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H. 4894 found 5 times.    Next
H 4894
Session 119 (2011-2012) 

H 4894Next General Bill, By White, Bedingfield, McCoy, Loftis, Bingham, Herbkersman, 
Parker, Bowen, Erickson, Taylor, G.M. Smith, Forrester, Frye, G.R. Smith, 
Merrill, Stringer, Lowe, Nanney, Tribble, Crawford, Ryan, Corbin, Southard, 
J.R. Smith, Allison, Barfield, Chumley, Clemmons, Cole, Crosby, Delleney, Edge, 
Hamilton, Hardwick, Harrell, Harrison, Hearn, Henderson, Hixon, Limehouse, Long, 
Lucas, D.C. Moss, Murphy, Norman, Owens, Pinson, Pitts, Putnam, Quinn, Simrill, 
Skelton, Sottile, Spires, Tallon, Thayer, Toole, Viers, Young, Atwater, Huggins and 
Patrick

Similar(S 1325, H 4547, H 4576) A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-6-1145 SO AS TO AUTHORIZE A DEDUCTION FROM STATE OF SOUTH CAROLINA TAXABLE INCOME UP TO SPECIFIED AMOUNTS FOR TUITION PAID BY A PARENT OR LEGAL GUARDIAN FOR THEIR CHILD OR WARD TO ATTEND AN INDEPENDENT SCHOOL OR A PUBLIC SCHOOL OUTSIDE THE CHILD'S OR WARD'S SCHOOL DISTRICT OF RESIDENCE, AND TO ALSO AUTHORIZE A SIMILAR INCOME TAX DEDUCTION UP TO A SPECIFIED AMOUNT TO A PARENT OR LEGAL GUARDIAN FOR HOME SCHOOL EXPENDITURES; AND BY ADDING SECTION 12-6-1146 SO AS TO AUTHORIZE A CREDIT AGAINST A TAXPAYER'S SOUTH CAROLINA INCOME TAX LIABILITY OR CERTAIN OTHER TAX LIABILITY FOR CONTRIBUTIONS MADE TO NONPROFIT SCHOLARSHIP FUNDING ORGANIZATIONS THAT PROVIDE GRANTS FOR CHILDREN WHO ARE ELIGIBLE FOR THE FEDERAL FREE OR REDUCED SCHOOL LUNCH PROGRAM, WHO ARE "EXCEPTIONAL NEEDS" CHILDREN, OR WHOSE FAMILIES MEET THE REQUIREMENTS FOR FEDERAL MEDICAID BENEFITS TO ATTEND INDEPENDENT SCHOOLS OF THEIR CHOICE, AND TO PROVIDE THE PROCEDURES FOR, AND CONDITIONS AND LIMITATIONS OF THESE TAX CREDITS. 02/23/12 House Introduced and read first time (House Journal-page 52) 02/23/12 House Referred to Committee on Ways and Means (House Journal-page 52) 02/28/12 House Member(s) request name added as sponsor: Atwater, Huggins 02/29/12 House Member(s) request name added as sponsor: Patrick 03/08/12 House Committee report: Favorable with amendment Ways and Means (House Journal-page 3) 03/09/12 Scrivener's error corrected 03/20/12 House Requests for debate-Rep(s). Bedingfield, Atwater, McLeod, J.H. Neal, Ott, Patrick, Brantley, Allison, Johnson, Sabb, King, Jefferson, Dillard, Alexander, G.R. Smith, Sandifer, Hamilton, Hardwick, Pope, J.R. Smith, Agnew, Anthony, Branham, Anderson, Munnerlyn, Pinson, Parks, McEachern, Buttler Garrick, Funderburk, Williams, G.R. Brown, Neilson, Clyburn, Bales, J.E. Smith, H.B. Brown, R.L. Brown (House Journal-page 68) 03/20/12 House Objection by Rep. Weeks, Sellers, and Cobb-Hunter (House Journal-page 68) 03/21/12 House Debate adjourned until Thur., 03-22-12 (House Journal-page 86) 03/27/12 Scrivener's error corrected 03/28/12 House Amended (House Journal-page 80) 03/28/12 House Read second time (House Journal-page 80) 03/28/12 House Roll call Yeas-65 Nays-49 (House Journal-page 81) 03/29/12 House Read third time and sent to Senate (House Journal-page 55) 03/29/12 House Roll call Yeas-62 Nays-38 (House Journal-page 56) 03/29/12 Scrivener's error corrected 04/03/12 Senate Introduced and read first time (Senate Journal-page 5) 04/03/12 Senate Referred to Committee on Finance (Senate Journal-page 5) 05/30/12 Senate Committee report: Majority favorable with amend., minority unfavorable Finance (Senate Journal-page 17)




