Category Archives: Taxes

Stop trying to oversimplify things, people! It doesn’t help.

Above, you see my results from an exercise offered today by The Washington Post that promised to show me “what kind of budgeter you are.” It was offered, of course, within the context of the debt ceiling “debate” going on in Washington.

It is laughable. Apparently, since I’m not, I don’t know, a member of AOC’s “squad” or something, I “believe that the national debt is the foremost crisis.”

It says that, even though I said a flat no to “Cut Defense Spending.” So go figure. I also, by the way, said no to “Enact House GOP debt ceiling bill.”

“Play our budget game,” the headline that led to the above brilliant conclusion. As though I were a child to be entertained. But at least they admitted that it was a game, and didn’t claim it bore any resemblance to real budgeting on the federal level — which, like everything else in government, is a tangled web of conflicting priorities.

Bottom line, as a more-or-less rational person, I believe we should reduce the debt. And I don’t see any way we get there without doing both of the following:

Cutting some spending.
Raising some taxes.

In fact, it will involve both cutting more spending, and raising more taxes, than most people even want to think about. Still, note the “some” in each case. Only a fool would cut all spending in sight or raise every tax suggested. The decisions to be made along the way are staggeringly complicated, and neither ideology nor simple rule of thumb will not guide you to anything that could remotely be recognized as wise governance. The process requires discernment and deliberation.

And putting silly labels on yourself or others — especially simplistic ones assigned by such a “game” as this — doesn’t help you acquire those qualities…

State Chamber takes on Act 388. I wish it luck and success

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A chart the Chamber shared in context of the issue. Source: Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence 2019

I’m kind of busy at the moment, so I’m not going to rehash all the reasons why Act 388 was an execrable piece of legislation that distorted our state’s system of taxation and made it both unfair and ineffective.

You can go back and read where I’ve done it before.

But while I’m thinking about it, I wanted to make sure you read Ted Pitts’ op-ed on the subject in The Post and Courier. Ted — my former House member — is the head of the state Chamber, so naturally he’s against something that shifted so much of our tax burden from owner-occupied homes to businesses.

I particularly appreciate that in this piece, he emphasizes the extreme regressivity of the Act, causing renters to pay as much as three times as much in property taxes as homeowners do.

Anyway, just go read the whole piece. His column refers in the lede to a recent column on the subject by Cindi. Read that, too.

Both of them, being astute and fair-minded observers, see Act 388 as one of the worst things our Legislature has done so far this century.

They’re right. That doesn’t mean anything’s going to happen. It should, and Ted is right to point to the current discussions about how we fund schools as a great opportunity. But it’s a tall order. Act 388 is the kind of dumb, irresponsible legislation that makes lawmakers popular with some of their loudest constituents. The voice of reason seldom shouts that loud.

Today’s Hot Topic: Columbia taxes and ecodevo

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We had a pretty good crowd, who seemed engaged.

We’ve relaunched the Greater Columbia Community Relations Council’s monthly Hot Topic discussions. Today at the Chamber offices we tackled the subject of Columbia property taxes and their effect on economic development efforts. Or, as local Chamber head Carl Blackstone said when I told him about it, “My favorite topic.”

On the panel were:

Mayor Steve Benjamin
Paul Livingston, chairman of Richland County Council
Henry Baskins, executive vice president, Greater Columbia Chamber of Commerce
Ryan Coleman, director of ecodevo for the city
Jeff Ruble, head of ecodevo for Richland County
Lasenta Lewis-Ellis, president/CEO of LLE Construction Group

We had a good discussion, and will probably have another to follow up before long.

Local businessman Hal Stevenson moderated.

To give y’all some idea of what was said, here are some of my Tweets from during the session:

I’m at the Greater Columbia Community Relations Council’s forum on the city’s tax structure and the challenges it presents for economic development… pic.twitter.com/pASZA6E6il

— Brad Warthen (@BradWarthen) February 8, 2019

Mayor @SteveBenjaminSC says 76.5 percent of city’s land area is tax-exempt. That and Act 388 make for a double whammy on business property taxes in Columbia.

— Brad Warthen (@BradWarthen) February 8, 2019

Jeff Ruble, who handles economic development for Richland County, says many measures taken to lure prospects to the area are a matter of “covering up for bad tax law.”

— Brad Warthen (@BradWarthen) February 8, 2019

And THAT, of course, can and should be laid squarely at the feet of the General Assembly. They passed Act 388. (That’s me talking, not any of the panelists.)

— Brad Warthen (@BradWarthen) February 8, 2019

.@SteveBenjaminSC suggests we need to speak from a position that recognizes our strengths. For instance, in a nod to @CCPColumbia, he notes that Columbia has more restaurants downtown than Greenville does…

— Brad Warthen (@BradWarthen) February 8, 2019

All of that said, the mayor speaks pragmatically when he says that he imagines the chances of the Legislature undoing the damage it did with Act 388 are “slim to none.”

Local attorney Mitch Willoughby chats with the mayor after the forum.

Republicans in Washington actually do something

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Today, Washington Republicans, nearly a year after capturing total control of both political branches, actually did something they had said they would do.

They passed a huge, complicated tax package that no one has made a convincing case the nation needs, that is startlingly unpopular (“24 percent of Americans say that the Trump-backed tax plan is a good idea, versus 41 percent who believe it’s a bad idea“), and that the experts predict will significantly increase the national debt.

Whatever it does to the country, the bill has made one man very, very happy…

But hey, they did something, whether it was a good idea or not, and they’ve wanted to do something for so long, so they’re excited about it. So, congrats, guys. I guess…

Paul Ryan can die happy now, his heart’s desire having been achieved. They say he’s been working toward this since 1993. Which tells you a lot about Paul Ryan.

