Guest Post: Delaware’s Government Channels Its Inner Trump
This is a guest post from Steve Newton. Sounds like the News Journal turned this down. Wonder why? Read on…
Secretary of Finance Tom Cook’s recent op-ed epitomizes the strategy of hiding things in plain sight. Secretary Cook and Governor Jack Markell’s revenue review panel has concealed among its recommendations for making Delaware tax revenues more “elastic” an ideologically driven agenda of tax cuts for the wealthy and out-of-state corporations at the expense of our state’s middle class, senior citizens and local business owners. That our governor could sanction such recommendations is a prime example of how politics in Delaware has been hollowed out in favor of profit taking.
Let’s first notice that in a era of declining revenues and increasingly challenging budgets to balance Governor Markell’s instructions forbade raising new revenue: “if a recommendation was made that could be expected to generate additional revenue for the state, then a corresponding revenue reduction would also be proposed to offset it.” This means (in English) that Cook’s panel was not interested in providing more money to balance our budget, but in changing who pays the bills.
First, consider the cuts. The panel recommends (in appropriately stealthy language) rolling back previous revenue-generating raises to the corporate franchise fees and reducing the corporate income tax rate. This change benefits primarily huge corporations and large institutional investors. The panel also suggests complete elimination of the Estate Tax, which is pretty much only paid by the wealthiest 1%. Here’s a multiple-choice question (in keeping with Governor Markell’s spirit of relentless standardized testing): Would these recommendations be most likely found in the political platforms of (A) Hillary Clinton; (B) Bernie Sanders; or (C) Donald Trump?
To “offset” the revenues lost from Delaware’s wealthiest citizens and out-of-state corporations, Governor Markell, Secretary Cook, and the panel recommend “the elimination of itemized deductions and a scaling back of elderly tax preferences” from our state income tax.
Itemized deductions are the primary tool that middle-class families use to reduce Delaware’s already high income tax burden; the 1%, whose income derives chiefly from non-salary sources, really don’t care about itemizing. The elderly (nearly one-quarter of Delaware’s population is on Medicare), now there’s a tax cow waiting to be milked. Retirees exist predominantly on fixed incomes, which our governor proposes to fix at a lower level so that the residents of Greenville can keep more of their dividends.
The other “offset” against those corporate income tax reductions is to be Delaware business owners (you know, the people who actually live and work here), who will be gifted with higher business license fees.
Secretary Cook notes that this kind of “prudent” financial management (read: transferring the tax burden from the wealthy to the middle class, local businesses, and the elderly) has benefited Delaware with a AAA bond rating purported to have saved us “$58 million in debt service payments since 2009.” That amount roughly equals what the State wasted in the Fisker deal plus one-year’s worth of subsidies to Bloom Energy, collected through your electric bill as a hidden tax.
Meanwhile, those six years have seen child poverty increase, our roads deteriorate, our streams become more polluted, middle-class incomes decline, and the “fiscally responsible” General Assembly balancing last year’s budget by stealing millions meant for Delaware homeowners who lost everything in the Great Recession.
Recalling Chief Justice John Marshall’s famous dictum that “the power to tax involves the power to destroy,” I read this soulless analysis and wonder why Delaware voters continue, year after year, to return to power the individuals seemingly more interested in destroying our middle class, our elderly, and our local businesses than in finding real solutions for the problems that beset us.
Tags: Donald Trump, Featured, Governor Markell, Secretary Cook, taxes
That’s why I voted for the Green Party candidate. I saw Markell for what he is immediately after his first election to State Treasurer. I would think Tom’s mother would be ashamed of him. But the no and low information voters just keep sending these people back. Disgusting.
its all on you guys who voted him in!!
Unfortunately realistic alternatives just do not exist
Excellent article yet not surprising at all. Delaware is a corporatist state.
“What’s good for business is good for Delaware” You can tell how good for business we are by how many brownsites and toxic waterways there are around the state that were left behind by business enabled by corporate lackeys at DNREC.
