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Archive for June, 2015

Last week’s Supreme Court ruling Continues IRS subsidies for 19,128 Delawareans, the beneficiaries of the Affordable Care Act.
  • Roughly 325 people with pre-existing conditions now have health insurance in Delaware.
  • There are 2,502 Delaware companies now subjected to the employer mandate and fines.
  • Since the subsidies have been upheld by the Supreme Court, 309,460 working employees in Delaware are now subject to taxes and fines, of which 32,064 are now mandated to buy insurance or pay 2% of their personal income as a penalty for not having “qualified” insurance.

So nothing has changed which means that small business will continue to be disinclined to grow into this hyper regulatory environment. We have greatly expanded our Medicaid population without expanding the network to care for them, with temporary Federal subsidies. Delaware’s budget liability has precipitously risen from an historic 17%, the national average for states, to well over 20%, much of which will soon be federally unfunded. The future of Delaware Medicaid is grim.

In Delaware, Aetna and BCBS have already asked for rate increases on top of rate increases already imposed. There has been no effort to control health care costs. There are plans now available through the Delaware exchange which have no doctors and no network. Many of the people who enrolled in Delaware’s exchange are now finding they can’t access any healthcare services because there is no network.  What is the point of offering these insurance services if costs are not controlled and doctors are not available?

The stock prices of health insurance industry and hospital networks are surging. Guess who really won last week?

The best hope of a free market correction of a very distorted market were dashed by an activist court that sided with big hospital, big insurance, and big government.

Chris Casscells,MD

Director, Center for Healthcare Policy

Chris Casscells,MD

Director, Center for Healthcare Policy

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The lifeblood of Delaware is the multitude of businesses incorporated in the state, some of which do not even exist within Delaware’s borders beyond a P.O. Box in Wilmington, and yet they pay taxes that make up a substantial portion of the state’s revenue. For years Delaware has been the premier place for a company to incorporate, and over half of all U.S. corporations are incorporated in the first state, in large part thanks to the state’s first rate court system that deals with businesses fairly and expediently. This means that it is cheaper to go to court in Delaware, and that means less costs that businesses have to absorb into their bottom lines or pass along to their customers. Although Delaware’s business court system remains the best in the country, other states are catching up.

State lawmakers have done their best to offset the savings offered by Delaware’s efficient court by creating ludicrous financial burdens on businesses and their employees that keep them away from the state. Because of these costs, many companies decide it is not worth it to open up actual offices in Delaware and subject themselves to the high taxes imposed by Delaware. Furthermore, many employers stay out of Delaware because their employees do not want to live there, because of failing schools and high crime, especially in Wilmington. Hundreds of millions of dollars in wealth has fled New Castle County in the past 15 years, undoing much of past efforts to attract business into the state. The state should be leveraging its accommodating courts to attract businesses to establish an actual presence in the state, rather than scaring them off with high taxes and unattractive communities.

Other states have also begun to attempt to reform their courts to make them more business friendly; both Nevada and North Dakota have improved the regulatory burdens they impose on states, and North Dakota especially has worked to reduce the tort costs inflicted upon its companies. In all likelihood the measures taken by theses states will poach some corporations from Delaware and will cut into growth in the number of new incorporations in the first state. It is a testament to the success and foresight of Delaware’s model that other states are attempting to emulate it and in a sense beat Delaware at its own game. For now Delaware’s courts still remain the most accommodating in the country, but other states are working to provide their own alternatives. Given the state officials complacency in making Delaware competitive, the possibility of other states surpassing Delaware grows by the minute.

States like North Dakota offer a vastly more hospitable tax climate compared to Delaware. North Dakota is making the smart decisions Delaware is not, attracting companies into the state with a potent combination of friendly courts and a sensible tax policy, that work in tandem to create a great offering. Meanwhile Delaware’s tax burdens offset the benefits its courts offer, wiping out any net-gain the courts might provide to a company looking for a place to start or expand. Overall it often makes more sense for a company to do business in North Dakota than Delaware, when one combines the combined effects of the states’ regulatory and tax policies. North Dakota is working to attract the P.O. Boxes and then turn them into offices, while Delaware only expands the financial burdens of doing business in the state and watches those P.O. Boxes disappear.

Jack Massih

CRI Intern

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This guest post is provided by Jack Massih, CRI’s summer intern. This is his debut post.

