Southern poverty pimps, The “original sin” of the Southern political class is cheap, powerless labor & In the South and West, a Tax on Being Poor 19FEB&9MAR13

HERE is a great expose explaining the role Southern politicians have played in repressing workers rights, minimizing workers  pay and benefits, minimizing the social safety net, minimizing basic government services for the 99%, promoting indentured servitude of immigrants by ignoring violations of immigration and employment laws, all to increase the wealth and power of the Southern plutocracy of the rich and their corporations. It also exposes the enabling of these policies by the federal government through redistribution of taxes such as the EITC. Most Southern politicians rant and rail against increased taxes on the rich and corporations to pay for government programs as Socialist redistribution of wealth while having no problem accepting federal government funding for programs and projects in their states, knowing full well their states are getting more in federal tax dollars than they send to Washington. Just as the 99% have been subsidizing the rich and corporations through federal tax loopholes and the federal corporate welfare system, progressive Northern and West Coast states have been subsidizing the increasing wealth and power of the plutocracy, and so the suppression and repression of the poor, working and middle classes in dixie. This from Salon.....
UPDATE; I have added another article suggested by a friend, In the South and West, a Tax on Being Poor from the New York Times......

Contemporary American politics cannot be understood apart from the North-South divide in the U.S., as I and others have argued.  Neither can contemporary American economic debates.  The real choice facing America in the 21st century is the same one that faced it in the 19th and 20th centuries — Northernomics or Southernomics?

Northernomics is the high-road strategy of building a flourishing national economy by means of government-business cooperation and government investment in R&D, infrastructure and education.  Although this program of Hamiltonianism (named after Washington’s first Treasury secretary, Alexander Hamilton) has been championed by maverick Southerners as prominent as George Washington, Henry Clay and Abraham Lincoln (born in Kentucky to a Southern family), the building of a modern, high-tech, high-wage economy has been supported chiefly by political parties based in New England and the Midwest, from the Federalists and the Whigs through the Lincoln Republicans and today’s Northern Democrats.

Southernomics is radically different.  The purpose of the age-old economic development strategy of the Southern states has never been to allow them to compete with other states or countries on the basis of superior innovation or living standards.  Instead, for generations Southern economic policymakers have sought to secure a lucrative second-tier role for the South in the national and world economies, as a supplier of commodities like cotton and oil and gas and a source of cheap labor for footloose corporations.  This strategy of specializing in commodities and cheap labor is intended to enrich the Southern oligarchy.  It doesn’t enrich the majority of Southerners, white, black or brown, but it is not intended to.

Contrary to what is often said, the “original sin” of the South is not slavery, or even racism.  It is cheap, powerless labor.

Before 1900, the cheap labor was used to harvest export crops like cotton and lumber.  Beginning around 1900, Southern states sought to reap benefits from the new industrial economy by supplying national manufacturing companies with pools of cheap, powerless labor as well.  For a century now, Southern state economic development policies have sought to lure companies from high-wage, high-service states, by promising low wages and docile workers.  Texas Gov. Rick Perry’s recent appeals to California businesses to relocate to the Lone Star State are the most recent example.

The essence of the Southern economic model is not low taxation, but a lack of bargaining power by Southern workers of all races. Bargaining power at the bottom of the income scale is created by tight labor markets; unions; minimum wage laws combined with unemployment insurance; and social insurance, such as Social Security and Medicare and Medicaid.

Naturally, the 21st-century descendants of Jefferson Davis and John C. Calhoun want to weaken everything that strengthens the ability of a Southern worker to say to a Southern employer:  “Take this job and shove it!”

Tight labor markets are anathema to Southern employers.  They want loose labor markets that create a buyer’s market in wage labor.  That is why, at a time of mass unemployment among low-skilled workers in the U.S., most of the calls for expanding unskilled immigration in the form of “guest worker” programs are coming from Southern and Southwestern politicians.  Guest workers — that is, indentured servants bound to a single employer and unable to quit — are the ideal workers, from a neo-Confederate perspective.  They are cheap and unfree.