I am not excited, partly because it is about money. And I just find it hard to get interested in money, even my money, during those anomalous periods of my life when I have some. Needless to say, I have not tried to decipher any of those stories out there that would tell me how I would fare under this boondoggle. Just don’t tell me, OK?

Anyway, that would not be the criterion I’d go by in judging whether this is a good move or not. The point is whether it’s good for the country. And I just can’t begin to tell you whether it’s a bad idea, or a worse idea. (Yes, hypothetically it could be a good idea, but I’ve been watching this come together, and that seems fairly unlikely. Perhaps I’ll be surprised.)

But perhaps some of y’all have passionate opinions on the subject, or even salient observations to make.

So here’s your chance…

Samuelson will tell you the truths you don’t want to hear

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Robert J. Samuelson — whom I don’t read as often as I should because of his tendency to write about money and other things one can measure with numbers — is not a guy to read at all if you want him to tell you things you want to hear.

Robert J. Samuelson

Well, let me amend that: I think the things he has to say are fine, when I can cut through the numbers and read him. But based on voting patterns I’ve seen in recent years, he’s likely to give a lot of other folks apoplexy.

For instance… not satisfied merely to slice and dice the Republicans’ contemptible tax “reform” plan last month, he strode right past the nonsense to speak a home truth: “Americans aren’t taxed enough.”

He didn’t mean it in absolute terms, of course. There is no perfect amount of taxation, and saying “this isn’t enough taxation” in a vacuum would be as idiotic as say, also in a vacuum, that “Americans are taxed too much.” And Samuelson is not an idiot.

No, he means that as long as America means to spend X amount — and there has been no credible effort to reduce the lion’s share of spending — it must have the common sense and maturity to pay X amount in taxes. And it’s been a very long time since we’ve done that.

As he put it:

The truth is that we can’t afford any tax reduction. We need higher, not lower, taxes. What we should be debating is the nature of new taxes (my choice: a carbon tax), how quickly (or slowly) they should be introduced and how much prudent spending cuts could shrink the magnitude of tax increases.

To put this slightly differently: Americans are under-taxed. We are under-taxed not in some principled and philosophical sense that there is an ideal level of taxation that we haven’t yet reached. We are under-taxed in a pragmatic and expedient way. For half a century, we haven’t covered our spending with revenue from taxes…

We resist the discipline of balancing the budget, which is inherently unpopular. It’s what Eugene Steuerle of the Urban Institute calls “take-away politics.” Some programs would be cut; some taxes would be raised. Americans like big government. They just don’t like paying for it….

But if you think that’ll make some people mad, consider his column today. But first, someone bring the smelling salts for Bud and Doug. The headline is, “Why we must raise defense spending.” An excerpt:

Politically, the vaunted military-industrial complex has been no match for the welfare state’s personal handouts. There has been a historic transformation. In the 1950s and 1960s, defense spending often accounted for half of the federal budget and equaled 8 to 10 percent of gross domestic product (the economy). In 2016, defense spending was 3 percent of GDP and 15 percent of the federal budget, according to the Office of Management and Budget. Meanwhile, welfare programs — called “human resources” by the OMB — accounted for 15 percent of GDP and 73 percent of federal spending….

The result is this:

Here is the assessment of Mackenzie Eaglen, a defense specialist at the right-leaning American Enterprise Institute:

“The United States now fields a military that could not meet even the requirements of a benign Clinton-era world. The services have watched their relative overmatch and capacity decline in almost every domain of warfare . . . for nearly two decades. As rival nation-states have accelerated their force development, the Department of Defense has stalled out, creating a dangerous window of relative military advantage for potential foes. . . . While the United States continues to field the best military personnel in the world, policy makers have asked them to do too much with too little for too long.”…

So, to summarize, we’re not taxing enough for the spending we’re doing, and we’re not spending enough to adequately perform what was originally the government’s chief responsibility.

And before I get the cliche response — citing numbers showing how much more we spend than other nations is pretty pointless. We emerged from 1945 as the chief guarantor of a security order designed to stave off World War III. And the only nations that have shown any interest in taking that mantle of dominant military power off our hands have been the very last big countries a believer in liberal democracy would want to see do so.

Samuelson may write too much about numbers, but I have to hand it to him: He goes right where the number lead him, regardless of whose ox gets gored, on both the left and the right…

Nice try at seeming balanced, senator — but you failed

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Back in the late ’80s, when The State had money for such things, my duties as governmental affairs editor included supervising the South Carolina Poll (at least, I think that’s what we called it — it’s been a long time).

Cindi Scoppe was the reporter I had working on it, because she had studied polling at UNC-Chapel Hill and was keenly interested in the process. She also had the kind of incisive mind, even as a very young reporter, that meant for a very critical eye when we were drafting the questions (which is why I later brought her up to editorial).

She and I and Emerson Smith, who used to bridle when I called him our “pollster” in print (political polling was more of a sideline for him, but he proved to be very good at it), would work hard at making sure that every question was as neutral as possible, and would give us the cleanest possible read on what the public really thought. This, of course, is how journalists spend a great deal of their time and energy — even though Trump supporters and that O’Keefe idiot think journalists do the precise opposite, bending the news to their supposed biases. (They think this because they know zero, zip, nada about journalists and what motivates them. And because they have the kinds of brains that assume if someone isn’t reinforcing their biases, that someone is biased. Especially now that there are plenty of information sources that will humor them.)

I think we did a pretty good job. I can’t confirm that with evidence on the issue questions, but Emerson’s polls were remarkably accurate on the kinds of things that can be confirmed — such as predicting election results.

Anyway, stepping outside of what you think in order to pose a neutral question takes practice, I guess, and politicians don’t get much of that kind of practice.

So it was that when Lindsey Graham tried to poll his constituents about the tax plan he and his GOP colleagues are determined to rush through Congress before anyone has a chance to stop them, I think he really tried to at least look like he was posing the question fairly.

But he fell short. Way short.

