2018, Full Issue

5/25: Impact of tax conformity; Southern accents; Henry McMaster; Phil Noble

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INSIDE ISSUE 17.21  |  MAY 25, 2018
NEWS: State response to federal tax reform will have big impact
BRIEF: S.C. farmers under threat without federal action, advocate says
COMMENTARY, Brack: The Southern accent – fading or here to stay?
SPOTLIGHT:  Municipal Association of South Carolina
MY TURN, McMaster: Fighting to achieve our full potential
MY TURN, Noble: “It’s never too late to do what we know is right”
FEEDBACK:  Send us your thoughts
MYSTERY PHOTO:  Rural and rustic
S.C. ENCYCLOPEDIA:  S.C. Medal of Honor recipients
NEWS

NEWS: State response to federal tax reform will have big impact

S.C. Department of Revenue Director Hartley Powell testifies at an April legislative hearing on tax conformity.

By Lindsay Street, Statehouse correspondent  |  Tens of millions of state revenues hang in the balance depending on whether the General Assembly runs out the legislative clock on updating the state’s tax code to fall in line with the federal tax code.

Just about everybody at the Statehouse agrees it’s complicated. (It is about income taxes, wags say.)  But what leaders can’t agree on at this point is what to do about the tax mess brought on after Congress overhauled the federal tax code late last year.

That dramatic income tax reform eliminated many federal deductions and exemptions.  Now if the state doesn’t take action to account for the federal changes, South Carolina would receive a few million dollars more in income tax revenue but, by default, create a duplicative tax system that would likely be a nightmare to tax filers.

Meanwhile if legislators decide to conform to federal reform without making major changes to the state’s tax code, South Carolina could generate a whopping $200 million in extra revenue — which critics say is an underhanded tax hike not in the spirit of the federal reform.  Yet another option would be for the state to conform to the federal code and make changes to the state’s tax code to offset the extra revenue through strategies like potentially restoring some deductions lost in federal reform

To add another layer of complexity on the whole mess:  Doing nothing, while confusing, actually might give lawmakers a better chance at sweeping and comprehensive tax reform that would broaden and flatten the overall tax base to make it fair for years to come.

Background

South Carolina is one of many states that keeps its tax code in line with the federal government. Once a taxpayer has completed his or her federal taxes, he or she can use that as a baseline to begin the state’s paperwork. The parallelling of the state code to the federal code is called “conformity,” and it’s up to the legislature to keep the code updated year to year.

But the massive tax overhaul in 2017 eliminated many deductions and exemptions on the federal level, and simply conforming would result in a tax increase, according to state researchers.

Conforming without altering the state’s tax code would mean an even bigger tax increase: $205 million, according to the S.C. Revenue and Fiscal Affairs Office (RFA).

The House passed a bill for conformity that offers minor alterations designed to keep the state from raising revenue. The Senate is mulling another bill that also offers similar alterations to the tax code. Conformity is one of the post-session goals of the General Assembly and could be hashed out in the two-day session June 27 and 28.

Business leaders across the state and House leadership are pushing for conformity, and the S.C. Republican Party will ask voters during the June 12 primary whether the state’s tax code should align with the new Trump tax code.

But, in an attempt to enact bigger tax reform, the Senate could hold out, according to a Senate Finance Committee member.

“I’m not going to let the ease of implementation drive a good or bad policy decision going forward because a policy decision is going to have positive or negative impacts for decades to come,” Dorchester Republican Sean Bennett told Statehouse Report. “When you rush into these decisions like this, it’s fraught with disaster or missed opportunity at least.”

But waiting to conform also has consequences.

Various options fraught with complications

Without aligning the state tax code to the federal code (called nonconformity), the state will see nearly $12 million in additional revenue due to certain sunsetted exemptions, according to the RFA’s April testimony to a House panel. That tax increase begins for this filing year and would continue for each year that the state remains out of step with the federal government’s tax code.

Noncomformity also has other issues, even in the short-term. South Carolina Association of CPAs board member Ken Newhouse said there is a lot of uncertainty and undue burden with nonconformity.

