Minimum wage increase passes with catch

Today's Washington Post covers legislation passed by the House late last night that raised the federal minimum wage -- unchanged since 1997 -- from $5.15 to $7.25 by 2009. However, the minimum wage increase was married with a permanent cut on the estate tax:

Under the bill, estates worth $5 million -- or $10 million for a married couple -- would be exempted from taxation. Inheritances above that threshold and up to $25 million would be taxed at capital gains rates, currently 15 percent. Estates worth more than $25 million would be taxed at 30 percent.

The cost of the estate tax cut would climb to $62 billion a year, added to the current $300 billion budget deficit. In addition, several special-interest tax breaks were slipped into the legislation:

Against the wishes of Senate Budget Committee Chairman Judd Gregg (R-N.H.), they included a measure that would shift costs of health care and environmental reclamation from coal companies to the federal government at a cost of nearly $4 billion over the next decade. Another measure, aimed at Washington state's two Democratic senators, would give timber companies a tax break worth $428 million over five years.

In total, the tax package would cost the Treasury nearly $310 billion through 2016. Republicans--many moderates included--supported the legislation, and they believe it will pass the Senate. Democrats, such as Rep. Earl Pomeroy (D-N.D.) likened the marriage of minimum wage increases to cuts on estate taxes as "legislative extortion." Democrats are hoping to make the minimum wage an issue in this year's midterm elections.

One point of interest in this debate is that many states and municipalities are taking the lead on minimum wage increases. For example, Arkansas recently raised its minimum wage. Some prominent Democrats, such as Former Senator John Edwards (D-N.C.), are taking their support for increasing the minimum wage to the state governments.

SC paper focuses on elderly and taxes

The Anderson Independent-Mail's Nick Charalambous says current tax policy in South Carolina for elderly residents should be renamed "No Retiree Left Behind" because it gives tax breaks to all seniors regardless of means.

In a July 28 column, he said it is time to rethink senior tax preferences:

According to Georgia State University research, there is an 80 percent difference South Carolina has an 80 percent differential between the effective income tax rates for elderly and non-elderly adults in South Carolina, which is the highest in the nation.

That might have been justified when the elder poverty rate was 24 percent in 1970, according to the U.S. Census Bureau. But now the older-than-65 population’s poverty rate is lower than most other adults, at about 10.2 percent.

Rethinking the idea of tax relief based on age alone is one of the top-10 ideas suggested by the Charleston-based Center for a Better South to make the tax system fairer.

Midterm Elections in the South

This week, the Raleigh News and Observer has published a series of articles about the midterm elections. One article states what many here already know: Democrats need the South to win national elections. This article claims four Southern states are the best indicators of success.

If you want to understand why Democrats are the minority party in Congress, look at four states: Virginia, Tennessee, North Carolina and Kentucky. Before the 1994 elections, when Democrats still controlled both chambers, these Southern states had 24 Democratic House members and 14 Republicans. Among senators, there were five Republicans and three Democrats. Look today. There are 24 GOP House members and 15 Democrats, and all eight senators are Republicans.

The story said the Democratic Party is attempting to refocus their strategy in the South by avoiding stereotypical images and divisive issues:

They hope to underscore that they do not fit stereotypes of Democrats as cultural liberals, and they hope to win voters with a mix of economic populism and traditional values. There is talk of raising the minimum wage and creating more jobs, but usually little about abortion or gun control.

This article is significant because it comments on a possible change in Southern political preference. While most of the South is still solidly Republican, there are a few races in Kentucky, Tennesse, Virginia, and North Carolina where the Republican hold may be loosening. If this article's four-state baramoter is correct, then both parties are going to need to rexamine thier strategies in the South.

Better South featured on AR TV show tonight

Arkansas Educational Television Network is featuring a segment on tax policy that stemmed from the Center for a Better South's Doing Better book.

• Click here to view the show online through streaming video.

From the press release on the show:

CONWAY, Ark. -- The role of political think tanks and the policies they advocate are the topics of the next episode of "Unconventional Wisdom" airing on the Arkansas Educational Television Network Friday, July 28, at 6:30 p.m.

Guests for the discussion will be Patrick "Rick" Calhoun and Andy Brack.

