Indicates Matter Stricken
Indicates New Matter
The Senate assembled at 2:00 P.M., the hour to which it stood adjourned, and was called to order by the PRESIDENT.
A quorum being present, the proceedings were opened with a devotion by the Chaplain as follows:
"Our soul waits for the Lord; he is our help and shield. Our heart is glad in him, because we trust in his holy name. Let your steadfast love, O Lord, be upon us; even as we hope in you."
Gracious God, we gather today in this Chamber with thankful hearts --thankful that our State was spared the full impact of Hurricane Florence, thankful that our Governor, our State and community leaders worked so efficiently and effectively to mitigate the impact of this storm and it's torrential rains and thankful that we can now move forward helping those who were harmed as well as devoting energy to the matters of the Senate.
Loving God, we are especially thankful this day that by Your grace and by Your power, Senator Greg Hembree is alive and with us today. So many prayers were answered when there seemed to be very little chance for a recovery for this dear man. Our hearts are overflowing with gratitude for our friend, our colleague and Your faithful servant.
And now, O God, as this session begins, enable our Senators to be resolute in their faith, humble in manner, honorable in action and imbued with a clear sense of inspired purpose and time honored statesmanship. Through Your holy name we pray, Amen
The PRESIDENT called for Petitions, Memorials, Presentments of Grand Juries and such like papers.
Senator MALLOY rose for an Expression of Personal Interest.
On motion of Senator MARTIN, at 2:15 P.M., Senator CORBIN was granted a leave of absence for the balance of the week.
On motion of Senator M.B. MATTHEWS, at 2:41 P.M., Senator KIMPSON was granted a leave of absence for the balance of the day.
The following were introduced:
S. 1290 (Word version) -- Senator M. B. Matthews: A SENATE RESOLUTION TO EXPRESS THE PROFOUND SORROW OF THE MEMBERS OF THE SOUTH CAROLINA SENATE UPON THE PASSING OF REVEREND DR. EVELYN GELZER STEVENS AND TO EXTEND THEIR DEEPEST SYMPATHY TO HER FAMILY AND MANY FRIENDS.
The Senate Resolution was adopted.
S. 1291 (Word version) -- Senator Martin: A SENATE RESOLUTION TO CONGRATULATE FRANK PRESTON HAYES ON THE OCCASION OF HIS ONE HUNDREDTH BIRTHDAY AND TO WISH HIM A JOYOUS BIRTHDAY CELEBRATION AND MUCH HAPPINESS IN THE DAYS AHEAD.
The Senate Resolution was adopted.
S. 1292 (Word version) -- Senator Scott: A SENATE RESOLUTION TO CELEBRATE THE TENTH ANNUAL SHOUTFEST, TO BE HELD SATURDAY, SEPTEMBER 15, 2018, TO ENCOURAGE ALL SOUTH CAROLINIANS TO ATTEND AND ENJOY THIS FAMILY-FRIENDLY EVENT, AND TO WISH ITS ORGANIZERS EVERY SUCCESS.
The Senate Resolution was adopted.
S. 1293 (Word version) -- Senator J. Matthews: A SENATE RESOLUTION TO HONOR CALVIN WRIGHT, EXECUTIVE DIRECTOR OF THE ORANGEBURG-CALHOUN-ALLENDALE-BAMBERG COMMUNITY ACTION AGENCY, INC., FOR HIS MANY YEARS OF DEDICATED SERVICE AND TO COMMEND HIM FOR HIS COMMITMENT TO ORANGEBURG, CALHOUN, ALLENDALE, AND BAMBERG COUNTIES.
l:\council\bills\rm\1487sd18.docx The Senate Resolution was adopted.
S. 1294 (Word version) -- Senator J. Matthews: A SENATE RESOLUTION TO EXPRESS PROFOUND SORROW UPON THE PASSING OF THE HONORABLE WILLIE RICHARD DAVIS OF ST. GEORGE AND TO EXTEND THE DEEPEST SYMPATHY TO HIS FAMILY AND MANY FRIENDS.
The Senate Resolution was adopted.
