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Archive for the ‘Tax Increases’ Category

Governor Markell released his budget for FY2015 and it includes new taxes, including a 10 cent per gallon increase in the gas tax. He also wants to increase taxes on businesses and move money from the Transportation Trust Fund to help offset the deficit.

Where are we going with this?

Much of this increase in spending is unnecessary and there are ways to pay for the spending without new taxes. For example, Delaware could save $90 million a year in the infrastructure category if they simply change their prevailing wage methodology from the state’s prevailing wage survey to the US Bureau of Labor & Statistics (BLS) survey. This is because Delaware’s survey is much more union-friendly and has caused public works projects to see an explosion in spending. The BLS survey includes more businesses and while still union-friendly is much less so than the state’s.

Delaware has $29 million sitting in bank accounts, unspent money collected from the Regional Greenhouse Gas Initiative. This is money polluting businesses pay to the state in order to “offset” their emission of CO2. The idea was that money would be spent on low-income weatherization projects (like installing energy-efficient windows or dishwashers in homes), but in reality most of the money spent was on administrative costs, with very little going to these projects (which had their own problems).

Delaware also makes the cost of business difficult, with electric prices 25% higher than the national average, the state with the worst gross receipts and corporate income tax rate together, and a personal income tax rate which make Delaware uncompetitive with Florida or Texas for jobs; in place the state has to essentially pay companies like ILC and Kraft Foods to keep jobs here. What we need is a natural gas pipeline to lower energy costs, a repeal or at least reduction in the tax rates mentioned above, and more support for existing firms. Delaware was last in the nation in terms of job expansion by existing in-state firms.

Let us hope that the General Assembly decides to move Delaware in a pro job-growth direction and away from punishing the middle class and small businesses of Delaware with onerous taxes and fees which are only encouraging the state to spend more.

*Note:This article will be updated when further details about the FY2015 budget are revealed.

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For Immediate Release

Contact:

Samuel Friedman

Communications Director

Tel. 302-734-2700

E-mail: Sam@caesarrodney.org

 

Abuse of Power Lawsuit Filed Against DNREC

Agency’s new emission permit ‘fees’ violate state constitution

            Dover- The Caesar Rodney Institute (CRI) announced today that David Stevenson, Director of the Center for Energy Competitiveness at CRI, is among four plaintiffs who filed a lawsuit this week against DNREC and DNREC Secretary Colin O’Mara.

 

The complaint asserts Secretary O’Mara has not been delegated the power to reduce the agency’s new carbon emissions goals, which is the basis for raising the carbon dioxide permit fees.  The plaintiffs also believe DNREC is violating the Delaware Constitution by issuing a regulation on carbon dioxide emission permit fees without the state legislature, as required in the state constitution. This new regulatory ruling will cost Delaware families and businesses over $50 million a year in fees collected through consumers’ electric bills.

 

“Multiple parties warned DNREC this decision was a potential violation of the Delaware Constitution in public comment sessions but the comments were ignored,” Stevenson explained. ” The state constitution specifically requires that all taxes and fees must be approved by a 3/5 majority in each legislative chamber.”

 

“One of the biggest debates in the legislature this year was over a tax increase,” Plaintiff and State Representative Harold “Jack” Peterman said. “Twenty-two legislators opposed an attempt by Delmarva Power to raise electric rates, and both issues involved less money than this. Twenty-five percent of the money collected must be spent on energy efficiency projects and on helping people pay their electric bills, according to a multi-state Memorandum of Understanding.  Unlike most state spending, the legislature has no say in how the money raised from this fee increase will be spent.”

 

The other plaintiffs are: Christian Hudson, of Hudson Management and Sam Yoder & Sons in Greenwood; and John Moore, CEO of Acorn Energy in Wilmington and a CRI board member.

 

“Businesses are already struggling with high electric bills; we don’t need to add to the problem and make Delaware less competitive”, Hudson said.

 

“The regulatory change DNREC is proposing doesn’t appear to be about the environment but rather about raising more state revenue”, Moore said.

 

The case will be heard by Judge Richard F. Stokes, Superior Court judge, in Georgetown.

