South Carolina explores tax rate changes to attract industry

The House Ways and Means Committee of South Carolina convened on April 22, 2025, to discuss significant tax-related issues impacting the state's economic landscape. A primary focus of the meeting was the state's tax rates and their influence on attracting new industries to South Carolina.

Committee members highlighted concerns that the current tax structure may deter potential businesses from relocating to the state. Comparisons were made between South Carolina's tax rates and those of neighboring states, such as North Carolina and Georgia. All three states have similar income tax rates, hovering around 8.2% for South Carolina and North Carolina, with Georgia slightly higher at 8.5%. This similarity raises questions about how South Carolina can remain competitive in attracting new industries.

One proposal discussed involved the possibility of adjusting the sales tax to offset the income tax. It was noted that a modest increase in sales tax could potentially eliminate the income tax altogether. The committee explored the idea of how other states have successfully phased out income tax or adjusted their sales tax rates to achieve fiscal goals, although specific examples were not provided.

Additionally, the committee addressed the contribution of out-of-state residents to South Carolina's sales tax revenue. While exact figures were not available, it was suggested that a significant portion of sales tax is generated from non-residents, particularly in tourist-heavy areas like Charleston and Beaufort. However, the exact percentage of sales tax paid by out-of-state individuals remains uncertain.

The discussions underscored the ongoing efforts by South Carolina lawmakers to refine the state's tax policy in a way that fosters economic growth while remaining competitive with neighboring states. The committee's deliberations will likely inform future legislative proposals aimed at enhancing the state's appeal to businesses and residents alike.