Needless to say, private sector unions that pool worker bargaining power are anathema to today’s suave metropolitan successors to the slave-owning plantocracy.  The whole point of the Southern model of economic development is to create a non-union region from Virginia to Texas, to which companies can be induced to move from states with unionized workforces.  Besides, unions engage in collective bargaining, in violation of the Southern ideal of employer-worker relations, in which the master gives orders and the fearful worker obeys without question.

A high national minimum wage also threatens the Southern conservative program for stealing jobs and industries from other states and other countries.  Particularly if it is combined with generous unemployment insurance, a high minimum wage gives Southern workers the ability to turn down jobs that pay poorly — that is to say, the majority of jobs in the South, if the Southern elite has its way.  While the Southern right opposes a higher federal minimum wage, it has no objection to increases in the minimum wage by Northern states, which thereby help the South lure more businesses.

Ruthless and callous as they are, the old families and nouveaux riches who make up the Southern elite don’t want their workers to starve.  On the other hand, they prefer not to pay a wage adequate for the necessities of life.   The solution favored by the Southern oligarchy is the earned income tax credit, a wage subsidy to workers that tops up a too-low wage paid by the employer.

The major champions of the EITC in national politics have tended to be conservative Democrats from the South, like the late Lloyd Bentsen, a reactionary born into the South Texas aristocracy, and Louisiana’s Sen. Russell Long.  What makes the EITC so appealing to Southern Democrats and Southern Republicans alike is that it forces the Northern and Western states, by means of the Internal Revenue Service, to subsidize low-wage businesses in the South, even as the South is using the poverty of its workforce to lure high-wage businesses from the North and West. Every penny spent on the federal EITC is a penny that Southern state governments and Southern employers do not have to spend on Southern workers to keep them from starving. By paying taxes to the federal government to fund the EITC, Americans in high-wage states are literally subsidizing the South’s job-stealing program. The progressive policy wonks who prefer a higher EITC to a higher minimum wage are useful idiots, from the perspective of the crafty Southern political-business elite.

Finally, there is the welfare state. Universal, portable social insurance programs like Social Security and Medicare increase the bargaining power of workers, by reducing the penalty for quitting a job because of poor wages or poor treatment.  If they quit, they don’t endanger their healthcare access or their retirement security. Workers with adequate social insurance are more likely — to use a time-honored Southern phrase — to be “uppity.”

Apart from a high federal minimum wage, nothing could be a greater threat to the Southern cheap-labor economic strategy than universal, standardized federal social insurance. In order to maximize the dependence of Southern workers on Southern employers in the great low-wage labor pool of the former Confederacy, it would be best to have no welfare at all, only local charity (funded and controlled, naturally, by the local wealthy families).

But if there must be a modern welfare system, then the Southern oligarchy prefers a system that allows state governments, rather than Washington, D.C., to control eligibility and benefit levels.  By controlling eligibility, Southern state governments can minimize the amount of the local workforce that has access to good social insurance, reducing the power of Southern workers to be “uppity.” At the same time, giving Southern states the option to have lower benefit levels provides the neo-Confederates with yet another bargaining chip, along with low wages and low taxes, that can be used by Southern state governments to lure business from more generous states or nations.

It is all a system, you see.  Southern conservative policies toward immigration, labor unions, the minimum wage and social insurance don’t reflect supposed conservative or libertarian ideologies or values, even if conservative or libertarian intellectuals are paid to dream up after-the-fact rationalizations.  These policies are reinforcing components of a well-thought-out economic grand strategy to permit the South, as a nation-within-a-nation in the U.S., to pimp its cheap, dependent labor for the benefit of local and foreign (non-Southern) corporations and investors.

