Archive for the ‘ Opinion ’ Category

Lies, Damned Lies and Education Statistics

Mark Twain popularized the phrase, “There are three kinds of lies: lies, damned lies, and statistics.”

Be that as it may, the following are raw statistics from the National Center for Education Statistics which is the primary federal entity for collecting and analyzing education data. These are just the numbers. You may draw your own conclusions.

South Carolina K-12 statistics comparing school year ending 2000 to school year ending 2009 -

7.7% – Increase in total enrollment

9.84% – Increase in total teachers

2.04% – Decrease in student/teacher ratio

3.03% – Increase in drop out rate (9th – 12th grade)

23.71% – Increase in total diplomas granted

50.54% – Increase in total expenditure per student

56.56% – Increase in total salaries

68.61% – Increase in total expenditures

For more information, please use the CCD Build a Table tool at http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4

The SC Benefit Corporation Act

In his inaugural address, Pres. George H. W. Bush borrowed a phrase from C. S. Lewis when he described charitable organizations as “a thousand points of light . . . spread like stars throughout the Nation, doing good.” He promised increased governmental support for those private organizations who exhibited the ideals of “duty, sacrifice, commitment, and a patriotism that finds its expression in taking part and pitching in.”

He believed that the vast number of existing charities are in a much better position to provide targeted relief on a local level. Rather than pour more money into huge government programs, he pushed to create more public-private partnerships that would support these local charities. His son, Pres. George W. Bush, continued his father’s legacy by declaring that “compassionate conservatism” would be a central part of his presidency until his efforts were overshadowed by the events of September 11, 2001.

While these efforts attempted to decrease the role of government, conservative critics observed that distributing tax money through charities was no different than distributing it through government agencies. Either method results in forced redistribution of wealth.

In an ideal society, private citizens and businesses would fully assist the needy, either directly or through charitable organizations without any governmental involvement. Unfortunately, we do not exist in such a society and with the recent recession, societal problems have grown.

Even so, Americans donated $291 billion to charity in 2010 according to The Center on Philanthropy at Indiana University. In spite of the recession, this was a 3.8% increase over 2009. Remarkably, American generosity actually exceeded the total profits of $230 billion reported in 2010 by the companies that make up the Standard & Poor’s 500 stock index.

The government encourages American generosity by granting an income tax deduction for charitable donations. Though some liberals claim that these tax deductions are a type of government subsidy and should be abolished, most Americans, both individuals and businesses, are grateful that the government acknowledges their sacrifice for the greater good.

If we believe that private donations to individual charities are the most efficient way to solve societal problems, then we should expect government to create laws that enable that possibility. This belief has prompted several states to recently pass laws enabling corporations to designate themselves as Benefit Corporations.

Benefit Corporation status allows the board of a corporation to publicly state a corporate purpose beyond making a profit. The corporate purpose must be a material benefit to the public good and can be broadly defined. This status has no tax implication for the corporation, but rather allows a corporation to prove their contribution to society through a third-party audit. I have introduced legislation that would create this opportunity in South Carolina.

Our current level of national debt affirms that we simply cannot afford to fund welfare support systems with money borrowed from future generations. The era of big government social programs has passed, which leaves us looking for new ways to address the problems resulting from high unemployment and a stagnant economy. Inventive legislation that unleashes the generosity of Americans will be necessary to fill that void.

Do You Feel Subsidized?

The South Carolina Supreme Court will shortly hear a case challenging the constitutionality of state sales tax exemptions. This case, filed on behalf of the plaintiff by Dick Harpootlian, asserts that sales tax exemptions violate the equal protection clause of the constitution. An affirmative ruling by the court would increase the tax burden for all South Carolinians and challenge the authority of the General Assembly to set tax policy for the state.

Proponents of big government have long despised tax deductions, exemptions and similar provisions. They are not afraid to use the courts to challenge those who benefit from them. Many people in Greenville will remember the legal battle that Bob Jones University fought against the federal government in the 1980s. This battle started when the Internal Revenue Service revoked their tax exempt status as a charitable organization.