Calhoun has served on the board of the Arkansas Policy Foundation, The Murphy Commission, and is past chairman of Eagle Forum of Arkansas. He is also a member of the Von Mises Institute of Austrian Economics and the Federalists Society and has authored numerous articles and essays on public policy and taxation including "The Truth about Taxes."

Brack, president of the Center for a Better South, will participate in the program via satellite from Charleston, S.C. He edits and publishes S.C. Statehouse Report, a weekly legislative forecast and syndicated newspaper column. A former congressional candidate, Brack also has a daily news service and communications strategy consulting business. He holds a master's degree from the University of North Carolina at Chapel Hill and a bachelor's degree from Duke University.

Boosting political participation in TN, GA

The Chattanooga Free Press highlighted the work of several organizations designed to get Latin Americans to the polls in Tennessee and Georgia.

The groups hope to be able to utilize the debate on immigration to motivate and mobilize Hispanic voters not just in this cycle, but in the future as well. There are an estimated 82, 000 eligible Hispanic votes in Georgia, and 33, 000 in Tennessee.

Civic activity seems to be gaining momentum within the Latino community as evidenced by this statement from Apolinar Banda, who is originally from Mexico:

"People are very much focused on what is going on with immigration policy. The way things are going, it’s better to become citizens and become involved."
Translated from Spanish

Virginia paper highlights Center's work

The Daily Press of Newport News, Virginia, on Sunday published an op-ed piece by Better South President Andy Brack that highlighted how ideas in the Center's new book impacted the Old Dominion State. An excerpt:

More reforms also can be made in Virginia. Even though the state's economy is shifting more toward services, its government taxes only 30 out of 168 services identified by the Federation of Tax Administrators. If it taxed more services, it would reduce hidden preferences given to services.

An example: If a state taxes the purchase of a lawnmower (a good), but doesn't tax landscaping services that cut people's lawns, there's an institutional preference for the service over the good. Taxing the service would make the sales tax fairer - and generate more revenue for the state. With more money from taxed services, the state could lower its overall sales-tax rate or invest in state programs and services.

• Read the full story

Web site of the week in SC

The South Carolina Business Review, a radio briefing each business day, will feature the Center on July 26 at 7:50 a.m. on the stations of SCETV Radio. The Review also awarded the Better South Web site and ThinkSouth blog as its Web sites of the week. Here's what the Review says about our efforts:

There’s a new organization trying to spearhead tax reform and other progressive ideas through southern legislatures, including South Carolina. Mike Switzer interviews Andy Brack, President of the Center for a Better South. www.bettersouth.org and www.thinksouth.org are our SC Web Sites of the Week.

Cohabitation law struck down

Yesterday a N.C. Superior Court judge declared the state's 200-year-old law against cohabitation to be unconstitutional. Read this article in the Raleigh News & Observer to learn more.

Believe it or not, this ancient law has been used to prosecute about a dozen state residents over the last decade. A few conservative local leaders are complaining about the decision and attributing it to "activist judges."

It's refreshing to see state government retreat from private homes.

The end of an era?

Washington Post columnist E.J. Dionne today takes a look at South Carolina and Georgia -- neighboring states that he says may show the polar ends of an era. (Column).

Dionne says conservative Christian consultant Ralph Reed galvanized voters in South Carolina in 2000 to turn to George W. Bush (and away from Sen. John McCain) in the GOP primary that year. How? By rallying the base - - conservative Christians. But this week in Georgia, Reed lost a bid to become the GOP lieutenant governor candidate by failing to mobilize that very same base, Dionne says. He also highlighted a discussion with U.S. Sen. Lindsey Graham, the South Carolina Republican who backed McCain over Bush in 2000 and who found this week's events interesting:

Graham suggested that his party needs to unlearn some of the lessons supposedly taught six years ago by his state's primary.

Republicans, he said, need to move beyond mobilizing their base "because our base isn't big enough to propel us to victory 10 years from now."

Conservatives -- of which Graham is emphatically one -- should be wary of a politics based on the idea that to satisfy your own core supporters, "the other side's got to be miserable."

"I want conservatism to be seen as a good solution to people's problems and not go the way of liberals," Graham said. "Liberalism is not a title easily worn now, and that could happen to conservatism."