PreviousH. 4894Next

COMMITTEE REPORT

May 30, 2012

PreviousH. 4894Next

Introduced by Reps. White, Bedingfield, McCoy, Loftis, Bingham, Herbkersman, Parker, Bowen, Erickson, Taylor, G.M. Smith, Forrester, Frye, G.R. Smith, Merrill, Stringer, Lowe, Nanney, Tribble, Crawford, Ryan, Corbin, Southard, J.R. Smith, Allison, Barfield, Chumley, Clemmons, Cole, Crosby, Delleney, Edge, Hamilton, Hardwick, Harrell, Harrison, Hearn, Henderson, Hixon, Limehouse, Long, Lucas, D.C. Moss, Murphy, Norman, Owens, Pinson, Pitts, Putnam, Quinn, Simrill, Skelton, Sottile, Spires, Tallon, Thayer, Toole, Viers, Young, Atwater, Huggins and Patrick

S. Printed 5/30/12--S.

Read the first time April 3, 2012.

            

THE COMMITTEE ON FINANCE

To whom was referred a Bill (PreviousH. 4894Next) to amend the Code of Laws of South Carolina, 1976, by adding Section 12-6-1145 so as to authorize a deduction from State of South Carolina Taxable Income, etc., respectfully

REPORT:

That they have duly and carefully considered the same and recommend that the same do pass with amendment:

Amend the bill, as and if amended, page 9, by deleting SECTION 4.

Renumber sections to conform.

Amend title to conform.

Majority favorable.    Minority unfavorable.

HARVEY S. PEELER, JR.    JOHN W. MATTHEWS, JR.

For Majority.    CLEMENTA C. PINCKNEY

RALPH ANDERSON

For Minority.

            

STATEMENT OF ESTIMATED FISCAL IMPACT

REVENUE IMPACT 1/

This bill will reduce general fund income taxes, insurance premium taxes, and bank license fees by $36,723,225 in FY 2012-13.

Explanation of House of Representatives Amendments on 3/28/2012

The Ways and Means Committee amendment and other amendments adopted by the House of Representatives allow (1) that student test scores on national achievement or state standardized tests, or both, be transmitted to the Education Oversight Committee for publication on their website; (2) public schools may offer national achievement or state standardized tests; (3) the General Assembly and the Education Oversight Committee to review this act by December 31, 2019; and (4) that current members of the General Assembly are not eligible for the tax deductions contained in this act. These amendments will not change the revenue impact of the bill as originally filed.

Explanation of Bill as Introduced on 2/23/2012

This bill allows a $2,000 tax deduction for expenses paid for a student to attend a home school, a $4,000 tax deduction for tuition, textbook and other fees, and school-related transportation paid for a student to attend an independent school, and a $1,000 deduction for public school students to attend a school district which is not their school district of residence. Beginning with FY 2013-14 the dollar amount of the deductions must be increased on an annual basis by an inflation factor equal to the percentage increase in the previous year of the Consumer Price Index, Southeast Region, plus the percentage increase in the previous year in the population of the State as determined by the Office of Research and Statistics of the State Budget and Control Board.

The legislation also allows a tax credit for contributions to nonprofit scholarship funding organizations of up to $15 million per year for students eligible for the federal free or reduced price lunch program or whose family qualifies for Medicaid benefits and an additional tax credit of up to $10 million per year for scholarship contributions to nonprofit organizations for exceptional needs children. Both tax credits are limited to 60% of the taxpayers' tax liability. Unused credits may be carried forward for five years. Beginning with FY 2013-14 the dollar amount of the credits must be increased on an annual basis by an inflation factor equal to the percentage increase in the previous year of the Consumer Price Index, Southeast Region, plus the percentage increase in the previous year in the population of the State as determined by the Office of Research and Statistics of the State Budget and Control Board. The two tax credits may be applied to individual and corporate income taxes, insurance premium taxes, or bank license fees.

The following tables report our detailed estimates of the revenue impact for each deduction and credit.

