Scott targets poverty with GOP tax plan — but would it help SC?

U.S. Sen. Tim Scott has made raising people out of poverty a centerpiece of his legislative agenda on Capitol Hill, and he sees his party’s push to overhaul the nation’s tax code as a way to make that happen.

It’s not clear, however, whether the GOP’s new tax overhaul proposal will accomplish those goals. Or whether Scott’s own ideas will be integrated into a final product. Or, for that matter, whether any bill will pass.

For now, at least, the S.C. Republican has been given a seat at the table to help negotiate the framework for what the GOP hopes will be the first sweeping tax code rewrite since 1986.

Scott is a member of the Senate Finance Committee, one of the panels that will write the tax overhaul legislation. Republican Senate leaders designated him as one of the party’s lead “messengers” for the effort in December, singling him out for being able to talk about a complicated issue in tangible terms.

At a press conference Wednesday where Republican leaders unveiled their framework, Scott was selected as one of only a few speakers to comment on the proposal.

The only black Republican in the Senate, Scott spoke from the perspective of having grown up in a single-parent household, mired in poverty, in North Charleston. He talked about how his mother and mothers like her – he mentioned a constituent named Sherri – struggle to raise their children while seeing so much money withheld from their paychecks.

“This tax reform conversation is about ‘Hashtag, keep yo’ money,’” Scott said in closing, eliciting approving laughter from his peers.

Battling poverty or ‘wealth-fare’?

Scott told McClatchy he’d been a part of conversations regarding the GOP’s proposal for tax reform since late last year. He said President Donald Trump has expressed interest in Scott’s “Investing in Opportunity Act,” which would delay capital gains taxes for investors willing to make investments in distressed communities.

In South Carolina — where the poverty rate is 15.3 percent compared to the national average of 14 percent, according to the U.S. Census Bureau — attracting investment is important.

“I think a lot of the opportunity agenda is now front and center because of the tax reform package, and I’m thankful I’ve had the opportunity to work with the White House, (chief White House economic adviser) Gary Cohn and (Treasury Secretary Steve) Mnuchin, meeting with them for the past six and seven months,” Scott said.

Scott’s ability to deliver his anti-poverty agenda depends heavily on whether Congress can pass any tax bill, an ambitious undertaking at a time when majority party Republicans are philosophically at odds with one another on a whole range of issues.

Though Democratic Party leaders have said they might be willing to work with Republicans, so far they have largely responded negatively to the tax-proposal’s framework, bemoaning that the plan favors the richest of the rich and dubbing it “wealth-fare.”

‘You ... get a lot more money’

While Scott is being asked to sell the tax proposal nationally, he also said he has been talking with S.C. interests.

“The GEs and the BMWs and the Boeings to small business owners, franchises like restaurant chains and folks who own restaurants to folks who are in the construction world and insurance industry,” Scott said, ticking off the list of groups he had spoken to since December.

South Carolinians should “love” what congressional Republicans have put together so far, Scott said.

“If you are the poorest of South Carolina, you actually get a lot more money,” he explained. “Doubling the standard deduction means that across the income scale you will actually have more opportunities to get your money because —as opposed to itemizing and not breaking through the threshold — you actually get the money just because you’re there.”

Scott also cited a finding by “economists on the left and the right” that up to 70 percent of corporate taxes effectively are paid by workers, so a corporate tax break could result in workers receiving higher wages.

Would tax reform help South Carolinians?

Based on what is currently known about the tax-reform plan, however, it’s not clear the tax plan would help the poorest South Carolinians, according to University of South Carolina tax law professor Clinton Wallace.

“One of the issues with this plan right now is, if you currently don’t pay income tax, there’s nothing here that will help you at all. And that is a pretty large group,” Wallace explained to McClatchy.

“About 21 percent of households that file tax returns have no income tax liability. In South Carolina, it’s double that. Forty-two percent of South Carolina households that file tax returns have no income tax liability.”

Under current law, families of four earning $28,800 and individuals earning $10,400 are exempt from federal income tax payments. The new framework would bring the threshold for families down to $24,000 and individuals up to $12,000.

With those numbers, some families would have higher income tax liabilities and some individuals would have lower liabilities, Wallace said. But most low-income earners would find their situation unchanged.

However, the tax-reform proposal will be well-received by businesses that would receive lower rates, said Wallace, especially high-income service providers like attorneys. “(But) there are fewer high-income people here (in South Carolina) than in New York or California,” he pointed out, “so we as a state get less of those benefits, but certainly there are people here who will be happy.”

On Thursday, Scott said he had spoken to only “three or four” South Carolinians in the 24 hours since the GOP tax proposal was first unveiled in Washington. “They don’t have enough information to say if they like it or not,” he said. “They are optimistic, and they are leaning into the conversation, which is good news.”

This story was originally published September 28, 2017 at 6:38 PM with the headline "Scott targets poverty with GOP tax plan — but would it help SC?."