“(Nonconformity) significantly raises the cost of administration and burden for people to be able to interpret it and could result in more lawsuits,” Newhouse said. The SCACPA intends to lobby lawmakers and push for conformity.

Tax preparers, who will need to have working knowledge of two different codes, may also increase fees by as much as 200 percent as they encountered a complex filing system, Newhouse said.

That could lead to two things: decreased compliance from taxpayers and businesses left in limbo on the best tax decisions to make. Both could wallop the state’s tax base.

If the compliance rate drops by just one percent, it could cost the state $45 million in the 2019-20 budget, according to RFA Executive Director Frank Rainwater, who spoke to House budget writers in April. Though it is likely to affect taxpayer compliance, it’s unknown how many taxpayers will balk, he added.

Further, S.C. Department of Revenue Director Hartley Powell also testified nonconformity could result in “a chilling effect” for the state’s red-hot economy.

Political will

The GOP is asking voters in its June 12 primary how lawmakers should respond — possibly lighting a fire under legislators to act in the June 27 and 28 session, which is expected to be devoted to the state’s annual spending budget.

Bennett

Bennett said he’s not certain the Senate will be convinced to act, however. He said was “surprised” when Senate Finance Chair Hugh Leatherman dropped a conformity bill in the last days of session. He said his prior conversations with the high-ranking Republican led him to believe that the Senate would delay any conformity conversation until next session.

“More broadly discussed in the Senate was not conforming,” Bennett said. “Our view was that we weren’t going to conform during the current legislative year because there are a lot of moving parts to conformity … This conformity discussion lends itself to a larger tax policy discussion on ways to improve our current tax policy.”

Bennett called conforming quickly and without meaningful tax reform “wrong-headed,” adding he could not think of a single senator who is in favor of conforming in June, with the exception of Leatherman.

“The Senate is not inclined,” Bennett said. He added that he would like to study the issue and come back ready for conformity and tax reform in January.

Leatherman’s office did not respond to calls requesting comment.  House Speaker Jay Lucas’ handler Caroline Delleney also did not respond to a call requesting comment for this story.

NEWS BRIEF

BRIEF: S.C. farmers under threat without federal action, advocate says

Staff reports  |  After weathering floods and tropical storms in recent years, South Carolina farmers could face new threat: Congress.

Congress tied immigration measures to an annual bill that funds a farm safety net.  But the U.S. House of Representatives was unable to pass it. Now it appears the immigration measures could be pulled out and another vote on federal subsidies for ailing farmers could come before the end of June.

“This legislation is an important safety net for farmers,” S.C. Farm Bureau Federation President Harry Ott said after the bill’s initial defeat. “As was evidenced during the flood in 2015, the crop insurance we have is not enough, and if we remove that safety net altogether and were to have another disaster, farmers would go out of business. In a time when farm income is decreasing and tariffs are looming, farmers do not need the uncertainty of losing the safety net that the Farm Bill provides.

U.S. Reps. Jeff Duncan, Joe Wilson, Trey Gowdy, Ralph Norman, and Tom Rice — all Republicans — voted in favor of the bill. U.S. Reps. Mark Sanford, a Republican representing the coast, and Jim Clyburn, the state’s only Democrat in the House, voted against it.

In related news, a newly released report shows that in less than one generation, the United States has lost nearly 11 million acres of the best land for food and crop production — much of which has become residential. The report, compiled by American Farmland Trust, also said climate change poses a big risk for farmers. An excerpt:

“A sampling of some of the crop damage in 2017 attributed to a changing climate includes the loss of nearly 80 to 90 percent of the peach crops in Georgia and South Carolina due to an overly warm winter and hard freeze in the early spring. Other effects included damaged peaches, blueberries, strawberries, and apples in parts of the Southeast.”

COMMENTARY

BRACK: The Southern accent – fading or here to stay?

By Andy Brack, editor and publisher  |  My Southern daughters have been making fun of my Southern accent.

They giggle when they hear me say words like yellow, mosquito, potato, pillow or can’t.

Of course, the right way to pronounce these words, despite what these ungrateful children say, is YELL-ah, muh-SKEE-tah, pu-TAY-tuh, PILL-ah and KAINT.