PreviousH. 4894 Revenue Impact Summary of Tax Deductions for Student Tuition and Expenses and Tax Credits for Contributions to Nonprofit Scholarship Granting Organizations

FY 2012-13

Type of Deduction    Number of    Total Tax    Total

Students    Deductions    Revenue

Claiming    Claimed    Reduction

Deduction

$2,000 deduction

for home school

instruction-related

expenditures    10,426     20,852,000     844,328

$4,000 deduction

for independent

school tuition    52,620     210,480,000     10,781,779

$1,000 deduction

for public school

students attending a

non-resident school

district    2,416     2,416,000     97,118

Credit for

contribution to a

nonprofit scholarship

funding organization

for students eligible

for the federal free or

reduced price lunch

program or whose

families qualify for

Medicaid benefits

and attend an

independent school            15,000,000

Credit for

contribution to a

nonprofit

scholarship funding

organization for

students with

exceptional needs            10,000,000

Totals    65,462     233,748,000     36,723,225

$2,000 Income Tax Deduction

for Home School Students by SC Taxable Income

FY 2012-13

(1)     (2)     (3)     (4)     (5)     (6)     (7)    (8)

SC Taxable    Average     Average    K - 12    Tax    Total    Average    Total

Income    IIT    Tax    Total    Deductions    Tax    Tax     Revenue

Class    Liability    Rate    Home    Claimed    Deductions    Liability    Reduction

Per         School        Claimed    Reduction

Return        Students            per

Student

No Taxable

Income        -    -    -5,121    -    -    -    -

1    1,000    11    0.22%    470    470    940,000    4    2,095

1,001        2,000    12    0.77%    378    378    756,000    15    5,823

2,001    3,000    17    0.65%    350    350    700,000    13    4,567

3,001    4,000    42    1.13%    321    321    642,000    23    7,237

4,001    5,000    74    1.56%    311    311    622,000    31    9,674

5,001    6,000    101    1.75%    293    293    586,000    35    10,229

6,001    7,000    145    2.12%    280    280    560,000    42    11,858

7,001    8,000    184    2.33%    270    270    540,000    47    12,602

8,001    9,000    221    2.46%    255    255    510,000    49    12,556

9,001    10,000    276    2.76%    243    243    486,000    55    13,409

10,001    11,000    333    3.01%    227    227    454,000    60    13,651

11,001    12,000    389    3.21%    219    219    438,000    64    14,067

12,001    13,000    446    3.38%    207    207    414,000    68    14,011

13,001    14,000    514    3.61%    194    194    388,000    72    14,016

14,001    15,000    582    3.80%    184    184    368,000    76    14,001

15,001    20,000    786    4.28%    788    788    1,576,000    86    67,405

20,001    25,000     1,138    4.81%    647    647    1,294,000    96    62,253

25,001    35,000    1,642    5.24%    1,035    1,035    2,070,000    105    108,553

35,001    50,000    2,472    5.59%    1,120    1,120    2,240,000    112    125,317

50,001    75,000    3,764    5.85%    1,244    1,244    2,488,000    117    145,597

75,001    100,000    5,523    6.10%    623    623    1,246,000    122    75,990

100,001    200,000    8,893    6.38%    562    562    1,124,000    128    71,745

200,001    500,000    20,812    6.81%    169    169    338,000    136    23,032

500,001    over     76,567    6.44%    36    36    72,000    129    4,640

Totals    1,443    5.66%    15,549    10,426    20,852,000    81    844,328

Columns 1-3: BEA staff estimates of SC taxable income, average tax liability, and average tax rate are based on DOR Tax Year 2008 data and individual income tax revenue projection for FY 2012-13.

Column 4: BEA staff estimate of the number of home school students by income levels is based on the number of exemptions claimed on individual income tax returns and U.S. Department of Education, National Center for Educational Statistics, Parent and Family Involvement in Education Survey of the National Household Education Surveys Program, 2007. BEA staff estimate of 15,549 for the total number of home school students in FY 2012-13 is based on the most recent five years of growth as reported by an Office of Research and Statistics survey.

Column 5: Tax deductions claimed are estimated for all returns with income tax liability. All students are qualified pursuant to the proposed legislation, but the family return must have taxable income to claim the deduction since the deduction is non-refundable.

Column 6: Total tax deductions claimed is the $2,000 deduction times the number of deductions claimed.

Column 7: The average tax liability reduction per student is calculated by multiplying the $2,000 deduction times the average tax rate for taxpayers at the various levels of taxable income listed.

Column 8: The total revenue reduction is calculated by multiplying the average tax liability reduction per student times the number of deductions claimed at each taxable income level listed.