S. 1295 (Word version) -- Senator Allen: A SENATE RESOLUTION TO RECOGNIZE JAMES W. MADISON OF GREENVILLE COUNTY ON THE OCCASION OF HIS SEVENTIETH BIRTHDAY ON OCTOBER 28, 2018, AND TO WISH HIM A JOYOUS CELEBRATION AND MUCH HAPPINESS IN THE DAYS AHEAD.
The Senate Resolution was adopted.
Senator LEATHERMAN from the Committee on Finance submitted a favorable with amendment report on:
H. 5341 (Word version) -- Reps. Lucas, White, Simrill, Rutherford, Murphy, S. Rivers and Davis: A BILL TO AMEND SECTION 12-6-40, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE APPLICATION OF THE INTERNAL REVENUE CODE TO STATE INCOME TAX LAWS, SO AS TO UPDATE THE REFERENCE TO THE INTERNAL REVENUE CODE, TO PROVIDE AN EXCEPTION FOR PERSONAL AND DEPENDENT EXEMPTION AMOUNTS, AND TO PROVIDE THAT IF THE INTERNAL REVENUE CODE SECTIONS ADOPTED BY THIS STATE ARE EXTENDED, THEN THESE SECTIONS ALSO ARE EXTENDED FOR SOUTH CAROLINA INCOME TAX; AND TO AMEND SECTION 12-6-50, RELATING TO PROVISIONS OF THE INTERNAL REVENUE CODE NOT ADOPTED BY THIS STATE, SO AS TO NOT ADOPT CERTAIN PROVISIONS.
Ordered for consideration tomorrow.
On motion of Senator LEATHERMAN, with unanimous consent, the Senate proceeded to a consideration of the Bill. H. 5341 (Word version) -- Reps. Lucas, White, Simrill, Rutherford, Murphy, S. Rivers and Davis: A BILL TO AMEND SECTION 12-6-40, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE APPLICATION OF THE INTERNAL REVENUE CODE TO STATE INCOME TAX LAWS, SO AS TO UPDATE THE REFERENCE TO THE INTERNAL REVENUE CODE, TO PROVIDE AN EXCEPTION FOR PERSONAL AND DEPENDENT EXEMPTION AMOUNTS, AND TO PROVIDE THAT IF THE INTERNAL REVENUE CODE SECTIONS ADOPTED BY THIS STATE ARE EXTENDED, THEN THESE SECTIONS ALSO ARE EXTENDED FOR SOUTH CAROLINA INCOME TAX; AND TO AMEND SECTION 12-6-50, RELATING TO PROVISIONS OF THE INTERNAL REVENUE CODE NOT ADOPTED BY THIS STATE, SO AS TO NOT ADOPT CERTAIN PROVISIONS.
The Senate proceeded to a consideration of the Bill.
The Committee on Finance proposed the following amendment (DG\5341C005.BBM.DG18), which was adopted:
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/ SECTION 1. This act may be referred to as the 'South Carolina Taxpayer Protection and Relief Act'.
SECTION 2. Section 12-6-40(A)(1)(a) and (c) of the 1976 Code is amended to read:
"(a) Except as otherwise provided, 'Internal Revenue Code' means the Internal Revenue Code of 1986, as amended through
December 31, 2016 February 9, 2018, and includes the effective date provisions contained in it.
(c) If Internal Revenue Code sections adopted by this State which expired or portions thereof expired on December 31,
2016 2017, are extended, but otherwise not amended, by congressional enactment during 2017 2018, these sections or portions thereof also are extended for South Carolina income tax purposes in the same manner that they are extended for federal income tax purposes."