They go into a full-blown tizzy, though, with one word – water, which is correctly pronounced “WART-err.”  At least that’s what I learned from my mother, born and raised in Arkansas.  Other pronunciations can be blamed on my dad, reared in middle Georgia.

I am, like many Southerners, guilty of dropping the last syllable of words and blending them into other words, occasionally turning one or two syllables into three or four.  For generations, the distinct Southern twang has been a reflection of our different culture, a different way of life.

What’s disturbing, particularly from my daughters, is how they don’t have as much of an accent or regional dialect.  This possible loss of the region’s distinctive sounds seems to be happening all over with younger folks.

Blame it on more outsiders moving in with harsher sounds that may be taming the thick Southern linguistic soup.  Blame it on the pervasiveness of global media, which expose Southerners to sounds of the world, not just the sounds of people down the street.  Blame it on TV, where news anchors must have some special school to teach them all to sound like they came from the same Midwestern farm town.

Some might argue an erosion of the Southern accent could cut down on cliched perceptions of Southerners as lazy, thick-headed dolts.

“Loose grammar and indulgent vowels mean the Southern accent is often associated with stupidity, says Jennifer Cramer of the University of Kentucky,” according to a 2014 story in The Economist.  “Two in five Americans think it makes the speaker sound ‘uneducated.’”

A 2018 study by political scientists at the College of Charleston showed Americans found politicians with Southern accents to be less smart, honest or competent as those who sound different.  “Candidates with a Southern accent are viewed more negatively, and they are thought to hold more conservative policy positions, than candidates with no discernible accent,” the February 2018 study discovered.

Maybe any erosion of the Southern accent in a region that is growing by leaps and bounds will lead to an unforeseen benefit – that Southerners might start to be taken a little more seriously.

But who wants to lose the way we talk?  When was the last time, Bill Segars of Hartsville observed this week, you were asked to talk more like a Northerner?

“Southern talk — people like to listen to it,”  Segars said.  They like the soft, lilting sounds they hear, just as Americans often love just listening to an English or Australian accent.

A 2013 study of 2,000 people by Cupid.com found the Southern accent to be the country’s most attractive.  According to a press release, “So what is it that makes the Southern accent so appealing to members of the opposite sex? When it comes to romance, most of us dream of long lazy days in the sun, epic sunsets and, ahem, rolls in the hay.”

In the 2017 book titled “The Resilience of Southern Identity,” some of the same authors involved with the College of Charleston study found the region’s distinctiveness has a stronger grip than the small sample offered by daughters who make fun of their dad.

“If ‘the South’ as a concept were an easy idea to kill off, it would be long dead,” political scientists Christopher Cooper and Gibbs Knotts wrote. “Instead, Southern identity is resilient.  It may change form, but if history is any guide, people will continue to search for distinctiveness and originality, even in the face of rapid change.”

So maybe the Southern accent isn’t fading as much as it’s just changing how it is manifest.

As a daughter ran to catch the school bus this week, she said, “Have a good meeting,” with the last word pronounced “MEET-n.”

Then she stopped, turned around, looked and said, “Oh no, it’s happening to me, too.”

Advantage, dad.

  • Have a comment? Send to: feedback@statehousereport.com.
  • Editor’s Note: Last week’s column on immigrant exclusion included a typo that fundamentally changed the context of a sentence.  The sentence in the fourth paragraph, now corrected, should have read: Social injustice,” the report explains, “is any policy or system that detracts from the common good or undermines human dignity.”  We apologize for the error.
SPOTLIGHT

SPOTLIGHT:  Municipal Association of South Carolina

The public spiritedness of our underwriters allows us to bring Statehouse Report to you at no cost. This week’s spotlighted underwriter is the Municipal Association of South Carolina. Formed in 1939, the association represents and serves the state’s 271 incorporated municipalities.

The Association is dedicated to the principle of its founding members: to offer the services, programs and products that will give municipal officials the knowledge, experience and tools for enabling the most efficient and effective operation of their municipalities in the complex world of municipal government.

  • Learn more: MASC.
MY TURN

McMASTER: Fighting to achieve our full potential

S.C. Gov. Henry McMaster reads a proclamation that recognizes April as the month of the military child at a ceremony in the Statehouse.  Photo via U.S. Army National Guard.

