Millions of Americans Would See Taxes Cut Under New Plan

South Carolinians could get a tax cut if a new budget proposal moves through under the direction of Republican Senate Finance Committee Chairman Harvey Peeler.

The state is working on a budget that would ditch a planned one-time property tax rebate worth $500 million and instead offer a statewide income tax cut.

If passed, the state would be using $100 million to bring the state income tax rate for most residents down to 6.2 percent from 6.3 percent. The tax cut proposal arrives as South Carolina is amid a five-year process to bring the top income tax rate from 7 percent to 6 percent.

Some remain against the tax cut because the money comes from an account originally set aside for the property tax rebate, which was funded by sales tax in the years following the pandemic.

Still, all debate aside, the budgetary discussion remains a "good problem to have," according to finance expert Alex Beene, financial literacy instructor at the University of Tennessee at Martin.

"South Carolina senators have debated giving a one-time property tax rebate to homeowners or a permanent tax cut, and, rightfully, many are saying the tax cut is the way to go," Beene told Newsweek. "While it doesn't provide the immediate higher return like the property tax rebate, it would be a lasting way of giving money back to residents through their yearly income tax."

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Under the newly proposed budget, the rest of the $500 million would go toward roads, bridges, and water and sewer system repairs.

"The good news is that the state is flush with cash given that pandemic spending was such to give the state an influx in sales tax revenues providing a surplus," finance expert Kevin Thompson, founder and CEO of 9i Capital Group, told Newsweek.

Peeler called the budget "balanced not only in arithmetic; it's balanced on the needs of the state of South Carolina," according to the Associated Press.

South Carolina Governor Henry McMaster previously said he would support a faster track to tax cuts if possible and brought up the issue during his 2024 State of the State address.

"If future revenues allow, I ask the General Assembly to speed up the income tax cut schedule, and let taxpayers keep even more of their own money," McMaster said at the time.

Another pro of the budget is that it could incentivize employers and employees to relocate, Beene said, as the tax cut is a mighty appeal.

"An income tax reduction would not just pay dividends to those currently living in South Carolina, but also to employers and employees looking to relocate to the state," Beene said. "In our current economy, every dollar counts, and any type of lessening of a state's income tax makes it economically a much more attractive proposition."