The IRS took the position that any deductable donation made to the University was a “subsidy” by the federal government. They further argued that since the government was “subsidizing” the University, the government had a right to dictate the University’s internal policies. The University sued to have their exempt-status reinstated and lost.

BJU lost because the federal government broadly defines tax provisions for deductions, exemptions, incentives and credits as “tax expenditures” by the government. In other words, the government does not view tax deductions as you keeping your income. They view tax deductions as the government giving you some of their money.

This illogical tax expenditure theory was created by Stanley Surrey, the Assistant Secretary of the Treasury for Taxation in the Johnson Administration. He believed that government should not grant any deductions and similar provisions because they reduced the amount of money raked into the Treasury which could then be spent on liberal government programs to further Johnson’s Great Society.

Surrey wanted to reform the tax code to make it simple and efficient. In his mind, simple and efficient meant that government could redistribute money, even to charities, better than private citizens who could not be trusted to support the right charities with their donations. His theory became reality when the Congressional Budget Office began tracking tax expenditures in 1974. This reality was shown to be coercive when BJU lost their tax exempt status.

This all-money-is-government-money theory of tax expenditure was concocted to aid liberals in their efforts to substantially expand government programs. In response, conservatives defended the importance of and expanded the number of deductions and similar provisions in order to allow taxpayers, both individual and corporate, to rightfully keep their money – until recently.

In a strange turn of events, Rep. Paul Ryan, a conservative Republican who chairs the House Budget Committee, declared earlier this year that he wanted to eliminate the largest tax expenditures in the name of tax reform. He asserted that they “diverted economic resources to less productive uses” thereby echoing the words of Stanley Surrey. According to the Congressional Joint Tax Committee, some of those targeted for elimination would be the deductions for retirement plan contributions, employer contributions for health insurance and mortgage interest.

Compare Rep. Ryan’s targeting of the health insurance deduction to the comments by Sen. Robert Packwood on the same subject back in 1983. Sen. Packwood, the Republican who chaired the Senate Finance Committee at that time said that the only reason that America had not adopted nationalized health care was because of the employer health insurance deduction.

Sen. Pat Toomey, a conservative Republican serving on the 12 member debt super-committee, recently targeted deductions in his deficit reduction plan. His plan would eliminate most deductions in exchange for lowering the tax rates for all families – a noble goal if the tax rates stay lowered. If a future Congress decides to raise the rates, then his plan has removed en masse a multitude of deductions that were designed to soften the impact of tax increases.

As a conservative involved with tax reform on the state level, I am confounded by conservative groups who have bought into Surrey’s assertion that deductions and incentives are government subsidies. When they use the terms “subsidy” to criticize deductions for individual taxpayers and “corporate welfare” to criticize incentives for business, they are basing their criticism on a very liberal idea. They ignore that ideas have consequences, especially when the idea expands government control over taxpayer money as was the case with BJU.

Certainly, we need tax reform. Elected officials have allowed our revenue code, both federal and state, to become confusing and primed for abuse. The revenue code should be transparent, relevant and efficient.

However, we must remember that, once granted, government never relinquishes its power to tax. Deductions and similar provisions dilute this power. Each of these provisions represents a hard fought battle in controlling the expansion of government. We would do well to be extremely cautious of those plans that eliminate them all in the name of tax reform.

Rick Perry: Substance over Illusion

With 14 million Americans out of work, including nearly 240,000 in South Carolina, our nation desperately needs a president who not only understands how the economy works, but who has a record of helping the private sector create jobs while serving in public office.

President Obama’s failed attempt to spend our way to prosperity continues to hold our economy hostage.  In contrast, Gov. Rick Perry’s “Cut, Balance and Grow Plan” offers a practical blueprint to rebuild America’s economy.

The Cut, Balance and Grow Plan will simplify and cut our taxes.