Here’s what he sent out:

TAX REFORM IN THE SENATE

Dear Friend,

The United States Senate will begin debating tax reform tonight and I want to hear from you on this important issue facing our nation.

Supporters of Tax Reform:
President Trump supports tax reform and has pushed the Senate to pass this important piece of his agenda for America. In fact, he came to the Senate yesterday to push Senators to support this plan. His pitch was simple hard working Americans should be allowed to keep more of what they earn. According to the nonpartisan Tax Foundation, in South Carolina the average family would be allowed to keep $2,391 more in their pocket. The legislation also will benefit business by creating more than 13,000 jobs in our state.

Opponents of Tax Reform:
Opponents of tax reform have said they believe it is unnecessary and the Senate should defeat it when it comes up for a vote. They have expressed concerns that tax reform could benefit the wealthy at the expense of the middle and lower income Americans. They have not offered an alternative proposal and feel our current tax system is working as intended.

Regardless of whether you support or oppose tax reform, hearing from you allows me to better represent your interests in the United States Senate.

Make Your Voice Heard:

Click here to share your thoughts

I appreciate you taking this opportunity to make your voice heard before this important vote.

Sincerely,

Lindsey O. Graham
United States Senator

It looks nice, and sounds nice if you read it aloud in a calm voice and don’t engage in critical thinking. Of course, I’m talking about where he tries to make the case against the legislation.

But come on. What would be the first thing you would want to mention as an argument against it, assuming you were a fair-minded person. What’s the thing that even a person who thought this package of cuts was wonderful might have qualms about?

Why, the deficit of course. That’s why Bob Corker has demanded, as the price of his support, a trigger that will automatically raise taxes if this “reform” increases the deficit the way it certainly will.

But there’s no mention of that. So right away, this attempt at “fairness” fails. Then, of course, it gets worse: “They have not offered an alternative proposal and feel our current tax system is working as intended.” To which the average recipient on his mailing list responds, They haven’t even offered an alternative (you know, like Republicans on health care)? Then screw ’em! And in what universe is there an idiot big enough to believe “our current tax system is working”?

Of course, I’m only analyzing the way he presents the “con” side.

His representation of the “pro” side is shilling of a shameful order. If I were to parody an attempt to condescend to the prejudices of the kind of people who voted for Trump (something the senator is doing a lot these days), I would probably think I’d gone overboard if I wrote something this embarrassing: “President Trump supports tax reform…” “this important piece”… “hard working Americans should be allowed to keep more of what they earn”… “in South Carolina the average family would be allowed to keep $2,391 more in their pocket” (translation: We will pay you $2,391 to support this bill!)… creating more than 13,000 jobs in our state.”

Gimme a break.

No, wait! I take that back — you might take that as “Yes, I want my tax break!” But I don’t, because I haven’t heard anything about this bill that persuades me it’s a good idea. And this laughably transparent bid for my support didn’t help your case…

Somebody forgot to drive a stake into the Senate ‘health’ bill

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People on the left have told them it’s a horrible bill.

People on the right have told them it’s a horrible bill.

People in the center have done the same.

Yet Republican leaders in Congress keep on trying to resurrect it when it should be dead:

McConnell is trying to revise the Senate health-care bill by Friday

Senate Majority Leader Mitch McConnell is aiming to send a revised version of his health-care bill to the Congressional Budget Office by as soon as Friday, according to Capitol Hill aides and lobbyists.

The effort reflects the tight timeline McConnell faces in his attempt to hold a vote before the August recess — and the pressure he is under to make changes that improve the CBO’s measure of the bill’s impact on coverage levels and federal spending.

McConnell is trying to move quickly to produce a new CBO score by the time lawmakers return to Washington in mid-July, giving the Senate about two weeks to fulfill the majority leader’s goal of voting before the August recess….

Once again we see the relentless phenomenon that characterizes our politics. Keats said it this way:

The best lack all conviction, while the worst
Are full of passionate intensity.

People with good intentions see that the bill is dead, say “that’s good,” and turn away. They go back to their lives. But the people with the very worst, most destructive ideas just never, ever give up. It happens time and again.

It’s like, in the final reel of the horror movie, when everybody thinks Dracula is dead, and he pops back up out of his coffin yet again — because no one remembered to put the stake through his heart…

Micah Caskey’s thoughtful words on gas tax bill

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When I first met Micah Caskey last year, I was still toying with the idea of running for the House seat he was seeking. My interview with him put that out of my head, I was so impressed with him. I agreed with him on so many things, and was so impressed by the thoughtful way he approached every issue even when I didn’t agree, that it occurred to me that if I did run against him, I might be tempted to vote for him anyway.

The statement he posted on Facebook regarding the roads bill just passed over the governor’s veto provides a sample of what I’m talking about. When I posted in passing about him and the bill yesterday, I had not yet seen this.

I’m not sure if this is the same statement he made on the floor of the House yesterday, but whatever he said there also made an impression, judging by multiple Tweets from @cassielcope and @AveryGWilks, reporters for The State.

An example:

Overheard on the House floor after @MicahCaskey‘s speech: “Damn!”

— Avery Wilks (@AveryGWilks) May 10, 2017

As I said, an impression was made.

Here’s what he said on Facebook:

The #1 issue in South Carolina is improving our state’s transportation infrastructure. Our roads are in terrible condition and we’ve got to fix them.

Micah Caskey

I want to address my position on the roads. This is a rather long post, but I think it’s important that I share where I stand on the issue. I ran for office promising folks that I would call the balls and strikes as I saw them, even if it wasn’t politically popular.

Well, ladies and gentlemen, it’s time to pay the piper. It’s time to raise our state’s gas tax.