 

read the full complaint: http://www.caesarrodney.org/pdfs/DNREC_Lawsuit.pdf

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Just yesterday the Sea Level Rise (SLR) Advisory Committee came out with its updated report, suggesting Delaware could have between 1.6-4.9 feet of sea level rise on Delaware’s shores by the end of this century. At those predictions most of Sussex and eastern Kent County will be underwater. Needless to say, the amount of flooding “expected” will impact property owners and businesspeople downstate. Here are some of the comments submitted by the committee. Ones of particular note are in bold.

“Sussex County seems to be extremely backwards, with little ideas about science”

“Sussex County Council is an ignorant bunch. The Council… has never met a developer it doesn’t like”.

“Wait to see what happens” and “How will you implement retreat?” and “How much brainwashing do we need?” (thoughts on who would have said this)
Very Worried about insurance, both homeowner policy and FEMA”

“Local communities are essential in supporting anything you (state government) try to do. Getting them to support any initiatives is key.”

“SLR Statements included in all property sales/leases.”

“Signage in high risk areas and outreach!”

“1% hotel tax on tourism. Carbon tax is most fair.”

“Make sure someone from Sussex County Tourism is on the Advisory Committee…to combat the tears that will emerge from this discussion.”

“Giving DNREC authority to regulate development with a 100 year flood plan”

“New authority for DNREC to…manage…new lands”

“Developers should pay through permit/consultation fees”

“Provide timely consultation, set permit fees high enough especially for business/developers to sustain program.”

“I do not see much private sector involvement”

“This (SLR) seems like an insurable risk. Can a public insurance pool be set up, funded from land taxes and development permits?”

“To whom does the SLR committee report (good question)? I suggest either the governor or the committee of the state legislature.”

one committeemenber proposed a package of tax increases with more local control over how SLR actions are handled and paid for.

“We need to restrict development in sensitive areas before they start,

“I think it is only honest and fair to warn new homebuyer’s of the property’s potential future vulnerability. The potential future risk of sea level rise should be disclosed in the Delaware seller’s disclosure of real property condition report.”

“SLR predictions should be figured into…business development plans.”

“prohibit development in areas that will be flooding with SLR.”

“providing as much technical resources to businesses, industries. Land management is a critical role for the state.”

“I don’t believe public money should be used for replenishment of private beaches.”

One partially illegible comment suggested better engineering of dikes.

“Partnerships with consultants should be included. Consultants offer a wealth of expertise.”

“Most presentations suggest SLR is coming or just arrived.  Show people what damage it has caused over the past 100 years.”

“County ordinances which take care of land use in unincorporated areas.”

“Provide SLR planning to local governments…especially target Wilmington.”

“It would be helpful to have a cost estimate: Abandon, buyout, move. With some rough dollar number for the extreme we can evaluate other plans.”

The question is, what does all of this mean? From these statements, which are full quotes from unidentified names (blacked out in the document), there is a pattern which emerges: the government, possibly DNREC, should be allowed to levy taxes on landowners and land developers in Sussex County to pay for the sea level rise actions. Landowners in all three counties, but especially in Sussex and parts of Kent, will need to advise potential buyers that the property is in a “flood zone”-and the government should have the ability to either tell the potential buyers or make the landowners do so. The next step then is to decide how badly “SLR” will “devastate” Delaware’s shoreline.

Next week we will show more information obtained from these documents and explain what it means to you.

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From CNBC:

It’s doubtful most people will notice, let alone celebrate, Friday’s 100th anniversary of the U.S. income tax code. But, yes taxpayers, Oct. 4, 2013, is the centennial.

So, happy birthday income tax?

“Obviously, it depends on your perspective,” said Ajay Mehrotra, a history professor at Indiana University.

“But there’s one thing we can take from the period of time when the tax law passed,” he said. “And that is lawmakers got together and realized some permanent form of taxation was needed instead of having a political stalemate that got nowhere.”

One expert sees the 100 years as a system run amok.

(Read more: Five key questions for taxpayers)

“In 1913, the tax code consisted of 400 pages,” said Timothy Nash, a professor of free market economics at Northwood University.