By Gov. Henry McMaster, special to Statehouse Report  |  When I became the first elected official in the country to endorse businessman and then-candidate Donald Trump in the 2016 presidential primary, the elites—and many people in my own party—called me a “crazy.” Most people did not recognize the conservative leadership in now — President Donald Trump. That’s the great thing about politics:  you can go from being “crazy” to being “a genius” overnight.

I saw in President Trump what many did not see: a bold, conservative leader with the strength to make important changes in Washington. These were the same qualities I saw in Nikki Haley when I rallied South Carolinians for her both in the run-off and then the general election for governor in 2010.

I recognize and appreciate conservative leadership because I have been on the front lines of South Carolina’s conservative movement my entire life, and I have the record to show it.

As Ronald Reagan’s first U.S. attorney, I prosecuted scores of criminals, including international drug kingpins. As chairman of the South Carolina Republican Party, I worked with a team of dedicated men and women to win majorities in the House, Senate and constitutional offices for the first time in modern history. As attorney general, I led the charge of attorneys general across the country in suing the Obama administration for the unconstitutional, big-government overreach known as Obamacare. I locked up Internet child predators and domestic violence criminals. As co-chair of Nikki Haley’s Ethics Reform Commission, I authored the “gold standard” report, which resulted in important new laws and recommendations that increased accountability and transparency in state government.

Running mate Pamela Evette meets voters with McMaster. Photo provided.

Now, as your governor, I am working every day to build on the conservative successes we’ve achieved in the last several decades in South Carolina, making us a model for the nation.

I’ve signed an executive order that will end all state tax dollars to Planned Parenthood and other abortion clinics. We are about to enact a law which will totally block sanctuary cities in South Carolina. We will soon begin stationing armed, trained law enforcement officers in our schools to protect our children.

And just in the time since I’ve been your governor, we’ve announced more than 20,000 new jobs and $6 billion in investment from new businesses, manufacturing plants and expansions. Major companies look all around the world to invest, then they choose South Carolina again and again.

These companies—like Samsung, BMW, Volvo and Harbor Freight Tools—invest here because they know what we have to offer: incomparable transportation and logistics through our magnificent Port of Charleston and two inland ports; and our top-notch four-year colleges, research universities and two-year technical colleges, which work vigorously and seamlessly to produce the best, brightest and most dependable workforce in the country.

Today, more people are working in South Carolina than ever before, and I am committed to expanding that workforce with even more enhanced and accelerated training in the trades and technologies, apprenticeships, and dual enrollment opportunities among our high schools, businesses, technical colleges and manufacturers. We have 60,000 high-paying, highly-skilled jobs right now in South Carolina eagerly seeking these workers.

As your governor, I will continue to fight for tax cuts. Lower taxes mean more money in your pockets—you earned it, it belongs to you, you should decide how to spend it. High taxes for the government destroy rising prosperity for the people.

We must get government out of the way of businesses. Burdensome and needless regulations suffocate growth and economic progress for future generations, and I will not let that happen.

These are the first steps to achieving our fullest potential, and with the endorsement of President Trump and support of the dedicated people of South Carolina, I know we can achieve anything. Experienced leadership coupled with innovative ideas and vision is what it takes to usher in an era of unprecedented greatness in South Carolina. That’s what I am working for as your governor and will continue to work for every day.

Columbia attorney Henry McMaster is the 117th governor of South Carolina.  A former lieutenant governor and state attorney general, he is running to continue his service as governor.  More:  HenryMcmaster.com

MY TURN

NOBLE: “It’s never too late to do what we know is right”

Phil Noble, right, with running mate Gloria Tinubu. Photo via campaign.

By Phil Noble, special to Statehouse Report  |  When I was born, my father was a Presbyterian minister in the Upstate.

A few years later, he took a new church and moved us all to Alabama. It was there at a very young age I learned the most important lesson of my life.

As a man of God with a civic conscience, Dad believed he was called to be a voice for civil rights and human dignity. In the beginning, I didn’t know that he realized what it would cost him.