“Pimp” is the mot juste.  In the 1960s, conservatives referred derisively to community activists who were accused of lining their own pockets while representing the urban poor as “poverty pimps.”  But the real “poverty pimps” in America are members of the Southern political class — many Southern Democrats and practically all Southern Republicans.  By means of permanent economic repression of most Southerners of all races, Southern strategists hope to strip the non-Southern states of the Union of their best companies and industries, thereby crippling Northern revenue bases and sending Northern economies into death spirals.

The defeat of Southernomics is therefore in the interest of most Southerners and most non-Southerners alike.  And the defeat of Southernomics requires the radical empowerment of Southern workers — white, black and brown alike. No American workers anywhere in the nation can ever be secure until the wage earners of the South are powerful and prosperous.  And uppity.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation.MORE MICHAEL LIND.http://www.salon.com/2013/02/19/southern_poverty_pimps/

In the South and West, a Tax on Being Poor

By KATHERINE S. NEWMAN

Javier Jaén

The Great Divideis a series about inequality.

TAGS:

INCOME INEQUALITY,POVERTY, SOUTHERN STATES (US), STATES (US),TAXATION, WESTERN STATES (US)

BALTIMORE

Debates over the fairness of the tax code are as old as the federal income tax itself. A cornerstone of the tax — established a century ago, by the 16th Amendment — has been the principle that those who make more should pay more, while lower tax rates help the poor to support their families and depend less on government benefits.

That social compact shifted into high gear during the Nixon administration, which tried to incentivize work by rewarding low-income households with a tax break that became the nation’s most successful antipoverty tool ever: the earned-income tax credit. Politicians of both parties have embraced the credit, making it more progressive three times since it was enacted in 1975.

While the federal government has largely stuck by the principle of progressive taxation, the states have gone their own ways: tax policy is particularly regressive in the South and West, and more progressive in the Northeast and Midwest. When it comes to state and local taxation, we are not one nation under God. In 2008, the difference between a working mother in Mississippi and one in Vermont — each with two dependent children, poverty-level wages and identical spending patterns — was $2,300.

These regional disparities go back to Reconstruction, when Southern Republicans increased property taxes on defeated white landowners and former slaveholders to pay for the first public services — education, hospitals, roads — ever provided to black citizens. After Reconstruction ended in 1877, conservative Democrats — popularly labeled “the Redeemers” — rolled taxes back to their prewar levels and inserted supermajority clauses into state constitutions to ensure it could never happen again. Property taxes were frozen; income taxes were held down; corporate taxes were almost nonexistent.

Practically the only tax that could rise was the one that hurt the poor the most: the sales tax. And rise it did, throughout the Deep South in the late 19th century, then spreading into the Carolinas, Georgia, Florida and the rest of the region in the 1960s and 1970s. Even liberal politicians weren’t able to buck the tide — just ask Bill Clinton, who as governor of Arkansas urgently sought new revenue to improve his state’s ailing schools and found the sales tax was the only politically viable option.

If this were just a history lesson, we could set it aside. It isn’t. In the last 30 years, these trends have only gotten worse. Southern states have steadily increased the tax burden on their poorest citizens by shifting the support of the public sector to sales taxes and fees for public services. After California voters passed Proposition 13, which capped property-tax increases, in 1978, Western states began to move in a similar direction. Sales taxes on clothing and school supplies and fees for bus fare and car registration take up, of course, a far bigger slice of a poor household’s budget than they do from the rich.

Over the same 30-year period, some Northeastern and Midwestern states moved in the opposite direction. They mimicked the federal government by passing their own earned-income tax credits (and making them refundable, as the federal government has done, so that very low-income earners get a check after filing their returns), preserved progressive state income-tax rates, and either exempted food and other basics from sales taxes or gave sales-tax rebates to low-income households. No Southern state provides refunds to its poor citizens through the tax code, no matter how little they earn.

There are many reasons to worry about the growing regional divide. But even leaving aside basic fairness — why should a poor child in the Northeast have greater life chances than one in the South? — the divergence exacerbates poverty itself, driving households deeper into distress and lowering social mobility.

