they failed miserably to do so…

***

ABOUT THE AUTHOR…

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and eight children.

***

WANNA SOUND OFF?

Got something you’d like to say in response to one of our articles? Or an issue you’d like to address proactively? We have an open microphone policy! Submit your letter to the editor (or guest column) via email HERE. Got a tip for a story? CLICK HERE. Got a technical question or a glitch to report? CLICK HERE.