“By 2012, the tax code was 73,608 pages,” he said. “We have gone from a simple tax system to a complex, unfriendly system.”

Taxed from the very beginning

Play Video
Now is the time to start tax planning
CNBC’s Sharon Epperson gets year-end tax planning advice from three leading financial advisors.

It was the 16th Amendment, adopted in February 1913, that gave Congress the legal right to levy an income tax. On the evening of Oct. 3, President Woodrow Wilson signed the Revenue Act of 1913 that allowed the collection of a federal income tax—starting the next day.

But having some sort of taxation goes back to the country’s beginning. From 1791 to 1802, the government was supported by tax revenue from the sale of such items as liquor, tobacco, sugar, property sold at auction and even through the sale of slaves.

The high cost of the War of 1812 saw the first sales tax on gold, silverware, jewelry and watches. But by 1817, Congress eliminated all taxes and relied on tariffs from imported goods for revenues.

It was in 1862, to fund the Civil War, that Congress enacted the first income tax. Anyone making between $300 to $10,000 a year paid a rate of 3 percent. That tax ended soon after the war.

Congress also established the Internal Revenue Service at the same time, which had much the same power and authority then as it does now.

Jumping to 1894, Congress passed the first peacetime income tax law, but a year later the Supreme Court declared it unconstitutional. The court said that taxes on rents and real estate income had to be divided among the states according to population, which the law did not allow.

But the court did make a crucial statement in its ruling. It said that Congress had the right to impose a direct income tax—and that led to the passage of the 16th Amendment.

People haven’t always hated taxes

As for most people’s seemingly contentious relationship with the taxman, Mehrotra said it wasn’t always that way.

“It’s a popular perception that Americans hate taxes, but that hasn’t been the case until recently,” he said.

“Taxes in the post-World War II era were very high at a 70 to 80 percent rate in some cases, and people were more or less willing to pay them,” he said.

“But our overall prosperity started to decline in the 1960s and ’70s, and people wanted to start paying less in taxes,” he said.

“We’ve had a real transformation of the economy and a loss of faith in the public sector over the years with Watergate, the Vietnam War, so people aren’t as supportive of the government and what it does as they used to be,” said Mehrotra.

Tax reform unlikely

The tax system has seen its share of changes over the years. In 1943, the withholding tax on wages was introduced for the first time. In 1981, Congress passed the largest tax cut in American history, some $750 billion in cuts over six years. That was partially offset in 1982 and 1984 when Congress raised taxes to the tune of $265 billion.

The Tax Reform Act of 1986 is considered the biggest reform measure since 1913. The top tax rate on individual income was lowered from 50 percent to 28 percent, the lowest it had been since 1916.

But along with the lower rate came the elimination of certain loopholes to make up the lost revenue. And the act put in a $120 billion increase in business taxes.

President George W. Bush signed several tax cuts into law in 2001 for the third-largest tax cut since World War II. President Barack Obama’s tax bill for 2013 kept some of the Bush tax cuts for lower incomes but raised levels for higher incomes, which had been reduced under Bush.

Among other moves, Obama restored the full amount of the payroll tax (6.3 percent) and raised the rates on capital gains and included a 3.8 percent surtax on incomes of $200,000 or more for single people to help fund the Affordable Care Act. The dreaded alternative minimum tax (AMT) received a permanent patch to try to keep thousands from having to pay it.

Calls for tax reform have led to recent hearings on Capitol Hill. Suggestions include going to a flat tax and eliminating deductions like mortgage interest and charitable giving.

“We need a national sales tax or flat rate tax,” said Nash. “Both would reduce the complexity and burden of our current system with a fair tax and the opportunity to abolish the IRS.”

“It all depends on what you call fair,” said Mehrotra, who also supports a national sales tax. “Medicare and Social Security aren’t going away, so we need to fund them.”

“We need taxation for progressive spending, but one thing that would be helpful is if we stopped trying to run every social policy through the IRS,” he added.

“But getting tax reform done won’t be easy,” he added. “Everyone has a special interest they want to protect.”