$4,000 Income Tax Deduction

for Independent School Students by SC Taxable Income

FY 2012-13

(1)     (2)     (3)     (4)     (5)     (6)    (7)    (8)

SC Taxable    Average IIT    Average    K - 12    Tax    Total    Average    Total

Income    Liability    Tax    Total    Deductions    Tax    Tax    Revenue

Class    Per    Rate    Inde-    Claimed    Deductions    Liability    Reduction

Return        pendent        Claimed    Reduction

School        per

Students        Student

No

Taxable

Income    -    0.00%    299    -    -    -    -    -

1    1,000    11    0.22%    1,043    1,043    4,172,000    9    9,298

1,001    2,000    12    0.77%    840    840    3,360,000    31    25,881

2,001    3,000    17    0.65%    780     780    3,120,000    26    20,355

3,001    4,000    42    1.13%    716    716    2,864,000    45    32,285

4,001    5,000    74    1.56%    707    707    2,828,000    62    43,984

5,001    6,000    101    1.75%    666    666    2,664,000    70    46,500

6,001    7,000    145    2.12%    637    637    2,548,000    85    53,955

7,001    8,000    184    2.33%    612    612    2,448,000    93    57,128

8,001    9,000    221    2.46%    599    599    2,396,000    98    58,987

9,001    10,000    276    2.76%    563    563    2,252,000    110    62,132

10,001    11,000    333    3.01%    525    525    2,100,000    120    63,145

11,001    12,000    389    3.21%    505    505    2,020,000    128    64,874

12,001    13,000    446    3.38%    477    477    1,908,000    135    64,571

13,001    14,000    514    3.61%    436    436    1,744,000    144    63,000

14,001    15,000    582    3.80%    409    409    1,636,000    152    62,245

15,001    20,000    786    4.28%    1,740    1,740    6,960,000    171    297,676

20,001    25,000    1,138    4.81%    1,407    1,407    5,628,000    192    270,757

25,001    35,000    1,642    5.24%    2,349    2,349    9,396,000    210    492,737

35,001    50,000    2,472    5.59%    10,583    10,583    42,332,000    224    2,368,275

50,001    75,000    3,764    5.85%    11,663    11,663    46,652,000    234    2,730,058

75,001    100,000    5,523    6.10%    5,797    5,797    23,188,000    244    1,414,179

100,001    200,000    8,893    6.38%    7,014    7,014    28,056,000    255    1,790,816

200,001    500,000    20,812    6.81%    2,103    2,103    8,412,000    273    573,207

500,001    over     76,567    6.44%    449    449    1,796,000    258    115,732

Totals    1,443    5.66%    52,916    52,620    210,480,000    205    10,781,779

Columns 1-3: BEA staff estimates of SC taxable income, average tax liability, and average tax rate are based on DOR Tax Year 2008 data and individual income tax revenue projection for FY 2012-13

Column 4: BEA staff estimate of the number of independent school students by income levels is based on the number of exemptions claimed on individual income tax returns and U.S. Department of Education, National Center for Educational Statistics, Parent and Family Involvement in Education Survey of the National Household Education Surveys Program, 2007. BEA staff estimate of 52,916 for the total number of independent school students in FY 2012-13 is based on the historical growth from 1995 to 2011 as reported by an Office of Research and Statistics survey of SC private schools.

Column 5: Tax deductions claimed are estimated for all returns with income tax liability. All students are qualified pursuant to the proposed legislation, but the family return must have taxable income to claim the deduction since the deduction is non-refundable

Column 6: Total tax deductions claimed is the $4,000 deduction times the number of deductions claimed.

Column 7: The average tax liability reduction is calculated by multiplying the $4,000 deduction times the average tax rate for taxpayers at the various levels of taxable income listed.

Column 8: The total revenue reduction is calculated by multiplying the average tax liability reduction per student times the number of deductions claimed at each taxable income level listed.

$1,000 Income Tax Deduction

for Public School Students Attending a Non-Resident School District by SC Taxable Income

FY 2012-13

(1)     (2)     (3)     (4)     (5)     (6)     (7)     (8)

SC Taxable    Average IIT    Average    K - 12    Number    Total    Average    Total