Sadly, the Governor hasn’t had anything helpful to say about fixing the roads. Instead of drawing a roadmap for how things can be improved, he’s chosen to do what we’ve come to expect from career politicians:

1. Put head in the sand
2. Yell “CONSERVATIVE!”
3. Hope nobody pays attention to reality

In the absence of Executive Branch leadership, the task of fixing roads has been taken up by the Legislative Branch. Unfortunately, crafting the law to fix the roads in the General Assembly as been incredibly contentious. There are a lot of cooks in the kitchen and everybody thinks his or her solution is best.

The 124 members of the S.C. House gave it our best shot in House Bill #3516. And, as is their custom, the 46-member S.C. Senate returned the House bill will something that looked very different. (To their credit, the Senate did at least manage to break from their tradition of not passing a roads bill out at all.)

When the House and the Senate don’t agree on versions of a bill, the parliamentary rules require there to be a “Conference Committee”, made up of 3 members from each body, to sit together and negotiate a compromise.

If you think of each body’s initial bill as a compromise from within that respective body (you need a majority vote to get out of the body, after all), the Conference Committee’s version is a Compromise of Compromises.

An ugly baby, to be sure.

I have broken down the Conference Committee version of H.3516 below. Like me, there’s probably a lot you don’t like about it. But, ultimately, the two must-haves (for me to vote for it) are there:

1. Gas tax money goes ONLY to roads (no sidewalks, parks, etc.)

2. There is reform in governance at DOT so that citizens can rightfully hold the Governor accountable for the performance of his agency.

This bill has both. (1) All new revenue must go into the Infrastructure Maintenance Trust Fund for existing infrastructure improvement only. (2) The Governor directly appoints all of the DOT Commissioners, with approval by the entire General Assembly — not just the Senate — and can remove a Commissioner at-will, on his own.

In truth, I think we need to eliminate the DOT Commission entirely and elevate the Secretary of Transportation to a Cabinet seat, but my view is a minority view in the 170-member General Assembly (we lost an amendment vote to do that in the House 33-84). Nevertheless, I think the Conference Committee version gives citizens the ability to hold the Governor accountable when the Commissioners he appoints stray from his priorities.

South Carolina deserves action. If past Governors or General Assemblies had acted in the past, we wouldn’t be in this position. However, since we can’t go back in time, our choice is simplified.

I don’t think raising taxes is a good answer, but I also see it as the only realistic answer for this problem. There’s no magic roads fairy coming to fix this. Waiting on the ‘perfect’ answer doesn’t work in the military, and it doesn’t work here.

I will vote to adopt the Conference Committee Report, and if the Governor chooses to put his own career ahead of South Carolina’s best interest, I’ll vote to override his veto.

Certainly don’t let me get in the way of your government-hating. I encourage you to be skeptical. I implore you to scrutinize SCDOT more than ever. I certainly will. Whether through the Legislative Audit Council, Inspectors General, or the Legislative Oversight Committee, I will be working to ensure SCDOT delivers a better investment return of tax dollars than they have in the past. I invite you to put your energy toward the same.

From where we are today, a gas tax increase is the only responsible solution.

-Micah

—-

Conference Report on Roads Bill
GOVERNANCE AND REFORM

● Provides real accountability and transparency at the Department of Transportation (public records, mandated meetings, ethical requirements for commissioners)

● Gives Governor complete control of the Commission with a clear line of authority and at-will removal

● Highway Commission organized to reflect regional representation with 7 Congressional districts and 2 statewide at-large members appointed by the Governor (adds 1 member to current structure)

● Requires General Assembly, not just the S.C. Senate, to approve all 9 Highway Commission appointees

● Strengthens DOT’s control over project authorization and financial decisions by the State Transportation Infrastructure Bank
FUNDING

● Creates a long-term and sustainable funding stream by increasing the motor fuel user fee by 2 cents/gallon over the next 6 years, not exceeding 12 cents/gallon

● Safeguards taxpayers from future automatic tax increases by not indexing for inflation

● Protects SC taxpayers from continuing to solely foot the bill for infrastructure repair by not using General Fund dollars and captures 30% of the motor fuel user fee revenue from out-of-state motorists

● Creates an Infrastructure Maintenance Trust Fund to ensure all new revenue collected from the motor fuel user fee is used only for existing infrastructure needs

● Does not increase or change fees for South Carolina driver’s license applications or renewals

● Increases funding for County Transportation Committees targeted to repair rural and secondary roads

● Captures revenue from alternative energy motorists by creating a biennial registration fee for all hybrid and electric vehicles

● Established a road use fee to capture revenue from out of state truckers

● Raises the cap on motor vehicle sales tax to $500 and creates a $250 out of state maintenance fee

● Incentivizes road construction industry to return to SC with responsible infrastructure investment

● Provides $640 million in new annual revenue for infrastructure maintenance needs when fully implemented

TAX RELIEF

● Includes responsible tax relief to offset the user fee increase for South Carolina residents

● Offers a refundable income tax credit equal to the motor fuel user fee increase that must be reauthorized prior to 2023

● Enhances already existing College Tuition Tax Credit for every South Carolina tuition-payer to enhance workforce development

● Contains a non-refundable Low Income Tax Credit for working families (not federal model)

● Increases the maximum income tax credit from $210 to $350 for dual income household joint filers

● Reduces SC manufacturers property tax burden by $35 million using a phased-in approach over 6 years

I’m proud he’s my representative. We need a lot more like him. Keep up the good work, Micah!

Robert Samuelson reminds us vegetables must be eaten

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I wish to call to your attention this piece by Robert Samuelson of The Washington Post Writers Group.

An excerpt:

Let’s be clear: America is an undertaxed society. Our wants and needs from government — the two blur — exceed our willingness to be taxed. This has been true for decades, but it’s especially relevant now because the number of older Americans, who are the largest beneficiaries of federal spending, is rising rapidly. Unless we’re prepared to make sizable spending cuts (and there’s no evidence we are), we need higher taxes.

