Three Things to Know: March 28th

This week's information compiled by your SC Chamber team includes: 
SC Chamber Applauds Senate Passage of S.244, S.C. Legislative Leaders Unveil Historic Income Tax Reform Proposal, Legislative Update - Week 11

 1. SC Chamber Applauds Senate Passage of S.244

On Wednesday night, after multiple weeks of debate and negotiations, the Senate passed S.244, a comprehensive lawsuit reform package that will deliver much-needed relief for all sectors of the South Carolina economy that are being negatively impacted by the state’s out-of-balance civil justice system, by a vote of 35-7.

 The amended version of the bill makes significant changes to South Carolina’s apportionment statutes to ensure businesses are only held responsible for the damages they cause, not those caused by others, unless they are greater than 50% at fault, in which case they can potentially be held fully liable for economic damages only. The amended version also fixes the issue in current South Carolina law by which juries can only allocate fault to named defendants in a lawsuit, not those who have previously settled or were never brought into the case, by allowing nonparties to be included on the verdict form with limited exceptions. 

The bill also protects bars and restaurants from unfair lawsuits by establishing a “visible intoxication” standard in order for a bar or restaurant to be civilly liable in alcohol related cases, establishing “loser pays” in alcohol related cases, requiring alcohol server training, reducing the mandatory minimum liquor liability insurance coverage requirements to $500,000, closing loopholes that threaten homebuilders and medical providers, allowing seatbelt usage to be admissible as evidence in lawsuits, and protecting innocent victims by increasing minimum auto policy insurance rates to 50/100/50, among other things.

Following the bill’s passage, SC Chamber President and CEO Mike Brenan released a statement saying, “The South Carolina Senate just took a big step towards providing South Carolinians with much-needed relief from an unfair civil justice system that costs our businesses and families millions of dollars each year.”

The bill now heads to the House, where House members must hear from businesses on this critical issue. Please contact your representatives and let them know that we need meaningful lawsuit reform that benefits all sectors of the South Carolina economy. Specifically, tell them that you support S.244 and urge its passage this year. Businesses can find their representatives here and send them a message here.

2. S.C. Legislative Leaders Unveil Historic Income Tax Reform Proposal

On Tuesday, Governor Henry McMaster joined legislative leaders, including House Speaker Murrell Smith (R-Sumter), Senate President Thomas Alexander (R-Oconee), Senate Finance Committee Chairman Harvey Peeler (R-Cherokee), House Ways and Means Committee Chairman Bruce Bannister (R-Greenville), and others, at a press conference where lawmakers unveiled a historic income tax reform proposal to make South Carolina more competitive in the ongoing battle for high-paying jobs and talent attraction.

Despite its well-earned reputation as a business-friendly state with a booming economy, South Carolina is routinely recognized for having a tax code that is archaic, confusing, and uncompetitive, ranking 33^rd for overall tax competitiveness in this year’s version of the Tax Foundation’s State Tax Competitiveness Index. By comparison, our neighboring states like Florida (4^th), Tennessee (8^th), North Carolina (12^th), and Georgia (26^th) fare far better when it comes to competitive tax codes. At 6.2%, South Carolina’s top individual income tax rate is still the highest in the Southeast. And because of the way the state calculates individual income taxes, nearly 44% of South Carolinians don’t pay any state income taxes at all.

The proposed bill (H.4216) would immediately replace the state’s current progressive income tax system, which places a higher tax burden on high earners, with a single, simple, flat tax rate of 3.99%. Additionally, the state would shift how it calculates an individual's taxable income from “federal taxable income” to adjusted gross income (AGI). At 3.99%, South Carolina’s income tax rate would be lower and more competitive than our immediate neighbors in North Carolina (4.25%) and Georgia (5.39%). Should state revenues continue to increase, the rate would eventually drop to 2.49%, which would be one of the lowest income tax rates in the country once fully implemented.

SC Chamber President and CEO Mike Brenan proudly stood with lawmakers at the press conference unveiling the proposal, and shortly afterwards released a statement saying that the proposal will “…vault South Carolina ahead of other states that have recently cut tax rates and create a more competitive economy that will attract even more jobs with even higher wages.”

The SC Chamber has long advocated for meaningful tax reform to make South Carolina’s business climate even more competitive, including publishing A Roadmap for Tax Reform in 2018, championing the Comprehensive Tax Cut Act of 2022, and, most recently, having current Board Chair Thomas Rhodes author an op-ed featured in the Post & Courier calling for immediate tax reform this year.

3. Legislative Update – Week 11

It was a great week for the business community’s legislative priorities with the Senate’s passage of S.244 and the introduction of the House income tax reform proposal (H.4216), both of which are described in greater detail above.

Other notable actions taken include:

• South Carolina Energy Security Act (H.3309) – On Tuesday, the Senate Judiciary Committee advanced an amended version of a bill that aims to address the current and future energy needs of South Carolina by increasing generation capacity through an “all of the above” approach and through common sense regulatory and permitting reforms to maintain South Carolina’s unprecedented economic growth. On Thursday afternoon, the Senate set the bill for special order, meaning that they will begin debating it next week.
• Electric Rate Stabilization Act (S.446) – On Tuesday, the Senate Judiciary Committee advanced a bill that would allow electric utilities to adjust their rates in a more predictable manner through regular, yet smaller, rate adjustments instead of lengthy rate cases. The bill now heads to the Senate floor.
• Ending Illegal Discrimination and Restoring Merit-Based Opportunity Act (H.3927) – On Wednesday, the House began debating an amended version of a bill that aims to restrict diversity, equity, and inclusion (DEI) initiatives within state government, its political subdivisions, and institutions of higher education. The amended version of the bill removed restrictions on the ability of the state or its political subdivisions to contract with private-sector employers who have DEI programs. The amended version now only applies to state agencies or quasi-state agencies, including institutions of higher education, school districts, charter schools, and political subdivisions. The debate was ultimately interrupted as lawmakers worked through numerous amendments and will resume next week.
• Angel Investor Tax Credit Extension (H.4134) – On Thursday, the Economic Development subcommittee of the House Ways and Means Committee advanced a bill to extend the Angel Investor Tax Credit for an additional ten years, until 2035. This credit allows for a 35% non-refundable tax credit to private individuals who invest their own capital in early-stage, high-growth companies. The bill now heads to the full House Ways and Means Committee.