Income    Liability    Tax    Total    of Tax    Tax    Tax    Revenue

Class    Per    Rate    Public    Deductions    DeductionsLiability    Reduction

Return        School    Claimed    Claimed    Reduction

Students            per

Student

No

Taxable

Income    -         -     1,338    -    -    -    -

1    1,000     11    0.22%    111    111    111,000    2    247

1,001    2,000     12    0.77%    89    89    89,000    8    686

2,001    3,000     17    0.65%    83    83    83,000    7    542

3,001    4,000     42    1.13%    76    76    76,000    11    857

4,001    5,000     74    1.56%    74    74    74,000    16    1,151

5,001    6,000     101    1.75%    70    70    70,000    17    1,222

6,001    7,000     145    2.12%    67    67    67,000    21    1,419

7,001    8,000     184    2.33%    64    64    64,000    23    1,494

8,000    9,000     221    2.46%    60    60    60,000    25    1,477

9,001    10,000     276    2.76%    57    57    57,000    28    1,573

10,001    11,000     333    3.01%    53    53    53,000    30    1,594

11,001    12,000     389    3.21%    51    51    51,000    32    1,638

12,001    13,000     446    3.38%    49    49    49,000    34    1,658

13,001    14,000     514    3.61%    45    45    45,000    36    1,626

14,001    15,000     582    3.80%    42    42    42,000    38    1,598

15,001    20,000     786    4.28%    181    181    181,000    43    7,741

20,001    25,000     1,138    4.81%    148    148    148,000    48    7,120

25,001    35,000     1,642    5.24%    236    236    236,000    52    12,376

35,001    50,000     2,472    5.59%    265    265    265,000    56    14,825

50,001    75,000     3,764    5.85%    280    280    280,000    59    16,386

75,001     100,000     5,523    6.10%    137    137    137,000    61    8,355

100,00 1    200,000     8,893    6.38%    131    131    131,000    64    8,362

200,001    500,000     20,812    6.81%    39    39    39,000    68    2,658

500,001    over    76,567    6.44%    8    8    8,000    64    516

Totals     1,443    5.66%    3,755     2,416    2,416,000    40    97,118

Columns 1-3: BEA staff estimates of SC taxable income, average tax liability, and average tax rate are based on DOR Tax Year 2008 data and individual income tax revenue projection for FY 2012-13.

Column 4: BEA staff estimate of the number of public school students attending a non-resident school district by income levels is based on the number of exemptions claimed on individual income tax returns and U.S. Department of Education, National Center for Educational Statistics, Parent and Family Involvement in Education Survey of the National Household Education Surveys Program, 2007. BEA staff estimate of 3,755 for the total number of public school students attending a non-resident school district in FY 2012-13 is based on a September 2011 survey of the school districts by the BEA and the SC Association of School Business Officials.

Column 5: Tax deductions claimed are estimated for all returns with income tax liability. All students are qualified pursuant to the proposed legislation, but the family return must have taxable income to claim the deduction since the deduction is non-refundable.

Column 6: Total tax deductions claimed is the $1,000 deduction times the number of deductions claimed.

Column 7: The average tax liability reduction per student is calculated by multiplying the $1,000 deduction times the average tax rate for taxpayers at the various levels of taxable income listed.

Column 8: The total tuition deduction is calculated by multiplying the average tax liability reduction per student times the number of deductions claimed at each taxable income level listed.

Approved By:

Frank A. Rainwater

Board of Economic Advisors

1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-6-1145 SO AS TO AUTHORIZE A DEDUCTION FROM STATE OF SOUTH CAROLINA TAXABLE INCOME UP TO SPECIFIED AMOUNTS FOR TUITION PAID BY A PARENT OR LEGAL GUARDIAN FOR THEIR CHILD OR WARD TO ATTEND AN INDEPENDENT SCHOOL OR A PUBLIC SCHOOL OUTSIDE THE CHILD'S OR WARD'S SCHOOL DISTRICT OF RESIDENCE, AND TO ALSO AUTHORIZE A SIMILAR INCOME TAX DEDUCTION UP TO A SPECIFIED AMOUNT TO A PARENT OR LEGAL GUARDIAN FOR HOME SCHOOL EXPENDITURES; AND BY ADDING SECTION 12-6-1146 SO AS TO AUTHORIZE A CREDIT AGAINST A TAXPAYER'S SOUTH CAROLINA INCOME TAX LIABILITY OR CERTAIN OTHER TAX LIABILITY FOR CONTRIBUTIONS MADE TO NONPROFIT SCHOLARSHIP FUNDING ORGANIZATIONS THAT PROVIDE GRANTS FOR CHILDREN WHO ARE ELIGIBLE FOR THE FEDERAL FREE OR REDUCED SCHOOL LUNCH PROGRAM, WHO ARE "EXCEPTIONAL NEEDS" CHILDREN, OR WHOSE FAMILIES MEET THE REQUIREMENTS FOR FEDERAL MEDICAID BENEFITS TO ATTEND INDEPENDENT SCHOOLS OF THEIR CHOICE, AND TO PROVIDE THE PROCEDURES FOR, AND CONDITIONS AND LIMITATIONS OF THESE TAX CREDITS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Article 9, Chapter 6, Title 12 of the 1976 Code is amended by adding:

"Section 12-6-1145.(A)    As used in this section:

(1)    'Independent school' means a school, other than a public school, at which the compulsory attendance requirements of Section 59-65-10 may be met and that does not discriminate based on the grounds of race, color, or national origin. For purposes of this definition, 'independent school' does not include a home school as defined in item (2).