For a book published in 2011, my colleague Rourke L. O’Brien and I analyzed the combined burden of sales tax, state and local income taxes on poor households in 49 states, based on consumer expenditures, from 1982 to 2008. (We omitted Alaska because it offers oil-revenue-related rebates to every household). We looked at the relationship between the total tax burden on a poor family of three and state-level figures for mortality, morbidity, teenage childbearing, dropping out of high school, property crime and violent crime.

The fact is, the more the poor are taxed, the worse off they are, whether they are working or not.

It turns out that after factoring out all other explanations — like racial composition, poverty rates, the amount spent on education or health care, the size of the state’s economy, existing inequality levels, and differences in the cost of living — the relationship between taxing the poor and negative outcomes like premature death persisted. For every $100 increase on taxes at the poverty line, we saw an additional 7 deaths and 78 property crimes per 100,000 people, and a quarter of a percentage point decrease in high school completion.

Southern states have far higher rates of strokes, heart disease and infant mortality than the rest of the country. Students drop out of high school in larger numbers. These outcomes are not just a consequence of a love of fried food or higher poverty levels. Holding all those conditions constant, the poor of the South — and increasingly the West — do worse because their states tax them more heavily. They have less money to buy medication, so their health problems get worse. High sales taxes make meals more expensive, so they shift to cheaper, unhealthy food. If people can’t make ends meet, they may turn to the underground economy or to crime.

This self-defeating pattern has plagued the citizens of the “meaner states,” the ones that tax poor people at a higher rate, for a long time. But it is about to get worse. Governors in fiscally strapped states are hoping to roll back state earned-income tax credits. Some — like Bobby Jindal of Louisiana, Dave Heineman of Nebraska and Mary Fallin of Oklahoma — are aiming to cut or even eliminate state income and corporate taxes and raise sales taxes. North Carolina lawmakers are considering the same thing.

Proponents say these moves will make their states more economically competitive, bring back jobs, and attract high-income residents. But economists who have studied the impact of raising taxes on residential choices have found that tax rates don’t make much of a difference. Employers represent a different story: they are attracted to low-tax states, particularly if they don’t need high-skilled labor. Accordingly, low-wage job opportunities have grown in the Cotton Belt and the Sun Belt, and shrunk in the Rust Belt. There is something to be said for this, if the goal is to replace the nonworking poor with the working poor. But this is hardly a strategy for eradicating poverty itself.

The fact is, the more the poor are taxed, the worse off they are, whether they are working or not. We all pay a huge price for this shortsightedness. Medicaid payments, food stamps, disability benefits — all of these federal programs swoop in to try to patch up a frayed safety net. Consequently, the Southern states reap more dollars in federal benefits than they pay in taxes (like Mississippi, which saw a net gain of $240 billion between 1990 and 2009), while the wealthier states — which do more to take care of their own — lose out for every dollar they pay (like New Jersey, which handed over a net of $706 billion over that same period). As noble as the federal effort to rescue the poor in the “mean states” may be, it is not enough to reverse the impact of regressive taxation.

There is a better way: increasing taxes on luxury goods; exempting necessities like food, medicine and children’s clothing from sales taxes; and perhaps most important, issuing tax rebates and preserving refundable earned-income tax credits, which put more money in the hands of low-income households. Since poor families tend to spend all of what they take in, these protections would stimulate the economy and preserve, or even expand, the job base.

The states headed in the opposite direction are not only damaging the most vulnerable of their citizens, but exacting a significant toll on Americans in states with more progressive tax policies. We all pay for the damage done when states try to solve their fiscal problems, or score ideological points, on the backs of the poor.

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Katherine S. Newman, a professor of sociology and the dean of the School of Arts and Sciences at Johns Hopkins University, is theauthor, with Rourke L. O’Brien, of “Taxing the Poor: Doing Damage to the Truly Disadvantaged.”

http://opinionator.blogs.nytimes.com/2013/03/09/in-the-south-and-west-a-tax-on-being-poor/?emc=eta1