Feeds:
Posts
Comments

Archive for the ‘Taxes’ Category

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.

Read Full Post »

And why they do not work

___________________________________

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

 

Read Full Post »

Key Findings:

U.S. small and mid-sized business owners plan to delay hiring new employees or seek new loans amid cautious optimism about the economy, according to the latest findings of the PNC Economic Outlook survey.

Highlights:

Waiting to Hire, Seek Loans
The survey, which gauges the mood and sentiment of small and medium sized business owners, found that only 46 percent expect their sales to increase in the next six months, significantly lower than last spring (58 percent). Profits are also expected to be lower, as only 38 percent expect an increase compared to 43 percent in the spring. Only 23 percent expect to add new employees, lower than in spring (28 percent) but still higher than a year ago (20%).

Housing Rebound to Continue
Building on the dramatic turnaround first seen in PNC’s fall survey, 48 percent expect home prices in their local markets will rise over the coming year compared to 26 percent one year ago. This expected house price rebound is reinforced by sizable house price gains in 2012.

Consumer Spending Supports Price Hikes
One-third plan to raise their selling prices and only five percent intend to cut their prices, signaling potential pricing pressures.

PNC’s chief economist Stuart Hoffman discusses the spring findings of PNC’s biannual survey of U.S. small and mid-sized business owners.

Read Full Post »

2013 is already upon us, and three days in things are headed downhill. Congress just passed a bill to respond to the so-called “fiscal cliff” by increasing EVERYONE’S taxes at least a little bit, and a lot if you have a high income (note: if your money comes from investments and assets, such as Warren Buffett, your taxes will be unchanged). More battles will come up on the debt ceiling, automatic defense cuts, and future budget deals (if any come), and no doubt the partisanship will continue.

Delaware has its own problems to deal with: unfunded pension liabilities, out of control Medicaid spending, bad deals with Fisker and Bloom Energy, education performances moving sideways and not up, and taxes such as the gross receipts taxes which harm business growth. These are just a sample of the issues facing the state. While CRI would like to resolve every major issue within the state, that is not very likely.

Therefore CRI will spend 2013 focusing on three elements: improving education standards, discouraging corporate subsidies, and preventing the state from passing any legislation which pushes single-payer healthcare by abolishing private healthcare insurance.

Education reform will be CRI’s top priority in 2013. There is general consensus that the education system as currently structured is not serving the students well, particularly those in areas like Wilmington and Dover, where parents usually do not have the  financial means to send their children off to private schools, and who cannot be guaranteed a slot in the charter schools due to bureaucratic processes. CRI is calling for legislative actions to allow the money to “follow the student”, where parents have options such as Education Savings Accounts (ESA) that give parents the financial opportunity to choose where they want to educate their child. We hope to inform and engage the public and the legislators into some serious action this year that will give students a big victory for their future.

Our second goal is to reduce, if not eliminate, subsidies for preferred businesses and special interest friends of the government. Bloom Energy and Fisker Automotive are two prime examples of the government handing over “subsidies” for “investment” in these companies, meaning hundreds of millions in tax dollars to give to these companies, money we will in reality never receive payback for. There is no industry in Delaware receiving taxpayer money that can be said to be worth the corporate welfare. Our aim is to educate the public and legislators, and push Delaware to either reduce/eliminate current government subsidies to preferred parties, or else to agree to prohibit future government subsidies via “corporate welfare”.

Our third goal will be to discourage the Legislature from passing any bill which bans private health insurance in favor of “single payer” government. While CRI acknowledges the issues in containing healthcare costs, such as Tort reform, allowing insurance to be purchased across state lines, and using means-tested methods to determine who qualifies for Medicare or Medicaid as opposed to just handing it out to anyone who asks, there is no way the government can raise all the taxes needed to pay for this without destroying job opportunities or sending them out of state. Plus, the government will not be able to manage the insurance aspects of healthcare policy without setting up a massive, inefficient bureaucracy, just like they do with everything else.

What do you think? Are there any goals CRI should work for that are no mentioned above?

Read Full Post »

By Joanne Butler, Senior Fellow at CRI’s Center for Economic Policy and Analysis

Although many folks may not ever feel free from government these days, according to the Tax Foundation national “Tax Freedom Day” occurs on April 9th and the date for Delaware taxpayers is April 11th.  Freedom Day is the date at which taxpayers will have earned enough money to pay this year’s tax obligations at the federal, state and local levels.  It takes Delawareans 100 days to just pay their government tab.  When compared to the dates for other states, Delaware ranks 20th, with the worst ranking (#1) going to Connecticut (April 30) and the best ranking to Alaska (March 23).  The following are other current Tax Foundation rankings for the First State.

State and Local Per Capita Tax Burden (FY2008):  With a ranking of 16th, Delaware has a state and local per capita tax burden that is above the median (Wyoming, at #25).  When compared to its neighbors, Delaware has the lowest ranking.  Delaware also has a better ranking than Rhode Island (the other small East Coast state), and Virginia, which traditionally is viewed as a low-tax, business friendly state.

State

Tax Burden:

State & Local

Ranking
Connecticut $7,007 1
New Jersey $6,610 2
Maryland $5,669 4
Virginia $4,669 9
Rhode Island $4,533 10
Pennsylvania $4,463 11
Washington State $4,334 15
Delaware $4,253 16
Wisconsin $4,194 17
Wyoming $3,714 25

State Business Tax Climate (2010) :  Delaware (#8) significantly outperformed its neighbors with regard to its business tax climate.  New Jersey is dead last (#50), with Maryland not far behind at #45 and struggling New York is #49.