Connecticut recently decided to walk off of a cliff with its tax hike on businesses, and unsurprisingly the affected companies are looking to move to friendlier climates. Governors from Florida, Texas, Georgia and even New York quickly jumped at the opportunity, calling CEO Jeffery Immelt to explain why their state is the best place for GE’s new home. Delaware, with its business friendly reputation, ostensibly seems a natural place for GE to plant its new headquarters, but Delaware has fallen behind other states in offering a pro-business atmosphere, and if GE does decide to move, it is a near certainty they will not relocate to Delaware. For a State that has historically acted to accommodate businesses, this is a troubling development, indicative of the disastrous path state leaders have charted for Delaware.

As the current General Assembly looks to raise the personal income tax on the state’s wealthier families and raise the gross receipts tax on businesses, it is easy to forget there was a time when Delaware actually cut taxes and streamlined regulations to attract businesses and their employees to the first state. Lawmakers and Governors worked hard to woo the banking industry into Wilmington, and they adroitly maneuvered to land AstraZenica’s corporate office. Such policies paid off massively for Delaware, and even though tax rates were decreased, revenues grew as people and businesses flocked to the first state. In recent years many other states have prospered thanks to this pro-growth model, and Delaware was the pioneer of such policy, but state lawmakers have forgone this proven path to success in favor of increased taxes and ever expanding regulations.

One merely needs to examine the wealth migration into and out of Delaware to understand that families and companies vote with their feet. Money is still coming into the state from surrounding states in the mid-Atlantic and northeast, but much of it is offset by wealth leaving the state for even sunnier financial climates in the south. Delaware seems to be nothing more than a layover on the flight of money out of the region, rather than a permanent destination. Smart decisions to cut taxes sensibly will entice that money to stay within the state, boosting revenues and infusing communities with cash, while reckless tax hikes and wanton government spending will permanently scare it away. Delaware is straddling the line between being a winning state or a losing state, and current decisions by the General Assembly threaten to push it into the losing camp.

The risks of Delaware’s loss in competitiveness go beyond families and businesses leaving the state, there is also the loss in growth due to companies choosing not to relocate or expand into Delaware. Not only does the state run the risk of turning away established businesses and residence, it stands to lose out on the next generation of AstraZenica’s and banking firms. As firms like General Electric looking to relocate pass over Delaware, the state will lose out on the important revenue growth these income-earners and employers will bring, and its options to meet its ever growing spending commitments will invariably shrink to increasing taxes and/or making drastic discretionary cuts to state services. Both unsavory options inevitably push people out of the state and leading to an increasingly vicious cycle of austerity as people abandon the state and the tax base decreases further.

In order to avert such a scenario state officials need to drop their current tax and spend predilections and carefully examine their options to make Delaware more competitive. The bad news is that in many respects Delaware is lagging behind many other states; its tax burden is one of the highest in the country, and it is one of the few states that levy both a corporate income tax and a gross receipts tax. However this also means Delaware’s lawmakers have many routes to take in order to make Delaware more attractive to businesses. What Delaware should do is examine the states that have lined up to court General Electric and attempt to recreate their environments. In many cases these states have no personal income tax or no corporate income tax, a lower overall tax burden, and sensible regulations that make it easier to conduct business.

Delaware was once an expert at making itself hospitable for businesses and workers and it must rediscover that talent or it will lose out to states that recognize the need for sensible regulations and tax policy. The beauty of the federal system is the competition it engenders between the many states, encouraging creativity and common sense while punishing irresponsibility and complacency. If Delaware wants to keep its reputation as the first state for business, it must abandon its current self-defeating policy of constantly raising taxes to meet swollen budgets, and it must instead make itself attractive to business through the pursuit of pro-growth policies that will allow the state to reap the advantages of a healthy economy. The sooner citizens come to this realization the sooner Delaware can work to restore its waning competitiveness.

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The Caesar Rodney Institute is a research and educational think tank, founded in 2008.  CRI’s mission is to formulate and promote public policies based on the principles of free enterprise, limited government and individual freedom – all for the purpose of providing public policy solutions that benefit the people of Delaware.  CRI focuses exclusively on public policy issues in Delaware.

