South Carolina and North Carolina have both implemented income tax cuts at the start of the year, with South Carolina lowering its top rate to 6.2 percent and North Carolina reducing its flat rate to 4.25 percent. North Carolina plans to further reduce its rate to 3.99 percent next year and aims to eliminate its corporate tax rate by 2030. South Carolina, on the other hand, has struggled to match North Carolina’s tax cuts due to its burgeoning spending problem. The state’s general fund budget has more than doubled in the past decade, hindering efforts to lower income tax rates. A major driver of this spending increase is the state’s rapid population growth, which has outpaced inflation rates. To address this issue, the South Carolina Policy Council recommends adopting a Sustainable Budget model to limit spending growth. Lawmakers in South Carolina have shown interest in more aggressive tax cuts, such as eliminating the income tax entirely or reducing it to 3.5 percent. Achieving lower tax rates is crucial for attracting businesses and residents to the state.
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