Perry’s plan will give Americans the option of throwing out the 3 million words of the current tax code. Each taxpayer will pay either a 20 percent flat tax on income and file their return on a postcard, or pay their current income taxes along with the fees necessary for tax return preparation every April.

Taxpayers who choose the flat tax will enjoy a higher standard deduction of $12,500 for each individual and dependent, as well as deductions for mortgage interest, charitable donations and state and local taxes. Under the flat tax, a married couple with two children will pay no taxes on the first $50,000 of income. When you combine tax savings with reduced compliance costs, the average South Carolinian making less than $100,000 per year will save over $1,000.

The Cut, Balance and Grow Plan will balance our budget by 2020.

Perry’s plan limits government spending to 18 percent of gross domestic product, cuts $100 billion in non-defense discretionary spending in the first year and builds on those savings until the budget is fully balanced. And to make sure politicians in the future don’t return to the mistakes of the past, Perry will aggressively push for a Balanced Budget Amendment to the U.S. Constitution.

Additionally, taxpayers will no longer have to watch their money used on “bridge to nowhere” projects or to reward failure, because Perry’s plan bans earmarks and corporate bailouts.

The Cut, Balance and Grow Plan will grow our economy.

Perry’s plan will spur significant job creation and economic growth across the country. To create jobs and increase America’s competitiveness in the global marketplace, Perry will cut corporate income taxes to 20 percent – the average rate businesses pay in other developed nations.

Today, American employers have $1.4 trillion in profits earned overseas that will be double-taxed if returned to the United States. Perry will allow companies to repatriate those profits at a one-time rate of 5.25 percent and fix the structure going forward, which could create as many as 2.9 million jobs according to the U.S. Chamber of Commerce.

To stop bureaucratic overreach and create jobs, Perry will place an immediate freeze on all pending government regulations, audit them for their cost and effectiveness, and repeal the ones that kill jobs. He will veto any legislation that creates a new federal program unless lawmakers reduce another program by an equal or greater amount.

America needs Rick Perry’s Cut, Balance and Grow Plan. Unlike President Obama’s stimulus initiatives, which are based on disproven liberal economic theories, Perry bases his plan on conservative principles that have proven effective in Texas.

It is no coincidence that Texas has gained more than one million jobs under Gov. Perry’s leadership, or that nearly 40 percent of American job growth over the past three years has happened in Texas.

Rick Perry’s Cut, Balance and Grow Plan will lead to the creation of millions of jobs, a revival of the American economy and permanent change in Washington’s over-taxing, over-spending, over-regulating culture.

Leadership requires more than just playing to the media. During the last election, Barak Obama obscured his lack of experience with his ability to communicate in front of a camera. He used the media to make many Americans forget that talk is cheap. Candidates who have mastered the media, even some Republican candidates, hold an illusory advantage. As voters, we must not mistake illusion for substance.

America needs the substance that Rick Perry learned as Governor of Texas.

Slaying Leviathan

Several months ago, I wrote about the difficulty of taming the Leviathan (the term Thomas Hobbes used for Big Government). I commented then that many conservatives were elected to Congress on a promise to shrink government spending, but that they had no real plan to actually fulfill that promise.

Now we find that the desperate battle with Leviathan has been joined.

Chaos often breeds opportunity in politics. The chaos that we are currently witnessing with the debt ceiling crisis was not created by our newly elected congressional delegation. The crisis was created by the unwise spending policies of the mainstream politicians of both parties. Unfortunately, the solution to our debt problem will be painful, regardless of the plan adopted.

Speaking of the current plans on the table, I researched the detail of each plan on the CBO website. While the pundits scream about the looming threat of default, no one seems to care about the details of each plan. Neither plan makes the type of structural reforms needed to solve our debt crisis.

The newly-elected conservative members of Congress, including our own delegation, have seized the opportunity created by chaos to push for real reform. They should keep up the good fight until a substantive plan emerges.

Tommy Stringer