1) “This means (in English) that Cook’s panel was not interested in providing more money to balance our budget, but in changing who pays the bills.” Very well said.
2) Fuck you Anonymous , you dumbass, idiot troll. Markell, at least, didn’t run as a schmuck. He revealed his full schmuckitude once elected. The can’t remember a GOP candidate that didn’t EXPLICITLY RUN ON the kinds of anti-middle class agenda that Markell is adopting here.
3) Barbara Adams, you are smarter than me. I was completely fooled by Markell.
Right back at you Jason! Your just embrassed that you voted for him! At least I got it right, you apparently didn’t do your homework.
“blah blah blah, I’m an idiot.” That’s what all your comments sound like to me.
This commission? The one with representatives from each caucus and R and D statewide electeds that agreed enough to not put out a dissenting report?
http://www.delawaregrapevine.com/5-15revenue.asp
Where have you been? Shifting the tax burden to the middle class is something both parties can agree on. That said, sad to see Bryan Townsend listed as an accomplice.
“The panel also suggests complete elimination of the Estate Tax, which is pretty much only paid by the wealthiest 1%.”
The adult children of elderly du Pont heirs quiver with anticipation. Hurry up!
You guys seem to know a lot more about politics than I do, but I read the requirement that the recommendations wind up paying for themselves as a way to stop the commission from simply saying “every tax should be cut.”
I’m going to add to this the recent reaction by Jack Markell and Tom Carper to a recent Third Way report that tells Americans that inequality isn’t the problem — a lack of education, training and skill sets is. It is an appalling argument, really. It tells the very squeezed middle class that *they* are responsible for all of the erasure of their economic power. Even though there is nothing but data that shows that working people do not share in the gains they achieve in productivity, but owners get most of those gains. Yet here we have Gov. Markell and his Third Way pals telling middle-class Americans that they need to get comfy with their path to serfdom. Because you aren’t supposed to notice that companies like Disney are laying off perfectly competent American tech workers in order to hire workers from places like India. And yet, none of these Third Way protectors of the Serfdom are especially interested in protecting the tech workers who are here and are threatened by outsourcing or folks who come here with H1B visas. While I have no doubt that Americans could be training for more tech jobs, those jobs need to be here and not in India for Americans to take advantage of it.
Because you aren’t supposed to notice that companies like Disney are laying off perfectly competent American tech workers in order to hire workers from places like India.
This is part of the “comprehensive” immigration reform plan so wished-for by liberals. If you are for comprehensive immigration reform, you are for this too.
I’m sorry what, Puck? Outsourcing of tech talent is a recent phenomenon and most certainly has to do with their being both more businesses reliant on the field and more in the field. Many companies go to India for development because it’s far cheaper than what they are willing to/can afford which is mostly because the value of tech labor has gone up so much in the past fifteen years and the best charge the most for their devices. Indian tech workers are highly skilled and competing. What part of immigration reform prohibits tech companies from outsourcing tech labor?????
I meant what part of Immigration reform encourages companies to outsource tech labor?
I find it hard to understand how allowing the parents of legal children (born in the US) a path to citizenship or giving rights to undocumented workers who have been here for a long time would encourage tech outsourcing.
I meant what part of Immigration reform encourages companies to outsource tech labor?
You clearly have not read the proposals. The left has a boner for amnesty, but all the proposals also sneak in increases in H1-B and other high-skilled visas. Go check, I’ll wait.
So you’re against legal immigration too? What’s wrong with high skilled workers coming here? They will certainly contribute through taxes and the local economy.
Actually what I’m against is Disney’s incredibly evil program of importing immigrants to do skilled tech work for contracts that are about 60% of the people here already doing the job, then telling the incumbents that they will only get separation pay and good recommendations if they stay on for sixty days to train their own replacements.
@MD “What’s wrong with high skilled workers coming here? They will certainly contribute through taxes and the local economy.”
