Gov. Henry McMaster called on lawmakers Monday to cut income taxes by one percentage point for all income brackets.
The governor proposed cutting $140 million in income taxes next year as part of a budget plan presented to reporters for the next fiscal year. The proposal would then reduce taxes by 1.0 percentage point over five years for each income bracket, reducing the highest rate from 6 to 5 percent.
McMaster presented the cuts as necessary given the plan approved by Congress last month that eliminates a tax deduction that South Carolinians could claim by reporting their state income taxes the previous year. Previous reporting estimates the average taxpayer would lose out on roughly $1,600 in deductions. However, those who consistently claim the standard deduction on their taxes each year would not be impacted by the change.
“While we are growing, and we are growing, and have been stimulated by the loss of that deduction, this is the right time to reduce the tax burden on the people of South Carolina,” McMaster said.
The governor said the reduction, if approved, would reduce tax revenue by $2.2 billion over the next five years. That would combine with roughly $22 million that would come from another tax cut proposal he submitted last week that would eliminate income tax for military retirees and first responders.
The budget would devote $25 million more towards the base student cost for public school districts. However, that would only average out to about $10 more per student. McMaster admitted his budget would be limited in new money for traditional schools.
“A lot of this is a change of direction,” he said. “Maybe the dollars are not as much as we’d want. But the direction is a dramatic difference.”
But he did push for larger increases in charter schools, with $18.8 million in new per-pupil funding at schools. That would average out to $180 more for each student in brick-and-mortar charters and $95 more per-pupil for online programs. The charter schools impacted are in both the statewide public charter district and those that moved to a separate program last year operated out of Erskine College.
McMaster did not propose a pay raise for state employees, beyond pay raises for prison corrections officers and Department of Juvenile Justice officers.
The budget proposal included $20 million for a new forensics laboratory at the State Law Enforcement Division (SLED), $10 million for various opioid treatment programs across state agencies, nearly $12 million more towards the Department of Commerce for business recruitment, $11 million for beach renourishment projects after hurricanes and $10 million to rebuild cabins at Hunting Island State Park after Hurricane Irma.