SECTION 3. A. Section 12-6-50 of the 1976 Code is amended to read:
"Section 12-6-50. For purposes of this title and all other titles that provide for taxes administered by the department, except as otherwise specifically provided, the following Internal Revenue Code Sections are specifically not adopted by this State:
(1) Sections 1(a) through 1(e), 3, 11, and 1201 relating to federal tax rates; (2) Sections 22 through 54, 515, 853, 901 through 908, and 960 relating to tax credits;
(3) Sections 55 through 59A relating to minimum taxes;
(4) Sections 78, 85(c), 86, 87, 168(k), 168(l), 168(m), 168(n), 196, and 280C relating to dividends received from certain foreign corporations by domestic corporations, unemployment compensation, taxation of social security and certain railroad retirement benefits, the alcohol fuel credit, bonus depreciation, deductions for certain unused business credits, and certain expenses for which credits are allowable;
(5) Sections 72(m)(5)(B), 72(f), 72(o), 72(q), and 72(t)
, relating to penalty taxes on certain retirement plan distributions;
(5A) Section 108(i) relating to the deferral and ratable inclusion of income arising from business indebtedness discharged by the reacquisition of a debt instrument;
(5B) Section 163(e)(5)(F) relating to original issue discount on certain high yield obligations, Section 163(j) relating to limitation on business interest expense, and Section 381(c)(20) and 382(d)(3) relating to carryover of limited business interest;
(6) Section 172(b)(1) relating to net operating loss carrybacks;
Section 199 relating to the deduction attributable to domestic production activities Reserved;
(8) Sections 531 through 564 relating to certain special taxes on corporations;
(9) Sections 581, 582, and 585 through 596 relating to the taxation of banking institutions;
(10) Sections 665 through 668 relating to taxation of certain accumulation distributions from trusts;
(11) Sections 801 through 848 relating to taxation of insurance companies;
(12) Sections 250, 267A, and 861 through 909, 912, 931 through 940, and 944 through 989 relating to the taxation of foreign income;
(13) Sections 1352 through 1359 relating to an alternative tax on qualifying shipping activities;
(14) Sections 1400 through 1494, except 1400Z;
(15) Sections 1501 through 1505 relating to consolidated tax returns;
(16) Sections 2001 through 7655, 7801 through 7871, and 8001 through 9602, except for Sections 6015 and 6701, and except for Sections 6654 and 6655 which are adopted as provided in Section 12-6-3910 and Section 12-54-55. However, Section 6654(d)(1)(D) relating to estimated tax payments for qualified individuals as defined in that item is not adopted.
(17) Section 68 relating to the reduction on itemized deductions and Section 151(d)(3) relating to the reduction on the personal exemption for:
(a) a joint return or surviving spouse with an adjusted gross income exceeding three hundred thousand dollars or the same adjusted gross income adjusted for inflation pursuant to Section 68, whichever is higher;
(b) a head of household with an adjusted gross income exceeding two hundred seventy-five thousand dollars or the same adjusted gross income adjusted for inflation pursuant to Section 68, whichever is higher; and
(c) an individual who is not married and who is not a surviving spouse or head of household with an adjusted gross income exceeding two hundred fifty thousand dollars or the same adjusted gross income adjusted for inflation pursuant to Section 68, whichever is higher
(18) Section 118(b)(2) relating to any contribution by any governmental entity or civic group, other than a contribution made by a shareholder as such;
(19) Section 199A relating to qualified business income;
(20) Section 162(r) relating to FDIC premiums."
B. The Department of Revenue shall make and publish rules and promulgate regulations to effectively administer the provisions of this SECTION.
SECTION 4. A. Section 12-6-520 of the 1976 Code is amended to read:
"Section 12-6-520. Beginning on December 15, 2018, and each December
15 fifteenth thereafter, the department shall cumulatively adjust the brackets in Section 12-6-510 in the same manner that brackets are adjusted in using the Chained Consumer Price Index for All Consumers, as published by the Bureau of Labor and Statistics of the Department of Labor, pursuant to 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 notwithstanding the rounding amount provided in (1)(f)(6) (1)(f)(7), the rounding amount is ten dollars. The brackets, as adjusted, apply in lieu instead 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."
B. This SECTION takes effect upon approval by the Governor and first applies to the adjustment made for tax year 2019, with the 2018 income tax brackets being used first as the base year upon which adjustments made pursuant to Section 12-6-520, as amended by this act, are made.