To the extent that President Trump’s proposed “tax reform” obscures or worsens this inconvenient reality, it is a dangerous distraction. We cannot afford large tax cuts, which are pleasing to propose (“something for nothing”) but involve long-term risks that are not understood by the president or, to be fair, by economists. Piling up massive peacetime deficits is something we haven’t done before. We cannot know the full consequences….

Looks like Samuelson’s bucking to be named patron saint of the Grownup Party, noting matter-of-factly that not only are vegetables good for us, but we must eat them.

By the way that line, “America is an undertaxed society,” goes double — no, triple, nay, 100 times — for South Carolina. I just thought I’d point that out for those still confused, especially the senators who think you can’t raise a tax that badly needs raising — the gas tax — without lowering some other taxes that has nothing to do with it.

Lucas gives McMaster’s roads letter the answer it deserves

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Henry McMaster continues to disappoint those of us who had hoped for some leadership for a change over at the governor’s office.

At least, we kept telling ourselves, he hadn’t threatened to veto the bill increasing the gas tax and reforming DOT, the way Nikki Haley would have done.

Well, today he crossed that line.

Then he exacerbated it by coming up with a cockamamie alternative for paying for road repairs:

Promising to veto an increase to the state’s gas tax to repair the state’s roads, S.C. Gov. Henry McMaster wants lawmakers instead to borrow up to $1 billion to fix South Carolina’s crumbling roads.

McMaster, governor since January, urged lawmakers to change a proposed $500 million borrowing plan, proposed by the House, to instead spend that money — and more — on roads. McMaster made his proposal in a letter Tuesday to House Speaker Jay Lucas, R-Darlington….

The speaker gave the proposal the contempt it deserved. Translated from genteel Lucasspeak, he not only said “No,” but “Hell, no:”

Governor McMaster’s proposal continues the pattern of placing the costs of road repair solely on the South Carolina taxpayer and not on out-of-state motorists who use and deteriorate our crumbling roads. Borrowing more money to fix South Carolina’s roads and bridges will not serve as a permanent solution to our infrastructure crisis. The House passed our roads bill with an overwhelming bipartisan and veto proof majority, which protects the South Carolina taxpayer by providing a sustainable funding stream that requires every motorist to pay their fair share.

Not only is Henry throwing behind the runner — he’s throwing to first when the House has long ago crossed home plate — but the proposal would have been ridiculous even if it were still an open question in that body.

We have a mechanism for the ongoing funding of roads — the gas tax. You want to fix roads and you don’t have enough money, you raise the gas tax. It’s not complicated, and there is no call for trying to reinvent the wheel as a way of avoiding the obvious, commonsense solution….

Thank for the leadership, Speaker Lucas

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If seems that Grover Norquist no longer runs the South Carolina House of Representatives.

Jay Lucas does. And he’s doing a good job. Along with Rep. Gary Simrill and everybody who voted for his bill yesterday.

It shouldn’t be remarkable that the House just voted to increase the state gasoline tax by (eventually) 10 cents a gallon. After all, everything about the situation would tend to lead any reasonable person to take that action:

We need road repairs.
We lack money for road repairs.
We have a tax that is dedicated to paying for road needs.
That tax is among the lowest in the country.
It hadn’t been raised for 30 years.

But as we know, our Legislature hasn’t been inclined to make calm, objective decisions with regard to taxes since the GOP took over in 1995. Since then, taxes have been for cutting, no matter the situation — because ideology rather than real-life conditions have ruled. And that approach, as the Speaker says, “simply places politics above responsible public policy.”

Speaker Jay Lucas

Of course, you don’t have to be an anti-government ideologue to have reservations about a tax increase. And in this instance, it would have been wrong to give DOT more money without reforming the governance of the agency. But this bill takes care of that, too.

Is this a done deal? Nope, because it still has to get through the Senate, which unlike the House isn’t run by anybody. As a body, it has been as allergic to DOT reform as the House used to be to tax increases. And that’s not the whole story. There’s also Sen. Tom Davis, whom The State today described as “libertarian-leaning,” which made me smile. Tom leans toward libertarianism the way Donald Trump leans toward self-aggrandizement.

But I want to praise Speaker Lucas and the House for getting us this far.

Folks, let’s pay for our roads ourselves, OK?

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Good for these House members:

A plan to raise S.C. gas taxes by roughly $60 a year was approved Tuesday by a panel of S.C. House members.

The bill will be considered by the full S.C. House budget-writing panel on Thursday.

The proposal is an effort to address the the $1 billion a year the Transportation Department has said it needs to repair and maintain the state’s existing road network….

And good for Speaker Jay Lucas and the other leaders who’ve gotten behind a bill to do the obvious: raise the gas tax to improve our roads.

I haven’t written about this courageous and rational move because I hadn’t fully made up my mind what to say about it. It’s basically a laudable, long-overdue proposal that is nevertheless seriously flawed.

The reasons why it’s laudable and long-overdue are obvious to all but those rendered blind by ideology:

This tax is our state’s mechanism for paying for roads.
We need road repairs, and don’t have enough money.
Our gas tax is one of the lowest in the country.
It hasn’t been raised since 1987.

So, you know, duh — raise it. Especially since we no longer have a governor who absurdly (and we’re talking Alice in Wonderland absurdity) threatened to veto a gas tax increase that wasn’t accompanied by a much larger decrease in other taxes, thereby more than erasing any benefit from raising the gas tax.

But here’s the rub: It’s not paired with reform of the state Department of Transportation. And it needs to be. That agency needs to be more accountable before we give it more money.

Unfortunately, after last year’s non-reform of the agency, the most recent in a long line of non-reforms our General Assembly has handed us, there’s little appetite or energy for trying again this year, knowing the same obstacles exist. As Cindi wrote today, “the reality is that if our best advocate, House Speaker Jay Lucas, isn’t pushing reform, we’re not going to get reform.”