Every morning, before taking me to school, he’d open the hood of the car to check for explosives. At night, he and my mom slept with a loaded shotgun under the bed.

Once, when I became aware this was not normal, I asked him if we should be worried about bad people hurting us.

In his most reassuring voice, he said, “Phil, it’s not the bad people we need to fear. It’s the good people who know something is wrong and do nothing to make it right.”

I am running for governor because I believe our state government is so mired in corruption, one-party politics and dark money that it cannot do what is right by our people.

  • We have the worst schools in the country and no plan to reform education.
  • We have highways and bridges that are crumbling and no plan to rebuild them.
  • We have good, hardworking people in need of health care but refuse to give them access to it even though it would cost the state nothing.
  • We have children in our schools and people in Bible classes being shot and our state leaders have done nothing doing to prevent exactly the same tragedies from repeating themselves.
  • Our utility industry and those responsible for overseeing it have been completely corrupted and our state government has failed to hold anyone accountable or protect South Carolinians who will have to foot a bill of $7,000 per family.
Noble

Our state government is desperately in need of radical reform from the bottom up…and I believe the Democratic Party is the best and only chance to make that happen.

The problem with the Democrats is that we have drifted away from our core values. We know what has to be done but lack the political will and courage to do it. We have been compromised, bought off or convinced that our best chance to lead lies in being more like Republicans.

Incumbent Democrats have even colluded with Republicans to gerrymander congressional and legislative districts in ways that assure Republicans of a permanent, majority status.

This year, Democrats have a very real opportunity to change the course of this state and, not just fix problems in state government, but become a driving force for reform that will transform it.

Unlike my opponents, I am not an incumbent legislator who can call on his network of lobbyists and special interest for campaign donations, or a wealthy corporate attorney who can write a gigantic check to her campaign.

However, I do have voice, and a lifetime of working to make this a better state.

This fall, South Carolinians have the chance to set a new course, and Democrats have the chance to take us there. With your help,

Dr. Gloria Tinubu and I will help our party re-discover the values that once made it great and guide South Carolina into the future it deserves.

It is never too late to do what we know is right.

Phil Noble is a business and technology consultant from Charleston who has founded three statewide nonprofit initiatives.  Learn more:  https://philnoble2018.com/

EDITOR’S NOTE: Through June 12, Statehouse Report is running opinion pieces by gubernatorial candidates with primary challengers.  Five Republicans and three Democratic candidates for governor have been invited to submit messages they want to share with voters.

Recent candidate contributors

FEEDBACK

FEEDBACK:  Send us your thoughts

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MYSTERY PHOTO

MYSTERY PHOTO:   Rural and rustic

Here’s a rustic, rural-looking photo provided by a loyal reader and photographer.  It’s in South Carolina, but where?  Send your best guess – plus your name and hometown – to feedback@statehousereport.com.  In the subject line, write: “Mystery Photo guess.” (If you don’t include your contact information, we can’t give you credit!)  (If the email doesn’t work for you still, send to: brack@brack.net.)

Our previous Mystery Photo

Before we identify the May 18 mystery, let us apologize to any of you who tried to send a guess for much of this week.  Our email server has been down.  We’ve worked diligently to fix the problem, but communications between readers and our site suffered greatly.  We hope the problem is now fixed, but if you guessed and got a bounced email from us, we apologize.  Thanks for trying.

The photo was of the Abbeville County Courthouse in the town with the same name as the county.

Hats off to those of you who identified the photo before the snafu, including:  Daniel Prohaska of Moncks Corner; Dan Shaw and Michael LeFevre, both of Columbia; George Graf of Palmyra, Va.; Steve Willis of Lancaster; and Dale Rhodes of Richmond, Va.

Graf sent along this context for the photo:

“The Abbeville County Courthouse, built in 1908, is an historic courthouse located in the east corner of Court Square, in the city of Abbeville in Abbeville County, S.C.  In 1981, the courthouse was added to the National Register of Historic Places and an arcade connects it to the adjoining Abbeville Opera House and Municipal Center.

“Abbeville was settled by French Huguenots and was named, along with the county, for the French town of the same name.  Abbeville’s City Motto is “Pretty. Near. Perfect.”