SECTION 5. A. Section 12-6-1140 of the 1976 Code is amended by adding an item at the end to read:
"(13) a South Carolina dependent exemption equal to four thousand one hundred and ten dollars for each eligible dependent of the taxpayer, including both qualifying children and qualifying relatives. To qualify for the deduction allowed by this item, each dependent must meet the eligibility requirements of Section 151 and 152, as applicable, mutatis mutandis, as those sections applied on January 1, 2017. Notwithstanding the deduction amount set forth in this item, each December fifteenth, the department shall cumulatively adjust the deduction amount using the Chained Consumer Price Index for All Consumers, as published by the Bureau of Labor and Statistics of the Department of Labor, pursuant to Internal Revenue Code Section (1)(f),except that the rounding amount is ten dollars."
B. Notwithstanding Section 12-6-1140(13), as added by this SECTION, the Department of Revenue shall not adjust the deduction set forth in Section 12-6-1140(13) for tax year 2018.
SECTION 6. Section 12-6-1160 of the 1976 Code is amended to read:
"Section 12-6-1160. A resident individual taxpayer is allowed
a an additional deduction for each dependent claimable on the taxpayer's federal income tax return eligible for the South Carolina dependent exemption pursuant to Section 12-6-1140 who has not yet attained the age of six years during the applicable tax year. This deduction is contingent upon the identification in the annual general appropriations act of revenues sufficient to offset the revenue loss caused by the exemption. The deduction allowed by this section is an amount equal to a percentage of the federal income tax personal exemption amount allowed for the applicable taxable year as follows:
Taxable year 1994 twenty-five percent
Taxable year 1995 fifty percent
Taxable year 1996 seventy-five percent
Taxable years after 1996 one hundred percent
the South Carolina dependent exemption allowed pursuant to Section 12-6-1140." SECTION 7. The Department of Revenue shall take actions necessary to implement the provisions of this act and take the appropriate actions to educate taxpayers of the amendments contained within this act, especially those, if any, that impact filing requirements or determination of taxable income.
SECTION 8. By January 15, 2025, the Department of Revenue, in coordination with the Revenue and Fiscal Affairs Office, shall deliver a report to the General Assembly that specifies the many provisions of the Tax Cuts and Jobs Act of 2017 that expire after tax year 2025.
SECTION 9. Except where specified otherwise, this act takes effect upon approval by the Governor and first applies to tax years beginning after 2017. /
Renumber sections to conform.
Amend title to conform.
Senator ALEXANDER explained the committee amendment.
Senator BENNETT explained the committee amendment.
The amendment was adopted.
The "ayes" and "nays" were demanded and taken, resulting as follows:
Alexander Allen Bennett Campbell Cash Climer Cromer Fanning Gambrell Goldfinch Gregory Hembree Jackson Johnson Leatherman Malloy Martin Matthews, Margie McElveen McLeod Nicholson Peeler Rankin Reese Rice Sabb Scott Senn Setzler Shealy Sheheen Talley Timmons Turner Verdin Williams Young
Campsen Davis Grooms Massey
There being no further amendments, the Bill, as amended, was read the second time, passed and ordered to a third reading.
We support conforming our state tax code with the federal code; such is regularly done by the General Assembly as a matter of course whenever changes are made to the federal tax code. Without such conformity the process of filing federal and state income tax returns becomes an accounting nightmare. And H. 5341 does in fact sync up our state's tax code with the federal tax law, and if that was the only objective, as it is in most years, we would have voted for the bill.
This year, however, the normally straightforward process of tax code conformity is more complicated given the sweeping nature of the 2017 federal tax act passed by Congress. If the General Assembly simply conformed as it usually does, then an additional $235 million in taxes would be paid by South Carolina taxpayers to the state treasury. For that reason, it is critical that this year's tax conformity legislation contain provisions that negate the payment of these additional state taxes.
And to its credit, the Senate Finance Committee considered such offsetting provisions in the amended version of H. 5341 that it passed and that was considered by the Senate today. Some of those provisions we support; for example, the amendment incorporates Senator CAMPSEN'S Taxpayer Inflation Protection Act, which fully indexes South Carolina's income tax brackets to inflation.
