JAN. 23, 2015 — Imagine if Gov. Nikki Haley played the lead role in a new sequel movie based on Adam Sandler’s “The Waterboy.” At some point, Haley might ask Mama Boucher, “Mama, when did unions cause safe workplaces, get rid of child labor and push through the minimum wage?”
Her mama would quickly respond, “That’s nonsense. I invented safe workplaces. Ain’t nuthin’ wrong with child labor and the minimum wage is a Communist conspiracy. Betty Boucher — unions are the Devil.”
In real life if you don’t think Haley is South Carolina’s “Watergirl” for big business, just look at how she blasted unions in Wednesday’s State of the State address with needless, raging venom.
“The successes of Boeing in South Carolina, and more so, the successes of the non-union workers who populate its ranks, are a threat to the IAM [International Association of Machinists and Aerospace Workers],” Haley pilloried. “Like bullies do, the union bosses will try to cover-up those truths and crush those threats.”
Folks, the only bully in the Statehouse chamber Wednesday night was Nikki Haley. Not a real contender in the 2016 presidential race, she must just have needed to create some kind of false bogeyman to feel warm and cuddly about herself.
Why? Because there’s one clear and simple prescription for businesses that don’t want unions to organize in their workplaces: Treat workers fairly and pay them what they deserve. Pay attention to workers and listen, and unions probably won’t be a threat. But tyrants who don’t appreciate their workers may face the union music at some point.
While Haley didn’t need to pound on unions to get across a message of South Carolina’s robust economy, there was a surprising development in her annual address to the state: Raising the gas tax is no longer the third rail of political death.
Haley proposed raising the gas user fee by 10 cents a gallon. But that wasn’t enough for the governor. She dramatically tied her support to a cut to the state personal income tax — just the kind of political fiddling that makes economists pull out their hair.
Tying the tax hike to an income tax cut, a plan similar to one being floated by GOP state Sen. Larry Grooms of Charleston, is dangerous because it ignores basic economic principles.
First, dropping the income tax rate when the state needs at least a billion dollars a year to fix crumbling infrastructure would narrow South Carolina’s tax base. In other words, if you get less money from income taxes, you are going to be more reliant on other streams of revenue. Therefore, the state would be forced to rely more on sales taxes, which are considered more volatile because they’re closely tied to the overall economy. In turn, that means that budgeting is more difficult because revenue is less stable. In the long run when the economy is in recession, there will be lots of cuts to things like health care and education — because of all of the volatility.
Second is the issue of tax fairness. Because of the way South Carolina’s income tax structure is organized, 40 percent of people in the state don’t pay income taxes. And because the tax brackets haven’t been fully modernized, most people who pay income taxes pay in the top bracket. Translated, this means any income tax cut will go disproportionally to rich people, while most South Carolinians will only pay more in taxes at the pump. Again, the middle class would bear the brunt of this so-called reform.
In fact, state Sen. Brad Hutto, D-Orangeburg, says Haley’s gas tax plan is essentially a political bait-and-switch. Yes, it would raise $3 billion in gas taxes for roads over the next 10 years. But it would also cut $8.5 billion in income taxes from coffers in the same time span.
State lawmakers don’t need to fall again for a simple solution. Remember the abysmal tax swap from a few years back that hurt schools and businesses by cutting personal property taxes and raising sales taxes? If we do another swap with gas and income taxes, we’ll just be setting government up for failure and gutting what we have left.
We Can Do Better, South Carolina!