Tag: politics

The Taxman Is After You

~ purplesage41 ~ Leave a comment

Many of my rr readers are South Carolinians. Even if you are not, a similar tax “reform” proposal may be coming to your state, as it has elsewhere. . So here’s the South Carolina version of the latest Republican plan to tax the middle class, and cut fores for the rich proposal.. South Carolina’s new proposal for a flat income tax, H. 4216, seems to be on the fast track for what is billed as a tax cut. Maybe. But not for most of us.

The federal standard deduction, expanded in the first Trump administration, would be cut for state tax purposes from $15,000 ($30,000 for a married couple) to a miserly $,6000 and $12,000, respectively. Then it is phased out until it disappears at an adjusted gross income of $40,000.

But wait, there’s good news. The tax rates would be changed from a two-step schedule of 3% and 6.3% to a single flat rate of 3.99% (just so we can claim to be lower than our neighbors). That’s a tax cut, isn’t it?
Yes and no. The General Assembly giveth and the General Assembly taketh away. The federal standard deduction, which was also followed in South Carolina’s state income tax, gives people at the bottom a little relief and makes the income tax just a little bit progressive.
That’s “economist-ese” for taking a smaller percentage of income in taxes for poor people than rich people. Our other state and local taxes on sales and property, and our fees and charges for government services, are regressive. They take a larger share of income from the poor than from the rich. So, the income tax has provided a partial equalization of the total tax liability across households at different income levels.
According to estimates by the S.C. Department of Revenue and Fiscal Affairs, if your family is in the median income range of $50,000 to $75,000, more than 80% of you will discover that your income taxes will go up, not down. Less than 10% of households in the income range of $300,000 to $500,000 will have that same sticker shock, but most will see a steep reduction.
Revenue from the individual income tax is expected to decline by about $216 million in the first full year. Bottom line: This is a tax cut for the wealthy, plain and simple. And unlike the usual justification – attracting business – the personal tax rate will now be lower than the business tax rate.
That’s not the only problem with this bill. With no chance to itemize, citizens with heavy medical expenses and/or generous charitable contributions or lots of interest on their home mortgage and/or student loans will have to rethink their priorities. Medical expense deductions are important for many disabled or elderly citizens, especially if there is a family member in a nursing home. Medicare is not much help there—and the future of Medicare is uncertain.
South Carolina is riding a wave of revenue growth that is overdue for correction. The stock market is flailing, consumer confidence has dropped, tourism prospects (important to our state) are dismal as people from other nations are reluctant to come here, and tariffs are likely to revive inflation that has just returned to more normal levels (not counting eggs).
The state’s definition of income for tax purposes will still be tied to the federal definition of adjusted gross income but that may change if Congress, worried about ballooning deficits, fails to extend the tax cuts from the first Trump administration. The legislature has made a number of commitments, such as higher teacher pay and a larger state contribution each year to protect the soundness of the retirement fund. Legislators may not be able to fund these priorities if revenue from the income tax falters, as it does with either tax cuts or recessions.
This bill needs to go in the circular file and start again.

To Endorse, or not to Endorse

~ purplesage41 ~ 2 Comments

Both the Washington Post and the LA Times refused to endorse a candidate in the current presidential election.  I don’t know much about the Times, but I have been a faithful subscriber to the Washington Post ever since it became available online. I like their games, their news coverage, their columnist. Their owner’s cowardice, not so much.

Jeff Bezos is a bottom-line kind of guy.  He knows that Harris is the only person fit to serve in this office. If he doesn’t know that, he’s too dumb to own a major newspaper, and I don’t think that’s the case. It’s a matter of pure self-interest.  If Harris is elected, she will not take it out on him because—unlike Trump—she is a fully functioning adult. She doesn’t suffer from toxic masculinity. If Trump is elected, he will make sure that Bezos pays for his failure to make the Nazi salute.

Unbridled capitalism is a recipe for societal disaster.

Ready for the Counter-Revolution?

~ purplesage41 ~ 4 Comments


Today is  the end of a month with three famous revolutions—American, Cuban, and French.  Did they make things better? Sometimes, for some people, at a very high cost. We are the heirs and progenitors of many revolutions.  The digital revolution. The industrial revolution. The printing press, which revolutionized 16th century Europe. The Green revolution, which was at the time believed the answer to world hunger but wasn’t. The Protestant Reformation, at least the left wing of it, which threw out lots of bathwater and several babies in the process.

 Actual armed battles were the chosen format for many of these revolts. One of my heroines is Boudica, Queen of the Iceni in Britain, The Iceni and their allies, led by Boudica, revolted against Rome in 60 AD and even won some major battles before finally being defeated by a more disciplined Roman army.  The Iceni and their Celtic relatives practiced democracy, unlike the Romans, which is good for peacetime but not so much in the military,

England’s Civil War began by beheading King Charles I and led 12 years later to restoring the monarchy. Twenty-eight years later, the Glorious Revolution ousted The Old Pretender, ran off the Young Pretender. and created animosity between Scotland (homeland of England’s Stuart kings) and England that persists to this day.   The bloody and endless French Revolution. The American revolution. The US Civil War (civil wars are also revolutions). The Spanish Civil War. The many revolutions against colonial domination in Asia, Africa, and South America.