However, taken as a whole, we believe the version of H. 5341 approved by the Senate today remains deficient in that it does not offset tax increases for all the taxpayers that will experience a tax increase due to conformity with the federal tax act. It is not enough for conformity legislation to be "revenue neutral"; it must also provide the tax relief to those whose taxes will actually increase, and in the amount of that increase. H. 5341 (Word version) does not do this and that is why we voted against it. While its total tax relief roughly equals the total tax increase caused by the federal tax act on a statewide basis, the relief is not properly apportioned to the individual taxpayers actually bearing the increased tax burden. It would be better, we believe, for the Senate Finance Committee to continue its work on the bill with the goal of providing tax relief for the individual taxpayers actually paying increased taxes.
Senator CROMER asked unanimous consent that the veto of the Governor regarding S. 1043 be taken up for consideration.
THE SENATE PROCEEDED TO A CONSIDERATION OF THE VETOES.
The Honorable Kevin L. Bryant
President of the Senate
State House, First Floor, East Wing
Columbia, South Carolina 29201
Dear Mr. President and Members of the Senate:
I am hereby vetoing and returning without my approval R 291, S. 1043 (Word version), known as the South Carolina Abandoned Buildings and Revitalization Act. Contrary to the Act's title, it addresses a plethora of subjects, including modifications to tax credits, tax refunds, revenue definitions, and the proper classification of satellite service receipts. Article III, section 17 of the South Carolina Constitution provides that "Every Act or resolution having the force of law shall relate to but one subject, and that shall be expressed in the title." S.C. Const. article III, sec 17, The "one subject rule," as this constitutional provision is known, exists to ensure that members of the public and the General Assembly are informed of the contents of an act upon reading the title, See S.C. Public Service Authority v Citizens and South National Bank of S.C., 300 S.C. 142, 162, 386 S.E.2d 775, 786-87 (1989). The myriad of provisions housed in this Act do not meet the one subject rule, and thus the Act is unconstitutional. See e.g., Sloan v. Wilkins, 362 S.C. 430, 608 S.E.2d 579 (2005), abrogated on other grounds, American Petroleum Institute v. S.C. Department of Revenue, 382 S.C. 572, 677 S.E.2d 16 (2009) (holding unconstitutional an act "teeming with subjects, from life sciences provisions to the establishment of a culinary arts institute.")
For the foregoing reasons, I am respectfully vetoing R-291, S. 1043 and returning the same without my signature.
Yours very truly,
The veto of the Governor was taken up for immediate consideration.
Senator CROMER spoke on the veto.
Senator CROMER moved that the veto of the Governor be overridden.
The question was put, "Shall the Act become law, the veto of the Governor to the contrary notwithstanding?" The "ayes" and "nays" were demanded and taken, resulting as follows:
Alexander Allen Bennett Campbell Cash Cromer Fanning Gambrell Goldfinch Gregory Grooms Hembree Jackson Johnson Leatherman Malloy McElveen McLeod Nicholson Rankin Reese Sabb Scott Senn Shealy Sheheen Talley Timmons Turner Williams Young
Campsen Climer Davis Martin Massey Peeler Rice Verdin
The necessary two-thirds vote having been received, the veto of the Governor was overridden, and a message was sent to the House accordingly.
Senator BENNETT rose for an Expression of Personal Interest.
On motion of Senator LEATHERMAN, the Senate agreed that if and when the Senate adjourns today, it stand adjourned to meet tomorrow at 1:00 P.M.
Senator SETZLER rose for an Expression of Personal Interest.
Senator HEMBREE rose for an Expression of Personal Interest.
On motion of Senator SHEHEEN, with unanimous consent, the remarks of Senator HEMBREE, when reduced to writing and made available to the Desk, would be printed in the Journal.
Senator McLEOD rose for an Expression of Personal Interest.
On motion of Senator SETZLER, with unanimous consent, the remarks of Senator McLEOD, when reduced to writing and made available to the Desk, would be printed in the Journal.
On motion of Senator LEATHERMAN, the Senate agreed to stand adjourned.
At 3:02 P.M., on motion of Senator LEATHERMAN, the Senate adjourned to meet tomorrow at 1:00 P.M., under the provisions of H. 5383, the Sine Die Resolution.
This web page was last updated on Wednesday, October 3, 2018 at 3:26 P.M.