Katrina lessons learned?

The front page story in the Raleigh News and Observer outlines a new study released by Harvard University.

The survey, released Thursday, was among the first to plumb attitudes toward disasters since Hurricane Katrina ravaged New Orleans last year. It was conducted between July 5 and 11 and sampled residents of all counties within 50 miles of the coast in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Texas.

Less than a year after Katrina, the study found that many Southerners in coastal areas are still reluctant to prepare and evacuate their homes for hurricanes.

Despite more than 1,800 deaths from Hurricane Katrina last fall, more than three-quarters of Eastern North Carolinians polled by Harvard University said they hadn't done more this year to prepare for hurricanes. And about a third of those surveyed here and in the other seven states most vulnerable to hurricanes said they may not obey orders to evacuate.

A notable finding of the study was that attitudes toward evacuation differed drastically by race.

Most who were stranded in the city atop flooded houses and overpasses and in squalid shelters were black, and some claimed at the time that blacks were reluctant to evacuate. The survey, though, found that African-Americans were nearly twice as likely as whites to leave their homes in a mandatory evacuation, 41 percent versus 23 percent.

Hopefully, mother nature will us a break this year because it appears that many Southerners have failed to learn from the ordeal last fall.

…two-thirds of the respondents were confident they would be rescued if they couldn't evacuate and needed help… Because of Katrina, the team had expected a majority [of respondents] to say that they had prepared more for the storm season. Just 38 percent had.

Posted by James Hunter

Georgia debate features Better South question

About 45 minutes into the Georgia Democratic gubernatorial debate on Sunday, Atlanta Journal-Constitution political reporter Tom Baxter asked a question to Lt. Gov. Mark Taylor on broadening the sales tax. It featured this exchange:

BAXTER: The Center for a Better South recently published a study of tax policy in the region and one of its strongest recommendations was to broaden the sales tax by abolishing things like sales tax holidays and eliminating exemptions like the one you're proposed on medicine and the one you hold up as an example of your record - - the sales tax on food. It might be less politically popular, but wouldn't that proposal cause the burden of taxes to be sh ared more equally and keep the overall tax rate lower?

TAYLOR: The people of Georgia pay too much taxes and the state of Georgia has enough revenue if it will focus on leadership ...

Taylor, who won the Tuesday primary and will face incumbent Gov. Sonny Perdue in November, went on to outline his plans to provide affordable health care to Georgians.

NC's New Waterfront

A story in today's issue of The News & Observer of Raleigh describes the impact that rapid growth along North Carolina's inland coast is having on the state's commercial seafood industry.

Already under intense pressure from foreign importers, North Carolina's commercial fishermen have seen their business problems compounded by the development boom occurring along the state's 3,000-plus miles of interior coastline. Development of high-end residential properties has driven up land costs, limited harbor access, led mainland processing facilities that buy catches to close and raised environmental concerns. While development also brings many benefits to communities, it threatens a traditional industry and way of life in coastal communities like Oriental, N.C.

This article is part of The News & Observer's special series on the development of North Carolina's inland coast. Click here to access all of the articles.

House votes to pass Voting Rights Act

In spite of the efforts of a few conservatives, the House voted Thursday to extend the Voting Rights Act.

Newspaper reports showcased the vote as an effort by Southern conservatives to kill the measure because they wanted to relax "federal oversight of their states," according to the Associated Press. It is interesting, however, to note that of the 33 House Republicans who voted against the measure, only 12 were from the South - - six from Georgia, two from North Carolina and one each from Tennessee, Alabama, Louisiana and South Carolina. Meanwhile , another 12 opponents were Republicans from two states - - evenly split between California and Texas.

The measure, which passed 390-33, generated emotional debate by supporters and opponents. Rep. John Lewis, the Georgia Democrat who was beaten in 1965 in Selma, shouted on the floor that extension of the act was still needed because discrimination still exists in America.

