Senate takes up H 4216 to switch to AGI and phase income-tax cuts tied to revenue growth
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Summary
House Bill H 4216 would decouple South Carolina from federal taxable income, move to adjusted gross income, lower top rates and include automatic, revenue-triggered additional cuts; senators raised timing, distributional and fiscal questions and asked for spreadsheets showing who gains and who may face increases.
Senate debate turned later in the day to H 4216, a House-originated income-tax package that would change the state’s tax base and stage reductions to the top marginal rate.
Sponsor explanation: Senator Turner (Greenville) described the bill as twofold: (1) change the state base from federal taxable income to adjusted gross income to remove dependence on federal code changes; and (2) reduce rates (example top-line targets to 5.39% and a long-run target of 1.99%), with an automatic trigger mechanism that uses a portion of income-tax revenue growth to fund further reductions when collections exceed preset thresholds (growth >5% would dedicate $200 million or 25% of growth, whichever is greater, to additional rate reductions).
Distributional concerns: Senators asked for and were promised a detailed spreadsheet showing impacts across income bands; the floor exchange made clear the change will be distributionally complex in the first year because conforming decisions in recent federal changes mean some taxpayers who previously owed nothing could see a small state liability. The sponsor said roughly 38% of taxpayers would see no change, about 32% would see a decrease and about 28% a modest increase under the bill as drafted, with an expected net revenue reduction of roughly $120 million in the bill’s initial form.
Fiscal and structural issues: Several senators urged caution about long-term reliance on income-tax growth to shrink rates, pointing to recession risk and examples from other states where aggressive cuts proved destabilizing. Others argued that decoupling from federal taxable income is necessary for fiscal autonomy and to move forward with broad tax reform.
Procedural status: At the close of floor discussion the Senate carried over multiple amendments for drafting and requested the fiscal office to prepare a more detailed, line-by-line impact analysis. Senators signaled interest in waiting for the finance committee’s broader tax-reform work before advancing final votes.
Representative quote: "This bill will level us out," said the sponsor, arguing the change makes South Carolina’s tax code comparable to neighboring states and reduces dependence on federal filing changes.
Ending: Lawmakers carried amendments and asked for further projections; no final enactment vote was taken during this session. The measure will return to the calendar with fiscal office materials and committee follow-up expected.