(2)    'Home school' means a home, residence, or location where a parent or legal guardian teaches one or more children as authorized pursuant to Section 59-65-40, 59-65-45, or 59-65-47.

(3)    'Parent' means the natural or adoptive parent or legal guardian of a child.

(4)    'Qualifying student' means a student who is a South Carolina resident and who is eligible to be enrolled in a South Carolina secondary or elementary public school at the kindergarten or later year level for the current school year.

(5)    'Resident public school district' means the public school district in which a student resides.

(6)    'Tuition' means the total amount of money charged for the cost of a qualifying student to attend an independent school including, but not limited to, fees for attending the school and school-related transportation.

(B)(1)    Beginning with the 2012-2013 school year, a parent or legal guardian who teaches one or more qualifying students at home as authorized pursuant to Section 59-65-40, 59-65-45, or 59-65-47 may take a deduction against their State of South Carolina taxable income of up to two thousand dollars per home school student for instruction-related expenditures. This deduction is limited to a total of two thousand dollars per child per year regardless of the number of taxpayers incurring home school instruction-related expenses on behalf of that child. The deduction allowed by this subsection is fully deductible for the calendar year in which the home school term begins provided the qualifying student completes the school term for that school year.

(2)    Beginning with the 2012-2013 school year, a parent or legal guardian is entitled to a deduction against their State of South Carolina taxable income of up to four thousand dollars paid to an independent school within this State for tuition on behalf of their child or ward to attend the independent school for that school year. The child or ward must be a qualifying student as this term is defined in subsection (A)(4). This deduction is limited to a total of four thousand dollars per child per year regardless of the number of taxpayers making tuition payments on behalf of that child. The deduction allowed by this subsection is fully deductible for the calendar year in which the school term begins provided the qualifying student completes the school term for that school year.

(3)    Beginning with the 2012-2013 school year, a parent or legal guardian is entitled to a deduction against their State of South Carolina taxable income of up to one thousand dollars paid on behalf of their child or ward to attend a school in a school district which is not the school district of residence of the child or ward. This deduction is limited to a total of one thousand dollars per child per year regardless of the number of taxpayers making payments to another school district on behalf of that child. The deduction allowed by this subsection is fully deductible for the calendar year in which the school term begins provided the qualifying student completes the school term for that school year.

(4)    Beginning with the 2013-2014 school year, the dollar amount of the deductions provided for in items (1), (2), and (3) above must be increased on an annual basis by an inflation factor equal to the percentage increase in the previous year of the Consumer Price Index, Southeast Region, as published by the United States Department of Labor, Bureau of Labor Statistics plus the percentage increase in the previous year in the population of the State as determined by the Office of Research and Statistics of the State Budget and Control Board.

The department shall publish the increases as determined in this item each year on its website available to the general public."

SECTION    2.    Article 9, Chapter 6, Title 12, of the 1976 Code is amended by adding:

"Section 12-6-1146.    (A)    The purpose of this section is to:

(1)    provide tax credits for certain contributions to a nonprofit scholarship funding organization;

(2)    expand educational opportunities for children of families that have limited financial resources or exceptional needs; and

(3)    enable children in this State to achieve a greater level of excellence in their education.

(B)    In enacting this section, the General Assembly recognizes diversity among children and affirms that every child is unique. The General Assembly also affirms that children learn differently from one another and may benefit from expanded educational opportunities.

(C)    As used in this section:

(1)    'Eligible school' means an independent school including those religious in nature, other than a public or home school, at which the compulsory attendance requirements of Section 59-65-10 may be met, that:

(a)    offers a general education to primary or secondary school students;

(b)    does not discriminate on the basis of race, color, or national origin;

(c)    is located in this State;

(d)    has an educational curriculum that includes courses set forth in the state's diploma requirements and where the students attending are administered national achievement or state standardized tests, or both, at progressive grade levels to determine student progress;

(e)    has school facilities that are subject to applicable federal, state, and local laws; and

(f)    is a member in good standing of the Southern Association of Colleges and Schools, the South Carolina Association of Christian Schools or the South Carolina Independent Schools Association.