Opponents included (Southerners in bold):

Baker (LA)...................................Barrett (SC)
Bartlett (MD) .................................Barton (TX)
Bonner (AL).................................Burton (IN)
Campbell (CA) ............................... Conaway (TX)
Deal (GA) ................................... Doolittle (CA)
Duncan (TN)................................Everett (MD)
Foxx (NC) ...................................Franks (AZ)
Garrett (NJ) ..................................Gingrey (GA)
Hefley (CO) ...................................Hensarling (TX)
Herger (CA) ..................................Johnson, Sam (TX)
King (IA) ................................... ...Linder (GA)
McHenry (NC) ..............................Miller, Gary (CA)
Norwood (GA) .............................Paul (TX)
Price (GA) ....................................Rohrabacher (CA)
Royce (CA) .....................................Shadegg (AZ)
Tancredo (CO) .................................Thornberry (TX)
Westmoreland (GA)

Paper says study comes at a good time

The Charleston (S.C.) City Paper said in an issue today that the Center's Doing Better study was an attempt to shed light and provide clarity in the neverending debate about taxes:

The study could not have been released at a more opportune time. Knowing the vote-rallying power of a good tax cut, politicians are among the most eager to engage in the tax debate. This is never more true than in an election year. Constituents have been bombarded with tax-centric news since the [South Carolina] General Assembly convened in January. Sales tax, property tax, income tax, for roads, for schools, for public services — it has become a blur of numbers and percentages, half-cents and tax holidays.

One of the interesting things the story did was to "translate" the 11 tax reform ideas outlined by the Center in colorful, easy-to-understand language. For example, in describing the idea of rethinking senior tax preferences, the City Paper observed, "Currently this piggy bank of a demographic is given full exemptions for Social Security income, a private pension exemption, additional deductions, and property tax allowances."

• Read the full article.

Tax exemptions get scrutiny in Georgia

Sales tax exemptions are getting closer scrutiny in Georgia following the release of the Center for a Better South's progressive tax reform book. According to a Monday story in The Augusta Chronicle by Morris News Service:

Now, some lawmakers and think tanks are looking at scrapping the exemptions, or at least some of them, in hopes of advancing other goals. The Center for a Better South would like to see the exemptions pitched overboard as part of a plan for creating what the organization says would be a fairer tax structure.

Some Republicans are taking a look at the exemptions as part of broader tax-reform efforts that could eventually include tax relief in other areas balanced out by repealing some of the exemptions.

"The truth of the matter is, tax exemptions are just a redistribution of taxes," said Rep. Larry O'Neal, R-Warner Robins, the chairman of a House panel studying the state's tax system.

Or, as the Center for a Better South puts it, the main problem with the exemptions is that everyone else ends up paying for them through a higher sales tax or other government charges.

"Over the years, special interests have gotten millions of dollars of customized sales tax breaks which eroded the pot of goods and services from which governments taxed sales," reports Doing Better: Progressive Tax Reform in the American South, a report the center issued last month. "In turn, governments have had to increase sales tax rates to balance the revenues lost to special interests."

• Buy the book
  

Debating the Voting Rights Act

An article in today's News & Observer of Raleigh uses the experience of Beaufort County, a coastal community in eastern North Carolina, to illustrate the impact of, and debate surrounding, the 1965 Voting Rights Act. Congress currently is considering renewing Section 5 of the Act. That law requires certain political jurisdictions in the South (including 40 counties in North Carolina) to submit proposed changes to election laws and practices to the U.S. Justice Department for approval.

The pre-clearance provision was adopted to prevent Southern states from denying political rights to African-American citizens. The provision was renewed once during the 1980s, and a proposal to extend it for another 25 years is pending before Congress. Some elected officials oppose renewal on the grounds that it is no longer needed, burdensome to local communities and unfair in that it only applies to the South. Other officials argue that the act is needed to prevent discrimination and protect the political rights of minority groups.

The News & Observer article shows how the arguments, both for and against, are playing out in Beaufort County. In many ways, the Beaufort County experience is similar to that of many places across the South and illustrates how the South's segregationist past continues to influence the present.

N.C. minimum wage increases

Today the North Carolina Senate gave preliminary approval to a one-dollar increase in the state minimum wage (read about it here). After the probable formality of another vote next week (and the signature of a supportive Gov. Mike Easley), North Carolina will have a new minimum wage of $6.15 as of January 1, 2007.

