South Carolina General Assembly
113th Session, 1999-2000

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Bill 4444


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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

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COMMITTEE REPORT

March 30, 2000

H. 4444

Introduced by Reps. Robinson, Wilkins, Quinn, Barfield, Barrett, H. Brown, Chellis, Cotty, Dantzler, Fleming, Gamble, Gilham, Hamilton, Harrell, Harrison, Hinson, Huggins, Keegan, Koon, Law, Leach, Martin, Meacham-Richardson, Riser, Rodgers, Sandifer, D. Smith, Stuart, Taylor, Walker, Young-Brickell, Whatley, Tripp, Cooper, Seithel, Allison, Altman, Beck, Campsen, Cato, Davenport, Easterday, Edge, Frye, Haskins, Kelley, Knotts, Lanford, Limehouse, Loftis, Lucas, McGee, McKay, Perry, Rice, Sharpe, Simrill, R. Smith, Trotter, Vaughn, Webb, Witherspoon and Woodrum

S. Printed 3/30/00--H.

Read the first time January 13, 2000.

            

THE COMMITTEE ON WAYS AND MEANS

To whom was referred a Bill (H. 4444), to amend Section 12-6-520, Code of Laws of South Carolina, 1976, relating to annual inflation adjustments to state income tax brackets, 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, beginning on page 2, by striking SECTION 2 and inserting:

/SECTION 2. This act takes effect upon approval by the Governor and first applies for income tax brackets applicable for taxable year 2000. Notwithstanding the inflation adjustment required pursuant to Section 12-6-520 of the 1976 Code as amended by this section, the adjustment applicable for taxable year 2000 is limited to not less than seventy-five percent nor more than eighty-five percent of the adjustment otherwise required which must be determined based on the certification of the Board of Economic Advisors to the Department of Revenue as to the maximum percentage in that range that does not reduce general fund revenues by more than eighteen million dollars in fiscal year 2000-2001. Notwithstanding the date required for bracket adjustments provided in Section 12-6-520 of the 1976 Code as amended by this section, the adjustment required for taxable year 2000 brackets must be made no later than fifteen days after the effective date of this section. /

Renumber sections to conform.

Amend totals and title to conform.

ROBERT W. HARRELL, JR., for Committee.

STATEMENT OF ESTIMATED FISCAL IMPACT

REVENUE IMPACT1

This amended bill is expected to reduce general fund individual income tax revenue by an estimated $16,750,000 in FY2000-01.

Explanation of Amendment

Under current law, South Carolina applies its own tax brackets to federal taxable income in computing income taxes. South Carolina's tax brackets are increased each year at one-half the increase in the Consumer Price Index (CPI). This amendment would index the individual income tax brackets as specified in Section 12-6-520 by not less than seventy-five percent nor more than eighty-five percent of the full amount of the CPI in tax year 2000. This amendment is expected to reduce Individual Income tax collections by an estimated $16,750,000 in FY2000-01.

This bill would provide for the full adjustment of the State's individual income tax brackets for inflation. Under current law, South Carolina applies its own tax brackets to federal taxable income in computing income taxes. South Carolina's tax brackets are increased each year at one-half the increase in the Consumer Price Index (CPI). Indexing by the full amount of the CPI would save taxpayers $20 per year on average. When spread over the 1,800,000 taxpayers projected for tax year 2000, full indexation would reduce individual income taxes by $36 million from the amount currently estimated by the BEA for FY2000-01. This bill is expected to reduce general fund individual income tax revenue by an estimated $36 million in FY2000-01.

Amendment

This amendment would index the individual income tax brackets as specified in Section 12-6-520 by not less than seventy-five percent nor more than eighty-five percent of the full amount of the CPI in tax year 2000. This will decrease individual income tax collections by an estimated $16,750,000 in FY2000-01.

Approved By:

William C. Gillespie

Board of Economic Advisors

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

A BILL

TO AMEND SECTION 12-6-520, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ANNUAL INFLATION ADJUSTMENTS TO STATE INCOME TAX BRACKETS, SO AS TO DELETE THE PROVISION LIMITING THE INFLATION ADJUSTMENT TO ONE-HALF OF THE ACTUAL INFLATION RATE AND THE OVERALL FOUR PERCENT LIMIT ON THE TOTAL INFLATION ADJUSTMENT AND TO DELETE REDUNDANT LANGUAGE.

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

SECTION 1. Section 12-6-520 of the 1976 Code, as added by Act 76 of 1995, is amended to read:

"Section 12-6-520. Each December 15, the department shall cumulatively adjust the brackets in Section 12-6-510 in the same manner that brackets are adjusted in Internal Revenue Code Section (1)(f). However, the adjustment is limited to one-half of the adjustment determined by Internal Revenue Code Section (1)(f), may not exceed four percent a year, and but the rounding amount provided in (1)(f)(6) is ten dollars. The brackets, as adjusted, apply in lieu of those provided in Section 12-6-510 for taxable years beginning in the succeeding calendar year. Inflation adjustments must be made cumulatively to the income tax brackets."

SECTION 2. This act takes effect upon approval by the Governor and first applies for income tax brackets applicable for taxable year 2000. Notwithstanding the date required for bracket adjustments provided in Section 12-6-520 of the 1976 Code as amended by this act, the adjustment required for taxable year 2000 brackets must be made no later than fifteen days after the effective date of this act.

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