State Rank
South Dakota 1
New Hampshire 7
Delaware 8
Washington State 9
Virginia 15
North Dakota 25
Pennsylvania 27
Maryland 45
New York 49
New Jersey 50

State and Local Tax Burden as a Percentage of State Income (FY2008):  Again, when compared to its neighbors, Delaware has a lower state and local tax burden as a percentage of state income.  New Jersey has the highest state and local tax burden as a percentage of state income.  Delaware ranks just above the median (Kentucky at #25).

State State & Local Taxes as

Percent of State Income

Rank
New Jersey 11.8% 1
Maryland 10.8% 4
Pennsylvania 10.2% 11
Virginia 9.8% 18
Massachusetts 9.5% 23
Delaware 9.5% 24
Kentucky 9.4% 25

State Debt Per Capita (FY2008):  Delaware’s state debt per capita is in the top 10 of the nation; it is higher than its neighbors, outpacing New Jersey by $471.  Significantly, Delaware is $3,332 above the median (Pennsylvania at #25).  This is a result of Delaware in recent fiscal years covering the gap between spending and revenues by floating debt.

State State Debt

Per Capita

Rank
Massachusetts $11,024 1
Connecticut $7,882 4
Delaware $6,574 5
New Jersey $6,103 6
Maryland $4,086 14
Pennsylvania $3,242 25
Virginia $2,820 31

Joanne Butler, Senior Research Fellow

Center for Economic Policy and Analysis

Read Full Post »

By Shaun Fink

The future of our state’s economy, and the standard of living for all Delawareans, will rise and fall upon our ability to encourage small business owners to invest and expand the size and scope of their enterprises; and our success at attracting new companies and corporations to relocate to Delaware.  The General Assembly and Governor Markell must recognize that a strong recovery and new hiring depends on the confidence businesses have in the future.

Uncertainty is a fact of life for all businesses, but when Dover adds materially to that uncertainty, businesses invest less and hire less. This is especially true following a deep recession, with so many producers still struggling with excess capacity. The most powerful strategy the General Assembly can adopt is to stop threatening those in a position to hire.  That means no more tax increases, less regulation and a serious look at whether we should be engaged in the Regional Greenhouse Gas Initiative (RGGI).

Last year, President Obama pushed through a massive $862 billion jobs bill emphasizing “shovel-ready” projects. Yet the 2009 stimulus did little to promote new private investment; unsurprisingly, it failed to create jobs. This failure was expected because government spending only shifts spending in the economy. It neither increases overall demand nor gives private businesses a reason to invest in new projects.  Nowhere was that felt more deeply than right here in Delaware.  The stimulus dollars spent here may have helped fix, repair and build some roads and bridges.  But it did nothing to spur confidence or create new jobs.

The General Assembly should jettison ideology and instead promote entrepreneurship and investment with proven ideas that have worked time and again in the past.  Presidents John F. Kennedy, and Ronald Reagan had at least one thing in common.  They both understood the long term effect of substantial tax reform on the spirit and psyche of the risk-taking entrepreneur.

Only when those who are creating jobs and wealth are convinced that their efforts will not be punished through excessive taxation and regulation, will they once again reinvest into their business specifically, and the economy in general.  Tax cuts do “cost” in the initial year, inasmuch as they reduce the expected revenue for that first fiscal year.  However, as history has shown, the reduction of taxes on profits actually has a net positive result on total revenue to the state.

This past budget cycle reveals that there is an interesting converse in that relationship between taxes and revenue, as well.  The General Assembly, in an attempt to close a huge budget deficit without properly dealing with the issue of overspending, raised taxes an unheard of $200 million.  And, as DEFAC has met since the institution of that budget, it has continued to decrease its projected revenue forecasts.

So, the net result of a tax increase is a decreased revenue forecast.  The plain explanation to this phenomenon is that businesses will not invest and take risks when the government punitively increases its share of the profits.  The Laffer Curve plainly shows the relationship between tax rates and revenue.  There is a point where taxes fail to increase a government’s take.  In other words, the government never took the negative effect of their tax hikes into consideration, but rather assumed businesses would continue to function as though they were not being punished through higher taxes.

It is apparent that the General Assembly should not have increased taxes last year and should seriously consider rescinding those increases to invigorate the business community.  This proves the point that priority one ought not to be balancing the budget for the sake of having a balanced budget.  The consequences of the actions necessary to balance a budget must be considered.  What good is a balanced budget if the anticipated revenue never materializes?  Certainly, this is not a recipe for a healthy and vibrant economy.  And the latter should be the state’s number one goal.

The governor has issued this year’s budget with claims to be balanced without raising taxes as was done last year.  The flip side is that the FY 2011 budget also lacks real substantial spending cuts other than the superficial reorganization of a few state departments.  Should the JFC have the courage to tackle the issue of government spending and find some ways to save a couple hundred million, the tax increase of last year could be eliminated.  The effect that action would have to our economy could be staggering.

If the governor and legislators are truly looking to bring companies and business to Delaware, there is no better way than to offer a low tax, low regulation environment friendly to innovation and creativity.  It is time for bold leadership; will anyone step up to the plate?

Subscribe to CRI to receive email updates about this story and other issues

Shaun Fink is Executive Vice President of the Caesar Rodney Institute.

The Caesar Rodney Institute is a 501(c)(3) non-partisan research and educational organization and is committed to being a catalyst for improved performance, accountability, and efficiency in Delaware government.

© Copyright Feb. 22, 2010 by the Caesar Rodney Institute

Read Full Post »

John Stossel gets it

Governments have a spending problem.

Read Full Post »

« Newer Posts