So that’s that. (Oh, and if you decry the power Hugh Leatherman regained upon his re-election as president pro tem of the Senate, this is an issue where you have a point — he’s a big obstacle to reform.)

Bottom line, we need to raise the tax, and we need reform. I haven’t yet fully decided what I would do were I a lawmaker. But I do admire the courage of those who finally broke the ridiculous taboo in that committee vote today — while I hope against hope for some reform to get attached to it later in the process.

But while I’m torn on that, I’m not on this: I’m not in favor of “solving” the problem by asking our new governor’s buddy Donald Trump to just give us $5 billion for infrastructure.

To begin with, it’s not a solution. Since $4 billion of that would go to roads, that kicks the problem down the road four years, no more. Which, conveniently, would be after the date that Henry McMaster hopes to be elected to stay as governor.

Given what we’ve seen from this Legislature over the last two decades and more, it is highly unlikely that it will be in the mood to raise the gas tax or any other tax four years from now. The fact that the House leadership is ready to do so now is something of a miracle — possibly resulting from giddiness over the departure of Nikki Haley — and unlikely to be duplicated.

Then there’s the fact that the federal government exists to fund and address national needs and priorities. There is no proposal currently on the table (that I know of) that would provide this level of funding nationally, so why should South Carolina — a state that with its super-low gas tax has refused even to try to pay for its own roads — be singled out for such largess? And no, “Because the president owes our governor big-time” is not an ethical answer. It probably makes sense in the deal-oriented private world Donald Trump has always inhabited, but to say the very least, it’s not good government.

My position on this is much the same as my reasoning against the state lottery way back when — public education is a basic function of the state, and if we want good schools, we should do what responsible grownups do: dig into our pockets and pay for them, not try to trick someone else into paying for them.

Similarly, if we want safe and reliable roads, we shouldn’t rely on some deus ex machina — or worse, cronyism — to deliver us from the responsibility of paying for them.

I see now that Henry is saying raising the gas tax should be the “last resort.” No, governor, trying to pay for our own needs ourselves should be our first resort. At least, it should come well before taking the begging cup to Washington. Besides, we’ve avoided doing this for 30 years now. How long do you go before it’s time for the “last resort?”

The bad news: Our $206 Trillion Fiscal Gap

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Laurence Kotlikoff, Joseph Von Nessen and Doug Woodward.

There was good news and bad news today at USC’s 36th Annual Economic Conference.

To be more specific, there was mildly, moderately good news, and really Terrible, Horrible, No Good, Very Bad news.

I’ll start with the good, which is on the local level. USC economists Doug Woodward and Joseph Von Nessen said that while growth has sort of leveled off in South Carolina, we’re in for a fairly good 2017. Advanced manufacturing remains strong, and things are going really well in construction — particularly along the coast — and retail. Merchants should have a good Christmas. If there’s a concern, it’s that employers are now having trouble finding qualified employees, particularly ones who are up to the challenges of automation — humans who can work with robots, basically.

On the other hand, we’re basically doomed.

That’s the message I got from the conference’s keynote speaker, Laurence Kotlikoff of Boston University, who started out noting that few Americans seem to have a clue what a fiscal hole we’re really in. Political leaders don’t speak of it, he said, pausing to complain about the “content-free election season” we just experienced. (Of course, you’d expect him to be dissatisfied with that, since he actually ran for president — unsuccessfully, he added dryly.) Oh, sure, they might speak of the $20 trillion national debt — which he noted isn’t really that, since the Fed has bought back $5 or 6 trillion of it — but they ignore the bigger problem.

That’s the true Fiscal Gap, as he calls it, which includes the liabilities that have been kept off the books. You know, Social Security, Medicare and the like — liabilities that aren’t acknowledged in the federal budget, but which are obligations every bit as binding as if the future recipients held Treasury bonds.

That adds up to $206 trillion.

There’s more bad news.

If we think in terms of what it would take for the nation to deal with that liability, our government is currently 53 percent underfinanced. That means that to meet these obligations, we’d have to have 53 percent across-the-board tax increases.

It gets worse.

If we don’t raise taxes by 53 percent now (or make drastic cuts to current and future spending that might somewhat reduce that need), then they’ll have to be raised a lot more on our children and grandchildren.

Dr. Kotlikoff has been raising the alarm about this for years. Here’s an oped piece he wrote for The New York Times in 2014. As he concluded that piece:

What we confront is not just an economics problem. It’s a moral issue. Will we continue to hide most of the bills we are bequeathing our children? Or will we, at long last, systematically measure all the bills and set about reducing them?

For now, we blithely sail on. But prospects aren’t good. None of the three economists, who spoke at a press conference before the event, had anything good to say about incoming political leadership on the national level. In fact, quite a bit of concern was expressed about 3 a.m. Tweets, any one of which could trigger a trade war with China before the day is out.

I came away feeling a bit like Damocles — or rather, like the nation is Damocles, since the sword fell on my head sometime back. And we just elected a guy who thinks he’s a national hero because he interfered with one business that was going to send some jobs out of the country (an interference in the market that none of the economists think was a good idea).

I’m not holding my breath for any leadership on closing the Fiscal Gap. (Nor would I be had the Democrats swept the elections.) Are you?

“What’s THAT hanging up there?” “Oh, that? I call it the Fiscal Gap…”

Do you have questions about the penny tax?

Could we finally get comprehensive tax reform?

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One of our perennial hobbyhorses on The State‘s editorial board over the years was our demand for comprehensive tax reform.

We wrote about it a lot, whether you remember it or not. Which you probably don’t. It’s not the sort of issue that makes most people’s hearts go pitter-pat — even those interested in tax changes. (Readers would complain, “All you ever write about is the Confederate flag!” Or video poker. Or the lottery. Or whatever they didn’t want us to write about. To which I would say, “No we write about a lot of issues.” “Like what?” “Like comprehensive tax reform.” “Comprehensive what…?”)

