Tax relief coming to small businesses

By John Boyanoski, Greenville Journal

May 9, 2005

Greenville First President Art Seaver doesn’t like to count his chickens before they hatch. But the idea that state tax relief may be coming for the South Carolina’s 94,000 small businesses over the next four years was enough to make Seaver optimistic.

“Anything that will lower our taxes will be an asset,” he said.

Gov. Mark Sanford signed a bill Thursday lowering the income tax on small business profits from seven to five percent over the next four years. That tax cut will remove an estimated $129 million from state coffers over the next four years.
However, supporters of the measure say it will allow many small business owners to hire more people and spend more money in the economy by buying new equipment, and selling advertising said Frank Knapp, Jr., president of the South Carolina Small Business Chamber of Commerce. The rate drop will put small businesses at the same level large companies pay, he said.
“Small businesses now will have a level playing field with big business on the state income tax rate,” Knapp said.

Seaver said his five-year-old company paid more than $1.2 million in taxes last year. That would likely increase with a new office opening near Pelham Road this month and another on Augusta Street later this year.

“Tax relief should help,” he said. Sanford had been pushing to reduce the state’s top personal income
tax rate, but the state Senate pared his plan down to just serve small businesses. Roughly 95, percent of state companies are small businesses.

“Small business is clearly the lead economic driver and the backbone of job creation,” Sanford said in a press release.
It was estimated Sanford’s bill would cost $1 billion over the next ten years. Sanford supports the pared-down bill, but said he plans to push for more tax relief.

“I’m frankly a bit disappointed the Senate didn’t devote a serious portion of this to tax relief for all South Carolinians, ” he said.

Knapp said his Columbia-based agency had been pushing for tax relief for the past five years, but the bill could never gain steam. A major reason was the state’s poor economy, he said. Numerous agencies were facing budget cuts and the legislators couldn’t fathom cutting taxes. However, the state is looking at an additional $600 million in new income in 2005, which is one reason the idea of tax relief is gaining steam, Knapp said.

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