Hot button issue

Taxes are always a hot button issue. Depending on whose study you look at—or your political persuasion—the U.S. is either the most overtaxed nation on the planet, the least taxed (especially for the wealthy), or it’s somewhere in the middle, as some have said.

Wherever it is, taxes are money for government services, like Social Security. Medicare, defense, federal worker payrolls, veterans’ benefits, education and health care.

And the amount needed keeps growing. The Treasury Department will likely collect around $4.9 trillion from income and payroll taxes in 2014. That’s a huge jump from the $5.4 billion collected in 1920 and the $43 billion in 1945.

If Americans do circle their calendars for taxes, it’s usually April 15, the yearly filing day, not the 100th birthday of the federal income tax.

“One hundred years of what we’ve had has been plenty and it’s high time Congress did something about it,” said Nash.

—By CNBC’s Mark Koba.

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SO with only 12 days until the healthcare exchanges roll out nationwide and in Delaware, you are probably wondering what is going to happen in the Diamond State.

If you have signed up for the “Choose Health Delaware” e-mails, you probably have been getting many as the state gets more and more excited to bring us the “healthcare insurance exchange”. Of course, Delaware still hasn’t received approval for its pricing plans from the Federal government as of this writing (September 19), so if they don’t get it by October 1 then it is possible the state will begin rolling out coverage plans which have no price attached to them. Meaning, you will not be able to look through or choose any plan or compare any pricing because there won’t be any. Word is (from CRI’s secret sources) that today was the day Secretary Sebelius was supposed to announce the rates for the states with the federal exchanges, which clearly will not be ready by October 1.

A key component of the law is getting young people to enroll in the exchanges to offset the likihood of older people in the exchanges using more healthcare services. Here are some samples:

Malik’s story: I’m young and I need health insurance

Have you met Malik?

Malik is a 23 year old bartender and server who works in the restaurant industry.

He works on his feet all day and like millions of Americans, Malik does not have health insurance because he can’t afford it.

Can’t afford insurance. Can’t afford to miss work.

Malik shared his story with us:

“I hurt my foot pretty bad and I personally thought it was a fracture. I can’t afford to not go to work and not walk on it so I’ve just kind of struggled through it.

If I did have insurance, I would have gone to make sure that it wasn’t worse than I assumed it was.

Without insurance, a serious accident would pretty much turn my life upside down. It would probably set me back for life.

I feel like the Marketplace will help me achieve my goals. It’ll just be a load off my shoulders.”

Then there’s Alejandra:

Alejandra’s story: College students need coverage too!

http://1.usa.gov/18COX6t

How the Marketplace helps people like Alejandra

Clearly the $300 just “disappears” and becomes “free”. Maybe for her, but for the taxpayer, that means more money needs to come out of our pockets.

According to the Manhattan Institute, an associate of CRI, their map says if Alejandra lives in California, she will an extra $34 a month for an individual plan (most likely the silver plan). Which is an extra $408 a year-more than the $300 she paid with no insurance.

She doesn’t live there? Pricing is unfair? If she lives in Oregon, New York, Washington State, Washington DC, Virginia, Vermont, South Dakota, New Mexico, Connecticut, Or Maine, she will pay an increased rate. Even if she lives in New York, Ohio, Colorado, or Rhode Island where rates have decreased, she would still pay no less than $169 a month (Ohio) to get coverage. No Alejandra, who probably has little income, could attempt to enroll in Medicaid or qualify for lots of subsidies for health insurance-which then means her “free” checkup will be passed along to everyone else in the health exchange or the taxpayers.

Of course, the exchanges must be up and running by then to even give Malik and Alejandra a chance to succeed.

Expect glitches when the ACA rolls out Oct. 1

12 days is a long time. Stay tuned.

UPDATE****************************************

On Friday, September 20, the Delaware State News published the exchange rates for their Choose Health Delaware plan. Expect a future blog post/article from CRI with our response to the plans shortly.

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And why they do not work

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On May 16th, 2013, the UK Daily Mail reported a shortage of toilet paper was occurring in Venezuela, the home of  the late “Revolutionary” Hugo Chavez. Although many Venezuelans and people around the world do not understand how this is, we will explain here. From the article:

“First milk, butter, coffee and cornmeal ran short. Now Venezuela is running out of the most basic of necessities – toilet paper.
Blaming political opponents for the shortfall, as it does for other shortages, the government says it will import 50m rolls to boost supplies.

