(The Center Square) – Taxpayers in South Carolina will face an average tax increase of $2,319 if the 2017 Tax Cuts and Jobs Act expires at the end of the year, says the National Taxpayers Union Foundation.
Results of analysis were released Thursday morning by the nonprofit organization billing itself a “nonpartisan research and educational affiliate of the National Taxpayers Union.” Its two state neighbors were similar: North Carolina ($2,382) and Georgia ($2,680) were each a tick higher.
The Tax Cuts and Jobs Act of eight years ago was a significant update to individual and business taxes in the federal tax code. According to the Tax Foundation, it was considered pro-growth reform with an estimate to reduce federal revenue by $1.47 trillion over a decade.
Should no action be taken before Jan. 1 and the act expire, the federal standard deduction would be halved; the federal child tax credit would decrease; higher federal tax brackets would return; the federal estate tax threshold will be lower; and some business tax benefits will be gone.
The foundation says South Carolina does not adopt full expensing of business investments. Lawmakers could adopt 100% expensing regardless of federal renewal.
An option is also available to avoid state tax increases even though the federal taxable income starting point is automatic with federal tax exclusion, exemption or deduction. To do so, the state could continue current policy on the standard deduction or Section 199A.
The state standard deduction would be significantly reduced if the expanded federal standard deduction expires. The foundation says the Legislature could combat it by “establishing that the standard deduction in their state is the larger of federal law or the inflation-adjusted amount from this year.”
The National Taxpayers Union Foundation also says lawmakers “should at least be conscious of any retroactive provisions when selecting their date of fixed conformity.” South Carolina is among 21 states conforming to the federal income tax base “only as of a certain date” rather than automatically matching federal tax code changes – meaning definitions, calculations or rules.
The foundation said nationally the average filer will see taxes raised $2,955. It estimates an increase for 62% of Americans. The biggest average increases by state are in Massachusetts ($4,848), Washington ($4,567) and Wyoming ($4,493) and the lowest are in West Virginia ($1,423), Mississippi ($1,570) and Kentucky ($1,715).
Individual wages, nationally, are expected to go down 0.5%, reducing economic growth by 1.1% over 10 years.
