The bill would exempt the first $10,000 in business property from tax. Counties could lose $9M, and some may raise millage to offset it.
COLUMBIA, S.C. — A bill moving forward at the State House aims to provide small businesses with a tax break and attract more businesses to the state.
Year after year, small businesses pay a tax on their business personal property. It’s items like chairs, computers and equipment.
A new proposal, unanimously approved by the South Carolina House, would exempt the first $10,000 of that property from the tax. Businesses with less than $10,000 in taxable property would not have to pay at all.
Thomas Rhodes, who owns Rhodes Branding, said the tax adds up quickly. He said his copying machine, which has a value that’s been depreciated to zero, still racks up hundreds in taxes every year.
“Every year we pay over $300 in property tax on one copying machine. It just doesn’t make any sense,” Rhodes said.
He said he continues to pay on that, along with every chair, computer and desk, at every business he operates. Each must be inventoried separately at each location and taxed at the local millage rate.
“We’ve already paid sales tax on this stuff, and now we’re paying a tax on it every single year,” Rhodes said.
Bill sponsor Rep. Brandon Newton said the change is meant to support the businesses that support their communities.
“They’re the ones that sponsor the Little League teams and give to the local charities, and we’re trying to show them they’re appreciated, and we want to make sure they’re getting a break,” Newton said.
County governments would have to absorb the loss in tax revenue. A fiscal impact study found that counties across the state would lose a combined total of around $9 million. Richland County noted it might have to increase the millage rate to offset the impact.
Newton said counties helped craft the bill in a way that minimized the impact, carving out tax breaks that target only small businesses.
“This is only going to impact these local governments in a much smaller way than a larger cut would have done for our larger business,” Newton said. “Our larger businesses, this tax is a rounding error. But for our small businesses, these are hundreds and sometimes thousands of dollars coming out of their pockets that they can use to pay themselves, pay their employees or reinvest in their businesses.”
South Carolina Manufacturers and Commerce, along with 24 local chambers of commerce across the state, urged lawmakers to pass the bill in a letter, arguing South Carolina’s current rules place businesses at a competitive disadvantage.
Many businesses said the biggest burden is the time it takes to count and record every taxable item, or, for those who can afford it, paying an outside entity to do so.
“Most times in small business, the owner is the head of HR, the head of accounting, the head of purchasing, the head of sales, the head of marketing, the owner, the janitor and just does everything,” Rhodes said. “And so this creates an unnecessary burden on small business because they don’t have that infrastructure that larger businesses have to deal with it.”
The legislation also cuts the corporate license fee for certain South Carolina-based corporations. State analysts estimate that the change would reduce general fund revenue by nearly $1.7 million a year once fully phased in.
The bill has been approved by the House but still needs approval from the Senate before it can head to the governor’s desk.
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