(2)    'Nonprofit scholarship funding organization' means a charitable organization that:

(a)    is exempt from federal tax under Section 501(a) of the Internal Revenue Code by being listed as an exempt organization in Section 501(c)(3) of the Code;

(b)    allocates, after its first year of operation, at least ninety-five percent of its annual contributions and revenue received during a particular year to provide grants for tuition, transportation, or textbook expenses (collectively hereinafter referred to as tuition) or any combination thereof to children enrolled in an eligible school meeting the criteria of this section, and incurs administrative expenses annually, after its first year of operation, of not more than five percent of its annual contributions and revenue for a particular year;

(c)    allocates all of its funds used for grants on an annual basis to children who are 'exceptional needs' students as defined herein, or who are eligible for the federal free or reduced lunch program, or whose families meet the qualifications for federal Medicaid benefits;

(d)    does not provide grants solely for the benefit of one school, and if the Department of Revenue determines that the nonprofit scholarship funding organization is providing grants to one particular school, the tax credit allowed by this section may be disallowed;

(e)    does not have as a member of its governing board any parent, legal guardian, or member of their immediate family who has a child or ward who is currently receiving or has received a scholarship grant authorized by this section from the organization within one year of the date the parent, legal guardian, or member of their immediate family became a board member; and

(f)    does not have as a member of its governing board any person who has been convicted of a felony, or who has declared bankruptcy within the last seven years.

(3)    'Person' means an individual, partnership, corporation, or other similar entity.

(4)    'Transportation' means transportation to and from school only.

(D)    The tax credits allowed by this section may be used in computing any tax imposed by this chapter or in computing insurance premium taxes or bank license fees; provided, that the tax credit may not offset more than sixty percent of the taxpayer's liability for a particular year.

(E)    A person is entitled to a tax credit under this section for the amount of money the person contributes to a nonprofit scholarship funding organization up to the limits of this section if:

(1)    the contribution is used to provide grants for tuition, transportation, or textbook expenses (tuition) or any combination thereof to children enrolled in eligible schools who qualify for these grants under the provisions of this section; and

(2)    the person does not designate a specific child or school as the beneficiary of the contribution.

(F)(1)    Grants may be awarded by the nonprofit scholarship funding organization in an amount not exceeding five thousand dollars per year or seventy-five percent of the cost of tuition, whichever is less, for children who are eligible for the federal free or reduced school lunch program or whose families meet the requirements for federal Medicaid benefits to attend an independent school. The dollar and percentage amounts of grants permitted by this item must be increased annually beginning with 2013, in the manner provided in subsection (H).

(2)    In addition to the provisions of item (1), grants may be awarded by a scholarship funding organization in an amount not exceeding ten thousand dollars or seventy-five percent of the cost of tuition, whichever is less, for students with 'exceptional needs' to attend an independent school. An 'exceptional needs' child is defined as a child who has significant cognitive, mental, physical, or emotional disabilities and whose parents or legal guardian believe that the services provided by the school district of legal residence do not sufficiently meet the needs of their child. The dollar and percentage amounts of the grants permitted by this item must be increased annually beginning in 2013, in the manner provided in subsection (H).

(G)(1)    The tax credits authorized by this section may not exceed cumulatively a total of fifteen million dollars annually for contributions made on behalf of students who are eligible for the federal free or reduced lunch program and whose families meet the qualifications for federal Medicaid benefits, and the tax credits authorized by this section may not exceed cumulatively a total of ten million dollars annually for contributions made on behalf of 'exceptional needs' students. If the Department of Revenue determines for a particular year that the total of such credits claimed by all taxpayers for one or both categories exceed these amounts, it shall proportionally reduce the credits of all taxpayers pro rata for that year in that category. The dollar amount of each of the tax credit caps imposed by this item, beginning with 2013, must be increased annually in the manner provided in subsection (H).

(2)    Taxpayers making contributions to a nonprofit scholarship funding organization who desire that a portion or all of their contributions be used for grants for exceptional needs children shall state with their contribution the amount to be used for this purpose. These amounts so stated must be used for purposes of computing the maximum tax credit amounts under item (1) of this subsection authorized for contributions on behalf of exceptional needs students. If no such designation for exceptional needs children is made, the contribution shall come within the maximum tax credit limitation for contributions pertaining to students who are eligible for the federal free or reduced lunch program and whose families meet the qualifications for federal Medicaid benefits provided in item (1).

(3)    If a husband and wife file separate returns for any year, they each may only claim one-half of the tax credit that would have been allowed for a joint return for the year.

(4)    The person shall apply for a credit under this section on or with the tax return for the period for which the credit is claimed.

(5)    The Department of Revenue shall prescribe the form and manner of proof required to obtain the credit authorized by this section.