In the 18th century, Americans tried to create a workable government to manage the public affairs of 13 very diverse colonies once they were free from the oppression of British rule.  That utopian vision is always the delusion of revolutionaries, the faith that keeps them going through Valley Forge and other calamities.  But no one ever anticipates a counter-revolution.

 The Roman Catholic Church officially launched a counter Reformation. The American Civil War was definitely a counterrevolution to protect the privileges of the while male hierarchy of the Southern slave states. France had so many counter-revolutions I can never keep track.

We citizens of the United States are in the throes of an attempted counter-revolution, long in the planning, detailed in its vision for post-democracy in America, and banking on this year’s election to bring it about, whether peacefully or with violence. It is a vision of what its proponents thought life used to be like when men (white ones) were men and women know their place and so did the lower classes, especially African Americans and native Americans. These counter-revolutionaries believe that an earlier America was a society in which we were only responsible for ourselves (we=men), women lived lives a modified version of he Handmaid’s Tale, teaching a dubious version of Christianity was mandatory in public schools, equality of opportunity and respect were lacking, and violence was the answer to everything. Rule by a privileged minority at the expense of a resentful majority.

And yet…there are increasing signs that democracy, like the phoenix, can rise from the ashes—maybe even put out the flames! We are all called neither to unwarranted optimism or to deep despair, but to active, engaged hope to keep our fragile democracy alive for the generations yet to come. Like the Minutemen of the original American Revolution, you are not called to violence but to support, act, and vote for democracy to survive.  As my fellow economist Eugene Steuerle says, “We get the government we deserve.”

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The Risk-Averse Voter

~ purplesage41 ~ Leave a comment

Fifty years ago ,I was roped into teaching risk and insurance, a required course for several majors in the business school at Clemson University.  The insurance part was rather dull, but risk was interesting. Right now, I am thinking about the risks associated with voting strategy in the presidential primaries. The race has come down to Biden, Trump, and Haley.  How should one spend one’s single precious vote so as to contribute to the most desirable outcome in November? And what are the risks involved in making that choice?

In 2010, three friends of mine, all Democrats, voted in the Republican primary to try to select the candidate least likely to win in the general election. (South Carolina splits about 55-60% Republican and the rest Democrat. Voters do occasionally elect a Democrat to a statewide office.)  These three thoughtful women reasoned that South Carolina was a sexist, racist state (true) and that it would never elect an Indian woman.  They voted for Nikki Haley. It is a strategy they did not intend to apply again, but ironically, in this year’s presidential primary, they will be voting for—Nikki Haley.

What’s a voter to do? There are two parts to the strategy.  The first steps to rank your preferences Three are three candidates, which creates six possible preference rankings.

  1. Biden, Haley, Trump
  2. Biden, Trump, Haley
  3. Trump, Haley, Biden
  4. Trump, Biden, Haley
  5. Haley, Biden, Trump
  6. Haley, Trump, Biden

I find options 2 and 4 highly improbable.  Option 3 is easy, vote in the Republican primary for Trump.  No hard choices there. The same is true of options 5 and 6, to vote for Haley in the Republican primary.  If you prefer Haley or Trump to Biden, you vote for the preferred one in the Republican primary.  The challenge of risk assessment is only in option 1, the ordering Biden, Haley, Trump.  That voter is probably a Democrat or a Democrat-leaning independent. In some states, she can vote in either party’s primary.

If Biden is your first choice, there isn’t much need to vote in the Democratic for Biden because he will win anyway. Instead, you express your support by voting in the Republican primary for—which? The least electable one? The least dangerous one? Ah, there’s the rub.  The sense I get from talking to voters is that Haley runs stronger against Biden. but even the remote possibility of re-electing Trump would have much more serious consequences.   

Which one do you think has the lesser chance? Which one could you more easily live with if elected? If you strongly prefer Biden over either Republican, but could definitely rest easier with Haley on the ballot, that suggests you should vote for her.  But beware, she may be more electable—she’s attractive, articulate, and YOUNG. And very conservative. Whereas Trump may be able to energize his base but not much of anyone else.

Some Democrats will just vote for Biden, especially if they live in a state where the primary is limited to registered party members.  (I do have a good friend, a liberal Democrat in Florida, who called me last year to tell me that she is now a registered Republican. I understood her choice. She is not the only one taking that course!)  I live in an open primary state. I can simply walk in and say “I feel like a Democrat” or “I feel like a Republican.” 

Normally both party primaries are held at the same time and in the same place, saving money and poll worker time, but this year the Democratic National Committee gummed up the works, at least in South Carolina.  As a result, I will be working as a poll worker in both primaries in February and casting my own early ballot 20 miles away at the Easley public library. In all three places, I will be among voters chewing on the same dilemma. What are they risking by making this choice, and what might be the consequences?

Or they can stay home.  But as I used to say to some of my libertarian economist colleagues who thought voting was a waste of time, ”If you don’t vote, you lose your right to bitch.” That’s a First Amendment right that has to be earned.

What would you do, and why?