Economists say Venezuela’s shortages stem from price controls meant to make basic goods available to the poorest parts of society and the government’s controls on foreign currency.

“State-controlled prices – prices that are set below market-clearing price – always result in shortages. The shortage problem will only get worse, as it did over the years in the Soviet Union,” said Steve Hanke, professor of economics at Johns Hopkins University.

Prices of goods and services is THE basic determinant of value of a particular good or service. How do we know what value is? Some items will be valued more by some than others. For example, some people will not pay $60 for a brand new video game, but others will. Some would pay $90 for a brand new video game. Thus stores will set their prices based on what people are willing to pay, not on what the government tells them. If stores overcharge on an item, they will sell fewer units, and thus will be compelled to lower their prices in order to sell their items and stay in business. If even one enterprise charges a little less than its competitors for the same item and consumers react accordingly, then other enterprises will be compelled to follow suit. This rule does not hold true for cartels, monopolies, duopolies, or oligarchies-nearly all of which are either sanctioned by the government or actually run by it. From the article:
“President Nicolás Maduro, who was selected by the dying Hugo Chávez to carry on his “Bolivarian revolution”, claims that anti-government forces, including the private sector, are causing the shortages in an effort to destabilize the country.”

This is a classic socialist tactic. Most socialists, Keynesians, and Statists do not understand that people will act according to their best interests. They think they can run an economy from one location and everything will work well because they said so. Hugo Chavez, whose nation only made money due to oil reserves in Venezuela, “gave” people food, work, education, healthcare, affordable housing, but his people still became poorer and more dependent. The reason is obvious: The “free” goods were paid for by those who produced, and taxes went up and up until the producers either fled the country or bargained with Chavez so they could benefit from Cronyism.

Back to the accusation: as is usual for people who do not understand the problems, or who are deliberately trying to manipulate people, blame some boogeyman for the regime’s failures, so those who are less educated and informed will actually believe the government’s lies. From the article:

“The government this week announced it also would import 760,000 tonnes of food in addition to the 50m rolls of toilet paper.

Many factories operate at half capacity because the currency controls make it hard for them to pay for imported parts and materials. Business leaders say some companies verge on bankruptcy because they cannot extend lines of credit with foreign suppliers.

Merentes said the government had met the US dollar requests of some 1,500 small- and medium-sized companies facing supply problems, and was reviewing requests from a similar number of larger companies.

Chávez imposed currency controls a decade ago trying to stem capital flight as his government expropriated large land parcels and dozens of businesses.”

Instead of businesses paying for the parts and materials they needed based on a free flow of pricing, the government simply told people what they could pay for things. The problem is that if the price is unacceptable to those trying to sell, they will just walk away. They will not take a value they feel is less than they were looking for  unless forced to by government. This is EXACTLY what happens to nations with single-payer healthcare: the government dictates the prices to the providers, and they either accept it or else decide the prices paid is not equal to or greater than the services they provide. The result is fewer providers, many of whom will retire or change professions. Why do all the hard work of medical school or in this case trying to buy and sell goods or services if your value is dictated to you by people, most of whom have no experience in your field and whose goals and motivations differ significantly from yours?

This is the lesson we learn from big government supporters:Government cannot run industries because their objectives differ from those who seek profit or other compensation as reward. Free-market and free-enterprise economics supporters do not take into account the temperment of people or the intent. Rather, we acknowledge reality: that most people are incentivized to provide goods and services for an incentive, be it money, stocks, items, or whatever else that individual values, and each person’s exact values differ. There is no “one size fits all”, and forcing people to go along with that idea does not work. There is no delusion paradise which often exists in the minds of “progressives” that rich people will just pay more taxes, doctors will happily provide their services for whatever price the government thinks is “fair”, and people will all get paid high wages with full benefits.

In this case price controls did not make goods cheaper: they made goods scarce and now Madura, who most likely rigged the election over Capriles, will now have to choose between doing the right thing and eliminating price controls and government control of the economy, or doing the Chavez and blaming everyone and everything for his party’s failures.