Any candidate advocating a huge increase in H1-B visas is a shill for the 1%.
The goal is to drive down wages for highly educated Americans and to replace them with low cost contractors from India and China.
It’s a terrible deal for America…
An aggressive program will basically destroy higher education (esp. STEM) in America and with its decline, there goes our future.
“What’s wrong with high skilled workers coming here? They will certainly contribute through taxes and the local economy.”
The problem is that US workers need to be the ones contributing to the economy. The alleged “shortages” of hign-tech workers are bogus.
Legal immigration is fine. But it should be limited, and the limits should be adjusted each year based on the unemployment rate. The numerical limits each year should be certified by Congress as necessary due to the lack of American workers.
We have no business importing foreign labor during times when Americans are struggling to find work or to make ends meet on shrinking paychecks.
The root crime is the introduction (beginning in 1970) of an industrial policy that argues that companies have no responsibility to do anything other than increase their share price. The widespread adoption of Shareholder Primacy is the disease. Everything else is a symptom.
The number of people we allow into the US is a political decison, not a corporate decision. Annual certification by Congress would at least allow the possibility of paying a political price.
Steve brought up an important point:
“An aggressive program will basically destroy higher education (esp. STEM) in America and with its decline, there goes our future.”
What this means is that spot shortages in certain STEM-based sectors will drive up labor price and spur more citizens to pursue the necessary education. But if we smooth labor demand by filling gaps with overseas workers, the demand for STEM education will stagnate and more universities will cut back or eliminate STEM offerings in a downward spiral.
The number of people we allow into the US is a political decision, but both parties have bought into shareholder primacy at such a high level, that the number is a given: as many as firms need.
It seems that the Democrat Party has become the Party of Big Business and Wall Street lately. Not really for the Traditional “Little Guy” anymore, strange.
Yes, Bob, after business’ bought the GOP they moved on to the Democratic party. It started in the 90’s with Clinton’s DLC bullshit.
America needs a jobs plan that imports jobs, not people. What Disney is doing (and they aren’t the only ones) is exactly what is wrong with the H1B Visa program. I trust Carper will get right on that. Not.
Rubio spoke of H1B visa reform at the debate last week. Even a broken clock is right twice a day. Carper on the other hand, sets his own clock and makes it seem like he is on time on every issue.
When faced with a life threatening illness, most seek the most qualified doctor for that illness based on his skill and results in his field. Do you care what political party he belongs too? We the people are the ones to blame for how the USA is today. Especially when we waste time defending who we promote based on a letter behind a name. Example: Hilary Clinton was called several names, liar and racist for two, when running against Obama. Now she has redeemed herself in some eyes as the best the party has to offer so all her lies and actions are washed cleaned. Republicans are no better. It is a shame we the people continue to support any career politician with the way they all change their stripes to suit themselves. Do any of them really care about us. So far, this next election may be the first I sit out on. The lesser between two evils no longer seems to apply. Shame on us.
Yep. We have an entire political party devoted to demonizing government and spitting on the idea that governments can be competent, and another that is so cowed by the bluster that they can’t offer a counter argument.
No wonder we are in the state we are in.
@puck “Steve brought up an important point:
“An aggressive program will basically destroy higher education (esp. STEM) in America and with its decline, there goes our future.”
What this means is that spot shortages in certain STEM-based sectors will drive up labor price and spur more citizens to pursue the necessary education. But if we smooth labor demand by filling gaps with overseas workers, the demand for STEM education will stagnate and more universities will cut back or eliminate STEM offerings in a downward spiral.”
Yes. That is exactly what I meant by my comment…. but my name isn’t “Steve”.
But the worst part is what it means for our future. If the bulk of high-tech workers are trained in India and China, where does that leave the US, in the long run??
We are currently in a situation that for every STEM PhD granted in America, there are 5 granted in India and 7 granted in China. We really are in a “death match” for the future of the world… and this is apparently where the real battle is going to happen…
Just wait it will get much worse once Dupont starts moving on out..
