Cutting Income Tax Brackets by 1%
H.4152 would cut all South Carolina income tax brackets by 1% over four years. The first 0.25% cut to each bracket would begin in 2015 and would continue for three more years until the full 1% cut had been achieved. The final effect of these cuts (if carried through) would be a lowering of the top tax bracket from 7% to 6% along with a lowering of all the brackets for lesser amounts of income.
While tax reformers would no doubt like to see a more significant cut, a 1% reduction in all tax brackets would allow hundreds of millions of dollars to be retained annually in the private sector. This retained income could be used on consumption or savings/investment thereby fueling economic growth.
This legislation also helps to demonstrate the difference between tax swaps and tax cuts, as it provides the exact same level of income tax relief as a compromise road plan suggested by Senate Republicans, but it does not couple these cuts with a gas tax hike, or hikes to any other taxes or fees.
The only problem with this bill is that in phases in its tax cut over time. Phased tax cuts will always be vulnerable to the possibility of legislative backsliding as the current legislature cannot bind the will of a future legislature. In other words, there is no guarantee phased in tax cuts will actually come to pass.