(6)    A person may claim a credit under this section for a contribution during a particular period only against the tax owed for the corresponding period.

(7)    Any unused tax credit, including the portion of a contribution which is reduced pro rata under item (1) of this subsection, may be carried forward for a period not exceeding five consecutive years. However, the tax credit is not refundable.

(H)(1)    Beginning with the year 2013, the dollar amount and percentage amount of a scholarship which may be granted under this section and the dollar amount of each of the tax credit caps provided in subsection (G)(1) must be increased on an annual basis by an inflation factor equal to the percentage increase in the previous year of the Consumer Price Index, Southeast Region, as published by the United States Department of Labor, Bureau of Labor Statistics plus the percentage increase in the previous year in the population of the State as determined by the Office of Research and Statistics of the State Budget and Control Board.

(2)    The department shall publish the increases determined under item (1) each year on its website available to the general public.

(I)    A corporation or entity entitled to a credit under this section may not convey, assign, or transfer the deduction or credit authorized by this section to another entity unless all of the assets of the entity are conveyed, assigned, or transferred in the same transaction.

(J)    Except as otherwise provided by this section, neither the Department of Education, the Department of Revenue, nor any other state agency may regulate the educational program of an independent school that accepts students receiving scholarship grants pursuant to this section.

(K)(1)    The Education Oversight Committee, as established in Chapter 6, Title 59, is responsible for determining if an eligible school meets the criteria established by subsection (C)(1) of this section, and shall annually publish an approved list of such schools meeting this criteria as provided in item (2) below. For this purpose, it also shall promulgate regulations further enumerating the specifics of this criteria. In performing this function, the Education Oversight Committee shall establish an advisory committee made up of not more than nine members including parents, and representatives of independent schools and independent school associations. The advisory committee shall provide recommendations to the Education Oversight Committee on the content of these regulations and any other matters requested by the Education Oversight Committee.

(2)(a)    By the first day of August of each year, beginning on August 1, 2012, the Education Oversight Committee, on its website available to the general public, shall provide a list with addresses and telephone numbers of nonprofit scholarship funding organizations in good standing which provide grants under this section, and a list of approved independent schools which accept grants for eligible students under this section and which in its determination are in compliance with the requirements of subsection (C)(1) of this section.

(b)    Student test scores each year, by category, on national achievement or state standardized tests, or both, for all grades tested and administered by an eligible school receiving or entitled to receive scholarship grants under this section must be transmitted to the Education Oversight Committee which in turn shall publish this information on its website with the most recent scores by category included.

(3)    Any independent school not determined to be an eligible school under the provisions of this section may seek review by filing a request for a contested case hearing with the Administrative Law Court in accordance with the court's rules of procedure.

(4)    The Education Oversight Committee, after consultation with its nine-member advisory committee, may exempt an independent school having students with exceptional needs who receive scholarship grants pursuant to this section from the curriculum requirements of subsection (C)(1)(d).

(L)(1)    Every nonprofit scholarship funding organization providing grants under this section shall cause an outside auditing firm each year to conduct a comprehensive financial audit of its operations in conformity with generally accepted accounting principles and shall furnish same within thirty days of its completion and acceptance to the Secretary of State and Department of Revenue which must be made available by them on their website for public review.

(2)    Every independent school accepting grants for eligible students under this section shall cause to be conducted a compliance audit by an outside entity or auditing firm examining its compliance with the provisions of this section and shall furnish the same within thirty days of its completion and acceptance to the Secretary of State and Department of Revenue which must be made available by them on their website for public review.

(M)    On January 1, 2015, and on January first every three years thereafter, the Education Oversight Committee shall report to the Governor and the General Assembly on the effectiveness and success of this section and whether or not the purposes of this section as provided in subsections (A) and (B) hereunder have been accomplished."

SECTION    3.    If a section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, this holding does not affect the constitutionality or the validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words thereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

SECTION    4.    Public schools may offer the same tests referenced in Section 12-6-1146(C)(1)(d) of the 1976 Code as added by SECTION 2 of this act.

SECTION    5.    Members of the General Assembly serving at the time of this act's effective date are not eligible to take the tax deduction provided for in Section 12-6-1145 of the 1976 Code, as added by Section 1 of this act, for four years after this act's effective date.

SECTION    6.    This act takes effect upon approval by the Governor and shall be reviewed by the General Assembly and the Education Oversight Committee by December 31, 2019. The tax deductions authorized by Section 1 and tax credits authorized by Section 2 of this act may be taken to the extent authorized beginning with calendar year 2012.

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