Our point was this: Instead of making more and more piecemeal changes to tax policy, further distorting the tax burden in the state, how about if we act like we have some sense and do this: Figure out what it costs to do the things we agree state government should do, figure out how much it costs (that is to say, budget reform), and then come up with the fairest, least burdensome, most reliable ways to raise the money to pay for it.

Instead, year after year, lawmakers came charging into Columbia, determined to give this or that tax break to this or that constituency group — whoever was yelling the loudest at a given moment (say, people who owned homes that were rapidly appreciating) — without any regard to the system overall. Increasingly, that led to such things as relying less and less upon such stable and rational revenue sources as real property, and more and more reliance on such volatile — and oppressive to the economy — sources as sales taxes.

Years ago, I could have given you a list of specific things that needed addressing, but I’m not as up-to-date on the details today. Of course we should do away with the sales tax cap on cars. In fact, we should take all sales tax exemptions and throw them onto the table. Let the constituency for each have its say, but in the end, spread the pain around. You can’t make everybody happy.

(This is Doug’s cue to say, “Why don’t you start by calling for doing away with the sales tax on newspapers?” To which, as usual, I say, “Why? That’s not one of the more egregious ones, like the auto cap. It’s pretty average. Throw it on the table with the rest, and let only the most rational exemptions, if any, survive.” I’d be surprised if the newspaper one was allowed to stay.)

Trouble is, there’s little appetite for the holistic, good-government approach. Until maybe now:

Speaker Lucas Appoints House Tax Policy Review Committee

Member panel tasked with offering suggestions to reform outdated tax code

(Columbia, SC) – House Speaker Jay Lucas (District 65-Darlington) today appointed fourteen members of the SC House to serve on the House Tax Policy Review Committee. This ad hoc committee will be responsible for reviewing South Carolina’s current tax code and submitting suggestions for reform to the Speaker before the beginning of next legislative session. The group will hold its first meeting next Tuesday, August 30^th, 2016, at 2 P.M. in room 516 of the Blatt Building.

Speaker Jay Lucas

“Our outdated tax code needs a dramatic transformation in order to promote economic competitiveness and increase the size of our citizens’ paychecks. Achieving this difficult task is long overdue, but necessary to ensure our tax code is fair for our taxpayers. A broader and flatter tax code will help continue to spur job growth and provide greater opportunities for South Carolina families,” Speaker Jay Lucas stated.

Speaker Lucas selected Speaker Pro-Tempore Tommy Pope (District 47-York) to serve as Chairman of the House Tax Policy Review Committee. Additional members include: Rep. Todd Atwater (District 87-Lexington), Rep. Bill Bowers (District 122-Hampton), Rep. Mike Burns (District 17-Greenville), Rep. Joe Daning (District 92-Berkeley), Rep. Chandra Dillard (District 23-Greenville), Rep. MaryGail Douglas (District 41-Fairfield), Rep. Shannon Erickson (District 124-Beaufort), Rep. Joe Jefferson (District 102-Berkeley), Rep. Jay Jordan (District 63-Florence), Rep. Roger Kirby (District 61-Florence), Rep. Mandy Powers Norrell (District 44-Lancaster), Rep. Bill Taylor (District 86-Aiken), and Rep. Anne Thayer (District 9-Anderson).

“Representative Tommy Pope and the bipartisan members of this ad hoc committee were individually selected because of their leadership abilities and knowledge of the tax system. I am confident that this diverse group will successfully begin laying the groundwork for significant tax reform,” Speaker Lucas concluded.

Will this group come up with something based on reason instead of which wheel squeaks the loudest? The odds have always been against it, but I’m going to allow myself to hope…

Your thoughts about a TIF for Finlay Park?

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This doesn’t move me much either way, but I was just wondering whether any of y’all have strong opinions about this proposal floated by the Columbia mayor:

A multimillion-dollar renovation of Finlay Park and a pedestrian-friendly remodeling of parts of two major downtown streets might be within reach if local governments will agree to a controversial financing plan being floated by Columbia Mayor Steve Benjamin.

Benjamin said last week that he’s working on a proposal to create a small taxing district that would capture property taxes on buildings along Assembly Street stretching north to Laurel Street, west to just behind the rundown park and south to Washington Street.

The largest source of income would come from a proposed $60 million to $70 million, 15-story apartment building called The Edge that a Chicago-based company wants to construct near the Richland County library, Benjamin said….

Mayor Steve may propose this at an August council meeting, so you’ve got time to either encourage him or head him off with a tidal wave of protest…

This was the only picture of Finlay Park that I could find in my archives — it’s from a rehearsal of “Pride and Prejudice” in 2012.

Penny program starting to emphasize some results

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penny

The Penny tax program, with all its troubles, has realized that it had better start showing some results.

Hence the above release I received via e-mail yesterday.

It doesn’t erase their problems, but it’s smart of them to point out, “Hey, we’re doing something!”…

Penny Tax leads to… a sidewalk! So all you critics shut up, OK?

1 Reply

Yikes!

I got an email announcement from the Penny Tax program (maddening tagline, “Pennies Impacting People,” which I am not making up) trumpeting a triumphant milestone in the tax’s transformation of our local infrastructure:

A new sidewalk in the county has officially opened thanks to funding by the transportation penny sales tax. Richland County and the Richland Penny Program held a ribbon-cutting ceremony Friday, May 20 for the Windover Street Sidewalk Project.

“Completing projects and improving the quality of life for our residents is what the Transportation Penny Program is all about,” said County Councilman Torrey Rush. “The sidewalk may seem like a small project compared to the road widenings we have on the list, but this project is a big deal to the surrounding community.”…(read more)

Yeah, it kinda does. Seem small, I mean. Yeah, I know, if you live on that road and have to get around in a wheelchair this is a great improvement for you. But if you’re one of the taxpayers wanting some answers on what benefit you’re getting… it’s not so great.