Just wait it will get much worse once Dupont starts moving on out.
Starts?
Well now I’m mad. I swear If the Republicans put up a competent non crazy candidate, I would really consider them. The Democrats make nice on social issues then screw average people
Bryan Townsend, the liberal savior was on this committee?!?!?!? Wow!!! How could the liberal baby Jesus be a part of such a thing without releasing a dissenting opinion? Maybe, Markell locked him in a basement and had Tom Cook give him an offer he couldn’t refuse? Or maybe, they gave him a different report to approve and then released this one after he gave his approval?
Or maybe his supporters are, or continue to be, gullible idiots who would believe any smooth talking corporatist with a nice smile? It worked in 2008.
I feel the need to set the record straight when it comes to this report and its recommendations. What was left out of your post was the sentence in my editorial column that said, “The bipartisan group agreed that the task of determining “how much” revenue belongs to the General Assembly and the Governor.” In fact, it was not the charge of this panel to determine what level of revenue the State of Delaware needs, but to advise the General Assembly as to which “levers” should be pulled or pushed depending on if it is their desire to raise revenue or decrease it. It was presented in the “revenue neutral” manner to take the “how much” question off the table and leave it to the policy makers so as not to be advocating for one way or the other. Determining which “levers” should be adjusted was based on the following criteria: (1) making the revenue portfolio more responsive to economic growth; (2) reducing volatility; and (3) maintaining or enhancing Delaware’s competitiveness with respect to other states.
Anyone wishing to discuss this topic with me further can contact me at 577-8984. The full report at:
http://finance.delaware.gov/defac/adv15/DEFAC%20Advisory%20Council%20on%20Revenue%20-%20Final%20Report.pdf
Pretty much your comment reprises your editorial–and the decision not to make revenue recommendations is in fact a strategic decision that smacks of political cowardice, straight up. If a bipartisan commission cannot muster the cojones to make revenue recommendations, what hope do we have in a highly partisan legislature. That’s one.
Here’s two: if you want to set the record straight, let’s discuss how transferring the cost of government away from the more affluent and away from large corporations directly onto the backs of the elderly, the middle class, and our in-state business owners is anything except business as usual for Delaware’s financial “elite” class?
Reducing tax preferences for the elderly makes our portfolio “more responsive to economic growth”? Precisely how?
Eliminating withholding for middle class taxpayers in a state that tops out its brackets so far down the scale it is under your shoes “reduces volatility” how?
Eliminating the Estate Tax entirely certainly makes sense if one lives in Greenville, but exactly how does that “reduce volatility,” or make the revenue structure “more responsive to economic growth”?
Charging the business people who actually live and work here MORE for their licenses makes us “more competitive” how?
The reality is, Secretary Cook, is that the model you are pursuing represents state-supported corporate capitalism based on shareholder primacy and little or no social conscience … and it doesn’t really work any more.
While we saved that $58 million with our AAA bond rating, our roads deteriorated, our streams filled with filth, children in Delaware got poorer, middle class wages went down, and your prescription remains the same as it was for the corporate elite a decade ago when “flipping houses” could be sold as a retirement plan.
Your bipartisan financial group deserves the disdain of our senior citizens on Medicare, two-income middle class families struggling to make their mortgage payments, and homegrown entrepreneurs tired of seeing the State back multi-national corporations over them at every step of the process.
I understood your report just fine. It’s your premise and your ideological perspective on just how government gets paid for that I reject.
Here’s one approach to trying to make change happen: “thanks,
Secretary Cook. It’s great to know you took the time to read this and I appreciate your attempt to clarify. When the legislators do meet, we will be making sure they know that we’re lining up support for X, y and Z because of these reasons. We hope to keep reading and look forward to the chance to share what we think are compelling arguments in the future…”
Here’s another: “Forget you. I’m going to yell at you more and alienate you further. Then the one guy in the legislature who’s best at alienating his coworkers will bluster some more and post elsewhere about how right he is about everything and how wrong you are. Clearly, that’s how we’ll get you and everybody to come around…”
The choice on which path to follow got made even faster than I would have thought. But maybe that choice was made up above when the original post left out that all four caucuses and multiple statewide secretaries and electeds were on the committee.
