South Carolina Republicans aren’t trying to limit government — and they don’t appreciate the Freedom Caucus pressuring them to do so. Instead, they’ve concocted a devious plan to push a bill that sounds like a flat tax but would raise taxes on most residents earning under $115,000. The goal? To trap Freedom Caucus members into opposing a bill GOP leaders intend to promote as a tax cut during campaign season.
House Speaker Murrell Smith Jr. (R) promised voters a tax cut throughout the session but didn’t reveal the bill until last week. Now we know why. The proposal would amount to a net tax increase on 66% of state tax filers, including nearly all who earn less than $115,000. Despite this, Republican leaders still hope to get the bill to Republican Gov. Henry McMaster’s desk by May 8.
Until voters start focusing on primary elections — where the real ideological battles are fought — red states will keep giving us the big government blues.
Currently, South Carolina taxes income above $17,000 at 6.2% — one of the highest rates in the low-tax Southeast. Seeking to catch up with other red states, House leaders, with support from the governor, introduced H. 4216 to implement a 3.9% flat tax. On paper, it looks like a voter-friendly reform.
But buried in the bill is a major shift: It redefines taxable income to include earnings before federal taxes and deductions. Under current law, South Carolina only taxes adjusted income after those reductions. The change would quietly increase the tax burden for most middle-income residents — even as lawmakers pitch it as a cut.
The state Freedom Caucus quickly flagged the problem, releasing an analysis showing how the bill would impact working families. Because of South Carolina’s relatively low income levels, someone earning the state’s median income would pay $716 more per year under the proposal. Lower-income families could see increases of $800 to $1,000 annually.
Even families earning $100,000 — roughly the combined salary of a married teacher and police officer — would face a net increase of $327. Taxpayers wouldn’t break even until they hit $115,000 in income. And even then, a household making $119,000 would only see a modest benefit of $93.
The Office of Revenue and Fiscal Affairs released a distributional analysis showing the percentage of taxpayers at each income level who would pay more under the proposed tax structure:
According to the data, between 78% and 90% of those earning $20,000 to $75,000 would see their taxes go up. Even among those earning $100,000 to $150,000, about 60% would end up paying more.
While it’s reasonable to want to broaden the tax base — which any flat tax will do — you can’t call this a tax cut if the overwhelming majority of middle-class families are paying more. To deliver actual relief, lawmakers would either need to drop the flat rate even lower or apply the 3.9% rate only to income after federal taxes and deductions.
Math doesn’t lie. This isn’t a cultural dispute, a philosophical debate, or a regulatory disagreement. State leaders know exactly what the numbers say — so the real question is: Why are they still pushing this bill?
The answer is simple. They don’t want to cut spending to pay for a real tax cut. In fact, the governor is proposing a 3.5% increase in the state budget. That’s why Republicans are promoting a tax plan that isn’t a tax cut at all.
Instead, they’re laying a political trap. By presenting this proposal as tax relief, they aim to paint the Freedom Caucus as anti-tax cut — even though the bill raises taxes on the majority of state residents. A few co-sponsors have already withdrawn their names, slowing the bill’s momentum, but it’s telling that this was the strategy in the first place.
Here’s the bottom line: Once a state adopts a progressive income tax, fixing it within the current framework is almost impossible. A better path would be to follow Mississippi’s lead. It recently joined nine other states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — in eliminating its income tax entirely.
South Carolina could do the same by cutting spending to offset lost revenue or transparently pairing income tax repeal with increases elsewhere. But to sell a plan that raises taxes on two-thirds of residents as a “cut” is flat-out dishonest.
Unfortunately, this move by South Carolina GOP leadership is nothing new.
A recent analysis using the Club for Growth’s conservative scorecard found that Republican House members — excluding the South Carolina Freedom Caucus — averaged just 27%. That’s barely above the average Democrat. In contrast, Freedom Caucus members averaged a score of 92%.
In other words, the ideological gap between the Freedom Caucus and the rest of the state GOP is far wider than the gap between Republicans and Democrats.
Until voters start focusing on primary elections — where the real ideological battles are fought — red states will keep giving us the big government blues.
South carolina, Rino republicans, Rinos doing rino things, Flat tax, Tax increase, Freedom caucus, Conservatives, Spending, Income tax, Murrell smith, Henry mcmaster, Opinion & analysis