CRI’s staff pursues its mission by undertaking accurate and timely research and publishing these findings to its primary audiences: the Delaware General Assembly, the executive branch, Delaware’s media, the state’s broad policy community and the public at large.  CRI’s products include publications, articles, videos, conferences and policy briefings.

Governed by an independent Board of Directors, The Caesar Rodney Institute is a nonprofit, nonpartisan, 501(c)(3) tax-exempt organization.  CRI relies on the generous support from individuals, foundations, and corporations.  CRI does not accept funds from any government entity or agency.

Responsibilities

CRI is a poised for significant growth. As such, the new President’s first priority will be to focus on financial growth.  As the growth occurs, the President’s focus will broaden to encompass the strategic and operational development of the organization.

The President will work closely with the Board of Directors to establish goals for financial and organization expansion.

Key Responsibilities for the president include:

Fundraising

The President will lead the fundraising efforts of CRI and initially will devote the majority of his/her time to the organizations fundraising efforts. To accomplish this the President will:

  • Personally cultivate and develop major donors
  • Maintain a steady flow of foundation grant requests
  • Assure that foundation grant expenditures focus on the promised proposal deliverables
  • Oversee the direct mail solicitation program
  • Maintain a smooth system for thanking, communicating with and tracking all of the current donors and funding prospects
  • Organize and oversee the annual dinner
  • Schedule at least 8 fundraising events in zip codes with high concentrations of CRI donors
  • Work closely with the Board to identify opportunities to expand the range of fundraising efforts undertaken

Management

The President serves at the consent of the Board, and is responsible for all aspects of CRI management. As such, the President will:

  • Assure that the expenditure of resources and staff efforts are confined to the objectives set by the Board
  • Insure that revenues exceed expenditures
  • Provide monthly reports to the Board including metrics on financial conditions, fundraising, communications, and progress on major projects
  • Maintain a 2 month or more projected schedule for all CRI activities on the CRI Google calendar
  • Provide six month evaluations of CRI staff

Coalition Building/Communication

  • Reach out to other Think Tanks and maintain strong relationships with current program executives and officers; seek opportunities to share programs and information
  • Maintain a high level of interaction and communication with the Board of Directors and the Advisory Board
  • Help insure that CRI’s communications remain “on message”
  • Participate in calls with the executive Committee on a regular basis

Growth/Long-term Planning

  • Build and lead a senior management team; ensure that each member of the team has a clear set of annual objectives and is formally measured against them
    • Develop written objectives with each staff member
    • Meet regularly, individually, with each staff member to review performance against objectives
  • Oversee the creation of an updated strategic plan and an annual operating plan
  • Ensure that CRI’s communications and research are of the highest quality in appearance, content and persuasiveness
  • Build and manage the annual operating budget
  • Ensure that there is a succession plan in place for each member of senior management

Qualifications

  • 5+ years of work experience
  • A proven track record of fundraising at a comparable nonprofit organization and building lasting relationships with donors
  • A good public presence; persuasive communication skills, both written and oral
  • Familiarity with new communications technologies and an understanding of how they can be utilized effectively
  • Demonstrated strong message discipline
  • A desire for external communications, including extensive public speaking
  • Understanding of and experience in marketing messages and products
  • Demonstrated ability to interact with and influence state policymakers; experience shepherding policy solutions through the legislative process
  • Ability to accurately assess the political and policy landscape
  • Strongly preferred that the individual has proven policy expertise in at least one of the following policy areas:  education, health care, fiscal and tax policy, or energy
  • Capable of effective networking with peers
  • Ability to travel, both in-state and nationally
  • Philosophical alignment with CRI; commitment to the furtherance of individual liberty, personal/economic freedoms, and improving performance, accountability, and efficiency in Delaware government

To Apply

Qualified candidates should submit the following:

  • Résumé
  • Cover letter detailing your sincere interest in this position/mission of the organization and your salary requirements

to:

Samuel Friedman

sam@caesarrodney.org

All applications MUST be received by 5pm Tuesday, June 30 to be considered.

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This article is based off a column originally published in FEE

If this was yours, would you complain? nauticexpo.com

The presidential race is heating up and both major political parties have populist candidates- that means candidates who are running on the kind of anti-establishment, anti-greed platform the left, middle, and right generally agree on.