“Abbeville has the unique distinction of being both the birthplace and the deathbed of the Confederacy. On Nov. 22, 1860, a meeting was held at Abbeville, at a site since dubbed “Secession Hill”, to launch South Carolina’s secession from the Union.  It was on May 2, 1865, in the front parlor of what is now known as the Burt-Stark Mansion that Jefferson Davis officially acknowledged the dissolution of the Confederate government, in the last official cabinet meeting.

“Anthony Crawford (ca. 1865 – Oct. 21, 1916) was an African American man killed by a lynch mob in Abbeville.  Crawford was co-founder of the Industrial Union of Abbeville County, which was devoted to the “material, moral and intellectual advance of the colored people.” He was the father of twelve sons and four daughters.  He owned a 427-acre cotton field and was one of the richest men in Abbeville.  He got into an argument over the price of cotton with a white store owner, then was struck on the head with an axe handle by the owner, and after being put in jail was later hanged by an angry white lynch mob.”

  • Send us a mystery:  If you have a photo that you believe will stump readers, send it along (but make sure to tell us what it is because it may stump us too!)  Send to:  feedback@statehousereport.com and mark it as a photo submission.  Thanks.
S.C. ENCYCLOPEDIA

HISTORY:  S.C. Medal of Honor recipients

S.C. Encyclopedia  |  Approved by the United States Congress in 1862, the Medal of Honor is America’s highest award for military valor. Thirty native South Carolinians have been awarded the medal for “conspicuous gallantry and intrepidity” above that of their comrades in arms. On rare occasions the Medal of Honor has been awarded for individual exploits taking place in peacetime. Among them is Shipfitter First Class George Huber Wheeler of Charleston, who received the award for extraordinary heroism during a fire at Coquimbo, Chile, on January 20, 1909.

The first South Carolinian to receive the award during military action was Ernest A. Garlington of Newberry, who earned the honor for “distinguished gallantry” against the Sioux Indians at the Battle of Wounded Knee on December 29, 1890. Early in the following century, naval surgeon Middleton Stuart Elliott of Beaufort and Commander William A. Moffett of Charleston each received the decoration during hostilities against Mexican forces at Vera Cruz in April 1914.

Eight South Carolinians were awarded the medal during World War I, including three who made the supreme sacrifice. Six recipients were members of the 118th Infantry, which received more Medals of Honor than any other regiment in the American Expeditionary Forces. Among them was Providence native Corporal James D. Heriot of the Thirtieth Division. Heriot made a lone thirty-yard dash against a German machine gun nest and forced the team to surrender, only to fall himself later that day. In 1991 the sisters of Corporal Freddie Stowers of Anderson County were presented a posthumous award for his extraordinary courage while attempting to destroy a machine gun that had pinned down his men during World War I. Stowers was the only African American from the war awarded the medal.

While serving in Nicaragua between the world wars, Marine Corporal Donald L. Truesdale of Lugoff saved the lives of the members of his patrol by shielding them from the shock of an errant grenade on April 24, 1932. During World War II five South Carolinians were awarded the medal for courage and self-sacrifice. Marine Sergeant Robert A. Owens of Greenville made a charge against a well-placed Japanese gun that was wreaking havoc on American landing operations in the Solomon Islands on November 1, 1943. His sacrifice silenced the gun and paved the way for a successful invasion.

During fighting in the Korean War, three of the four South Carolina recipients were presented the honor posthumously. The fourth, Marine Staff Sergeant Robert Sidney Kennemore of Greenville, miraculously survived the blast of a grenade on which he had thrown himself to protect his platoon. Seven native South Carolinians were awarded the Medal of Honor during American involvement in Vietnam. The last Medal of Honor action of the Vietnam War occurred on Halloween night 1972, when Greenville native Petty Officer First Class Michael Edwin Thornton saved the life of his team leader Lieutenant Thomas Norris. Thornton’s is the rare case of one Medal of Honor recipient receiving the award for saving the life of another recipient.

Excerpted from an entry by Samuel K. Fore.   To read more about this or 2,000 other entries about South Carolina, check out The South Carolina Encyclopedia, published in 2006 by USC Press. (Information used by permission.)

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