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COMMITTEE REPORT
April 5, 2001
H. 3443
Introduced by Reps. Robinson, Wilkins, W.D. Smith, Quinn, Koon, Knotts, Simrill, Allison, Altman, Barfield, Barrett, Bingham, Campsen, Cato, Chellis, Coates, Cooper, Cotty, Dantzler, Davenport, Delleney, Easterday, Edge, Fleming, Frye, Gilham, Hamilton, Harrell, Harrison, Haskins, Hinson, Huggins, Keegan, Kelley, Kirsh, Klauber, Law, Leach, Limehouse, Littlejohn, Loftis, Lucas, McGee, Meacham-Richardson, Owens, Perry, Rice, Riser, Rodgers, Sandifer, Sharpe, Sinclair, D.C. Smith, G.M. Smith, J.R. Smith, Stille, Stuart, Talley, Taylor, Thompson, Townsend, Tripp, Trotter, Vaughn, Walker, Webb, White, Witherspoon, A. Young and J. Young
S. Printed 4/5/01--H.
Read the first time February 1, 2001.
To whom was referred a Bill (H. 3443) 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
That they have duly and carefully considered the same and recommend that the same do pass:
ROBERT W. HARRELL, JR. for Committee.
REVENUE IMPACT1
The indexing by the full amount of the CPI on the State's individual income tax brackets in tax year 2001 would reduce individual income taxes by an estimated $3,665,000 in FY 2001-2002.
Explanation
Under current law, Section 12-6-520, 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 CPI. Under the proposed law, the tax brackets would be adjusted fully for inflation, as they are in Internal Revenue Code Section (1)(f), but the rounding amount provided in (1)(f)(6) is ten dollars. Based on prior individual income tax data, indexing by the full amount of the CPI on the State's individual income tax brackets in tax year 2001 would reduce individual income taxes by an estimated $3,665,000 in FY 2001-2002.
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.
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 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 2001. 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 2001 brackets must be made no later than fifteen days after the effective date of this act.
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