Nuttingham: if you perceived my intent as “getting everybody to come around” or convincing those who clearly have a stake in continuing to support Delaware’s corporatist fiscal policies … you clearly flunked reading comprehension. I don’t have a single whisp of a belief that this can be addressed via politics as usual, because there are pretty blatant ideological agendas on the table, and sticking up for the elderly, the middle class, and Delaware business owners are clearly not among them.
I was interested in rousing some rabble and asking some uncomfortable questions. I notice that both you and Secretary Cook are only apparently interested in the “Tut, tut” school of correction and play nice, and not in answering those questions, and that’s fine. It aligns your interests pretty damn well.
The reality here is that I’ve done both. I’ve served on statewide commissions and groups (hell, I’ve even chaired them), and–here’s the important part–almost nothing ever changes. Playing by the rules of “don’t piss anybody off etiquette” got us dirtier water, shitty roads, bad schools, increasing child poverty, middle class income reductions, and a health insurance universe dominated by a single corporate entity–all the while that our revenue sources are drying up and a majority of our “elected officials” play fiddles while the barn burns.
Maybe the approach of pointing out that the elimination of the Estate Tax has NOTHING to do with any of the points raised in Secretary Cook’s own report, and EVERYTHING to do with catering to a wealthy constituency is considered radical, or offensive, or not playing nice with others. I no longer give a shit. When roughly 50% of the state’s population is on Medicare or Medicaid, we’re past the tipping point and we need to start to deal with real consequences, not this buttoned-down “the financiers know best” bullshit.
There. Is that plain enough for you? I’m not an elected official, I’m an aggrieved citizen, and I’m not going to be quiet, or nice, about this any more.
The committee immediately dismissed the notion that, IF more revenues were to be needed, they’d come in the form of more progressivity via income taxes.
Even in the Executive Order, Markell basically made quote ‘economic development’ unquote the um, gold standard by which any adjustments should be considered. Not fairness.
I wrote about this months ago, even posted the Executive Order. The Executive Order also guaranteed that the insiders, dominated by cabinet officials and DEFAC lackeys, would write the recommendations, with only a couple of legislators to be appointed to give it the veneer of credibility. More info here:
http://delawareliberal.net//2015/09/28/markell-chamber-rethugs-rigging-the-game-for-2016-d-eadership-awol/
Revenue Neutrality is to filling a $160 million revenue shortfall as is taking the dirt from the bottom of a hole to fill that hole. Mixing that dirt with a dollop of bull***t will not help either.
Rep. John Kowalko
The other “offset” against those corporate income tax reductions is to be Delaware business owners (you know, the people who actually live and work here), who will be gifted with higher business license fees.
Actually, increasing gross receipts taxes is a good idea. It’s simple and progressive.
Gross receipts is a hidden sales tax on Delaware shoppers and diners. That’s fine, as long as we are aware of that, and we discuss it aware that it doesn’t hit the large corporations that get a lot of benefits from domiciling here without paying much for the privlidge.
“Hidden sales tax” is a baseless Chamber of Commerce cliché. Gross receipts taxes are paid by the business owner. Did your toothpaste become cheaper when gross receipts tax was cut in 2005? Did your dentist, pizza or oil change become cheaper? Of course not. The market establishes the price, which doesn’t vary because the owner pays 0.00384 percent on the sale.
Ample criticisms can be made of this package, but there is no progressive argument against the gross receipts tax.
Good point. It doesn’t hit the large corporations that get a lot of benefits from domiciling here without paying much for the privlidge.
Interestingly, making a model more responsive to economic growth isn’t really the question. The model needs to actually survive economic contractions when spending on social programs necessarily increases.