At least Paul Livingston had the good sense to list some larger projects that are getting built…

No, wait. He didn’t. He referred us to the website, which touts…

Yikes again…

An exchange regarding county’s handling of the Penny Tax

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Richland County Council’s Paul Livingston stepped out into the line of fire today with an unabashed defense of the county’s doings with an op-ed piece headlined, “Facts show Richland penny tax is a success.”

If I’d been standing near him at the moment the piece hit the Web, I’d have moved away quickly. (But I’d have been cool about it, acting like I’d suddenly remembered something I need to run home for or something. Wouldn’t want to look cowardly or anything.)

An excerpt:

Paul Livingston

What began as a welcome audit of the program has morphed into an effort to undermine one of the best hopes Richland County has of reaching its full economic potential while providing a consistent, quality transit and transportation network that enhances the quality of life for all citizens.

I have not seen any evidence to support claims of illegal activity and corruption on the county’s part. Integrity is extremely important to me, and I take it personally when someone attacks my integrity.

County Council has only followed the will of the people. We haven’t done anything different than what voters requested and approved….

The fact is that a solid foundation has been laid to deliver on the promise of a modern bus system and better roads, bikeways, sidewalks and other special projects that will improve transportation.

The fact is that the COMET, crippled by a 45 percent reduction in service a few years ago, is now flourishing: It has restored lost service, introduced new routes, improved bus stops, adopted new technology to enhance riders’ experience, and more. Ridership has increased 150 percent.

And our roads and sidewalks are being fixed. Already, 76 roads have been paved or resurfaced, and other dirt road paving and resurfacing projects are underway….

But go read the whole thing at thestate.com.

An alert reader has pointed me to a tough rejoinder posted by Susan Quinn, a Facebook friend of mine (and, a quarter-century back, a student of mine that one semester that I taught a newswriting course at USC).

Here’s what Susan said:

Susan Quinn

While Mr. Livingston basks in the glow of a few dozen county road getting their potholes patched thanks to the Penny Transportation Tax, let’s recap some of the facts he evidently doesn’t wish to deal with.
FACT 1: The Penny Tax Development Team LLC has never obtained the required city or county business licenses and could be required to repay fees and possibly fines.
FACT 2: Millions of taxpayer dollars have been filtered to numerous outside PR firms when the County itself has a full-service PR department. I’m referring to Banco Bannister and Campbell Consulting (which, BTW, provided no documentation for work performed). I’m also referring to other businesses who have been awarded (using the phrase, “allowed to steal” has such a negative connotation) thousands of taxpayer dollars for alleged PR services (including one business …Strategic Business and Politics, LLC…which received $169,687 and which has its office in a UPS Store…sound fishy?)
FACT 3: The Penny Tax Development Team LLC has submitted exorbitant monthly invoices for items such as cars, cell phones, computers, internet services, printer paper and gourmet coffee. They’ve even submitted invoices for pest control services! And those pest control services did nothing to control the pests robbing us taxpayers! These expenses totaled over $35,000 FOR ONE MONTH, according to information obtained under a Freedom of Information request. And these are just some of the expenses the county will actually admit to!
FACT 4: Let’s not forget the $300,000 deals to people paid who had no training to do the work they were hired for, like the former City Councilman attorney who needed training on doing title searches and the former USC cheerleader turned real estate agent.
FACT 5: And let’s also recall the hundreds of thousands of dollars filtered to select individuals through the “Mentor-Protégé” program…a phony program that never even existed!
These are just a few facts that have come to the surface in the cesspool that is Richland County government. There are bound to be more as our county leaders get away with their multi-million (billion?) dollar blatant fleecing of us tax payers.

Perhaps you’d like to weigh in as well…

Graham gets award that won’t help him with the base, but really should

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This just in from Lindsey Graham:

Graham Named ‘Fiscal Hero’ For Work To Address National Debt

WASHINGTON – U.S. Senator Lindsey Graham (R-South Carolina) was named a ‘Fiscal Hero’ by the Campaign to Fix the Debt for his work during the 114th Congress to improve the nation’s fiscal future and address the core drivers of the national debt.

“Senator Graham has worked through a variety of channels to draw attention and find solutions to the nation’s fiscal challenges,” said Maya MacGuineas, Head of the Campaign to Fix the Debt. “While many lawmakers have chosen to bury their heads when it comes to these issues, Senator Graham has shown courage and leadership and has been willing to stand up for what is right for the country – even when it’s not easy to do so.”

“The longer we wait, the more severe and difficult the choices will be to fix the debt,” MacGuineas continued. “Yet very few Members of Congress take this problem seriously. Those who do, like Senator Graham, deserve our thanks and praise.”

Honorees included 26 members of the House and 21 Senators from both parties, covering a range of political views.

To be named a Fiscal Hero, lawmakers distinguished themselves by casting fiscally responsible votes; pushing their party leaders to make addressing the debt a priority; leading bipartisan policy efforts; and engaging and educating constituents.

The Campaign to Fix the Debt is a nonpartisan movement to put America on a better fiscal and economic path. More information on the group can be found on its website:http://www.fixthedebt.org/

#####

The nice thing about this organization is that, unlike too many other groups these days, it is transparent about who is behind it.

Here’s the steering committee of Fix the Debt. Starting with Erskine Bowles and Alan Simpson themselves, the list includes such luminaries as Ed Rendell, Michael Bloomberg, Pete Domenici and Sam Nunn. I see a list like that and I think, I may not automatically agree with everything these guys come up with, but I’m certainly going to give it a respectful listen.

But these are just the kinds of folks that the great populist mass is rising up against these days, isn’t it?

So Lindsey Graham should be proud to have the praise of such a group, but it’s not going to do much to heal the divisions between him and the restive members of his base…

bradwarthen.com

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