One of these candidates, the avowed Socialist Bernie Sanders, believes the world is a zero-sum game: If I have, then you don’t, and vic-versa. He does not see the potential for us both to have, but sees the possibility that I can take from you and vice -versa. In a recent speech, Sanders lamented that people are spending money on deodorant or sneakers when children are hungry. He literally said:

“You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. I don’t think the media appreciates the kind of stress that ordinary Americans are working on.”

Not to be outside, a comedian named Louis C.K. followed up with a joke on a similar note:

“My life is really evil.

There are people who are starving in the world, and I drive an Infiniti. That’s really evil…. There are people who are like born and then they go, “Oh, I’m hungry,” and then they just die, and that’s all they ever got to do.

And, meanwhile, I’m in my car — boom boom, brrr! — like having a great time, and I sleep like a baby…. I could trade my Infiniti for like a really good car, like a nice Ford Focus… and I’d get back like twenty thousand dollars, and I could save hundreds of people from dying of starvation with that money.

 And every day, I don’t do it.

Louis C.K’s joke reflects a common complaint about markets—that markets enable people to purchase luxury goods while other people starve.”

This article is about debating whether it’s bad to purchase big-ticket items, especially when roughly 47 millions Americans are receiving SNAP benefits (aka food stamps), when so many young people live in crime-ridden areas and have parents who cannot afford to move their child to a safer school, 93 million-plus working-age Americans do not have a job, and median household incomes have fallen since 2008. When you look at the hundreds of millions of us struggling in this economy, it’s easy to get disgusted with the wealthy, some of whom probably don’t deserve their wealth (like if they earned it illicitly or obtained it by some other means than honest work), and who go drink $900 a bottle wines in restaurants in the swanky parts of Manhattan or who fly around in private jets that the rest of us can only see from the ground.

But what is a “luxury good”, and why are we taxing it? Most people would not argue that a private jet is “luxury”. What about deodorant? Most of us need that! And if one deodorant is $5 and one is $50, is the $50 deodorant “luxury”, how about Hermes belts, some of which run into the four digits. Are these luxury, or necessity, since all of us who wear pants need belts?

The reason classical liberal economic policies, such as the ones CRI advocates for, work is because the true value of an item is determined by those who buy it, not by society at large, and not by government officials who are taking guesses. There is no one item everyone in America owns, not by brand, and not by type. Most people have cars and car insurance, but not everyone does. Certainly there is no book or movie everyone’s seen or dog/cat food all dog/cat owners use, if they use it at all. Those who use or consume a particular product figure out what the value is and pay accordingly. if the collective value becomes too high for us, and we determine we don’t need or want that product or service anymore, we just say no (unless the government mandates it). If Hermes wasn’t making money selling belts for thousands of bucks, they’d stop doing it. Clearly, some are willing to pay for that, so they keep making it, and thus keep their workers employed.

Those goods and services we value more will end up having more people working in those industries, and the industries will less support lose ground. This is why there are lots of gun manufacturers, but far fewer bow and arrow makers. Or, more car manufacturing plants, but fewer horse and buggy plants. Why some people decide to fly first-class as opposed to economy on the same airplane, or even choose one airline over another, or to fly or not to fly. Market forces generally determine that the lower something costs, the more it will be purchased. For the same reason those of you who buy books on your book reader might stock up on paid books under $5, but if books were all $25, you’d buy far fewer of them (we assume you aren’t addicted to ‘free-books). When goods and services are cheap, we can consume more of them, building more industries and making more people prosperous. This is why keeping tax rates as low as possible is so important- the more cost you add, the less people can and will purchase something. This is how a person with just a two hundred dollars can buy a DVD Player, two six-packs, chips and dip, and still have enough for a month’s electric and water bill while $200 wasn’t enough to buy a DVD player when they first came out. So if you managed to buy one, you didn’t have left-over for anything else.

Therefore, it’s unreasonable to suggest that buying luxury goods is somehow bad. Yes, a millionaire could give $25,000 to a charity, or to the government, to feed, clothe, or house poor families. But if that millionaire purchased a new car at $25,000, that would help keep the auto workers, the truck drivers, and the car dealer owner and his/her employees employed. Diffusing the money among them is no different than diffusing money among the millions of hungry kids. Yes, some businesses don’t always pay or treat their workers fairly, but these businesses are absolutely in the minority.

So the next time a politician tries to tell you that luxury items are evil because they are expensive,and redistributing the wealth is the only logical solution, walk away.

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