Read the original article:http://www.guardian.co.uk/world/2013/may/16/venezuela-toilet-paper-shortage-50m

 

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Please read the following from David Stevenson, CRI’s Director for Energy Competitiveness:

In August 2011 the Public Service commission approved PSC Docket No. 11-362 providing for Delmarva Power to purchase electrical power to be supplied by the Bloom Project Company, a privately held company headquartered in Sunnyvale, California, from their proprietary solid state fuel cells. Bloom’s fuel cell units are to be assembled on the site of the former Chrysler automobile assembly plant, located in Newark and owned by the University of Delaware. The power supply commitment spans 21 years with projected revenue from electric ratepayers of approximately $1.1Billion.

Caesar Rodney Institute was the only intervener at the public service commission hearing requesting denial of the new rate tariff, arguing that it would increase the cost of power to Delmarva’s customers by up to $35 Million a year over the life of the contract versus power from conventional sources.  Delmarva’s customers will be billed a $2 Million premium in the second half of this year for fuel cell power from just 10% of the proposed project.  Ratepayers will also pay $17.5 Million for infrastructure upgrades needed to support the entire fuel cell project. In addition, Delmarva ratepayers will pay a $19 Million premium this year for other “green” programs such as wind and solar energy credits, regional cap and trade permits, and Green Energy Fund grants.  These expenses are not shown separately on Delmarva Power electric bills.

Under the terms of the above Docket approval, Diamond State Generation Partners, LLC, a Bloom Energy affiliate, plans to install 235 Bloom Energy solid oxide fuel cells requiring 9 – 12 acres of land at Delmarva’s Red Lion Energy Center, 1592 River Road in New Castle and located within the protected Coastal Zone area. While the sub-station land use by Delmarva would be prohibited today, it was built before the restrictive zoning law was passed and enjoys “grandfather” status.

On April 30, 2012 Diamond State Generation was granted a permit by the Delaware Department of Natural Resources to locate its fuel cells on the Delmarva site. On May 15, 2012 John Nichols, a citizen activist and Delmarva customer filed an appeal to the issuance of the permit with the Coastal Zone Industrial Control Board (CZICB) on the grounds that it was a prohibited use under the CZ statute. Diamond State Generation then filed a Motion to Dismiss Mr. Nichols appeal claiming Mr. Nichols did not have standing (the right) to file an appeal. The motion to dismiss will be decided at the public hearing at 9:30 AM, June 13, 2012 at Del Tech’s Dover campus before the members of the CZICB. (http://egov.delaware.gov/pmc/Event/Details/18175). All members of the CZICB are appointed by the Governor, confirmed by the State Senate and is currently chaired by Richard Legatski.

Caesar Rodney Institute will provide two expert witnesses supporting Mr. Nichols’ appeal.  In addition, Lindsay Leveen, an expert in thermodynamics will provide an analysis of Bloom’s fuel cell operating characteristics.  His study of the Coastal Zone application submitted by Diamond State Generation Partners, LLC (Bloom Energy) was   funded by CRI.

CRI has consistently maintained that electrical power supplied from high cost “renewable” sources such as these ‘Bloom Boxes’ is a “job killer” for the state.To this end CRI continues its efforts to inform the public of the facts and explore other options to prevent the Bloom Energy project from proceeding.

This is a very important meeting. All of Delmarva’s customers have a vital stake in the outcome as does every Delaware citizen concerned about the environment so it is absolutely important you attend.

David A. Stevenson

Director, Center for Energy Competitiveness

If you plan on being there, please reply to this post and say you’ll come!

Also, please consider helping CRI out with a tax-deductable contribution to helping us keep up the fight against those that abuse power. We know the economy is rough, and you have other places you are trying to help out, but we are facing a multi-billion dollar entity with the best corporate lawyers money can buy. You can send a check to:

Caesar Rodney Institute

PO Box 795

Dover, DE 19903

or log onto the website http://www.caesarrodney.org and make a secure donation online.

or call us at (302) 734-2700 and let us know you are available to help us sound the alarm to victory!

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