Organizations such as the Common Sense Foundation and the N.C. Justice Center have been pushing a minimum-wage increase in North Carolina for years. Read this article by Common Sense and this study by the Justice Center to learn why all the myths you may have heard about the dangers of small increases in the minimum wage are just that: myths.

Book's ideas lead to editorials

The Center for a Better South's new book, Doing Better: Progressive Tax Reform for the American South, continues to generate thoughts around the South -- exactly what it was intended to do.

From the July 5 edition of the Charlotte Observer:

Andrew Brack, president of the Center for a Better South, was in town recently talking about new report on state tax systems in the South. What he stated was obvious, but that doesn't mean it wasn't worth saying.

"We live in a more dynamic Sunbelt that has transformed from the goods-based, mule-driven days of the 20th century into a knowledge- and service-economy that competes globally," he said. "Unfortunately, our state governments generally haven't adapted to the new economy. Their structures have outdated tax components that need to be modernized for today's market."

The Center for a Better South, a nonpartisan think tank based in Charleston, S.C., concluded that our state's tax system ranked (alongside Virginia's) as the best in the South. Alas, that's like tying for first in a 100-yard-dash for slugs....If our tax system were a car, we'd have traded it in long ago. To keep depending on it is costly and irresponsible.

And this ("Mississippi could learn from this man") from The Natchez (MS) Democrat:

Andy Brack, president of a Charleston, S.C., think tank called the Center for a Better South, was making the rounds last week talking about taxes. Essentially, his group has recently completed a study about progressive tax reform in the South and he was evangelizing a bit from the study. Much of what the study proposes as necessary changes do make a little sense....OK, so even some stranger from South Carolina can point out the obvious holes in the system.

The real challenge is in making the old, decrepit system change for the better. Only the Legislature — prodded along by taxpayers such as you — can do that.

Farm subsidies vex Southern progressives

Farm subsidies present challenges to Southern progressives. On the one hand, most progressive institutions have lined up against the supports, because they disproportionately benefit big operations, present barriers to third-world agricultural imports and cost so much.

On the other hand, so much of the Southern economy is still centered around farming, and the subsidies help keep a struggling industry afloat. Plus the extra domestic production keeps food prices low, which is good for poor people. And a native food supply that does not rely on imports is arguably a national security interest.

As Southern progressives wrestle with the issue, some recent news coverage is worth examining.

Monday's Washington Post focused on farm subsidy payments. An article on Sunday focused on the $1 billion paid to people who don't farm. The Post also listed the top 10 recipients of farm subsidies in each county in the U.S., as well as a map showing where loan deficiency payments were concentrated.

Redeem the Vote backs Better South book

Dr. Randy Brinson, chairman of the Montgomery-based Redeem the Vote, issued the following statement June 30 in support of the Center for a Better South's latest progressive tax reform proposal:

“Over the last several decades, the Southern states have been falling behind other states in the nation with regards to progressive tax policy. Governor Riley and the Alabama legislature made significant strides during the past legislative session by raising the income threshold at which individual income taxes are assessed in the state. However, Alabama along with many of their Southern neighbors have done little otherwise in regard to tax policy since the early 20th century, despite significant advancement in the delivery of goods and services since that time.

“This week, Andy Brack of the Center for a Better South, will be in Montgomery as part of a tour of several Southern state capitals, to promote his new book, on innovative ways to modernize our tax system within the South. At his recent event in Atlanta with former Gov. Roy Barnes, it was identified that over 100 sales tax exemptions were still on the books in the state of Georgia, many of which were outdated. Larry O’Neal, a Warner Robbins Republican, and chairman of the House Ways and Means Committee of the Georgia Assembly, agreed that significant tax reform was needed in the State of Georgia provided it remained income neutral to the state.

“It is our hope that we can improve and objectively review our tax system in such a way that it promotes true fairness and equity for all the residents of the state of Alabama. By making taxes fairer and using targeted tax credits to promote the welfare of our citizens and ensure better health and educational opportunities, we can enhance the productivity of our state and ultimately reduce social costs for the most needy and vulnerable.”

Redeem the Vote is a nonprofit organization that seeks to engage America's young people of faith in the political process and educate them on issues pertinent to their lives.