Topic: Business Climate
News
Aug. 4, 2017

Double-digit inflation in the late 1970s pushed American families into ever-higher tax brackets (there were 15 at the time). This process, called “bracket creep,” drove up taxes almost 50% faster than inflation, enriching the government while impoverishing workers. Thus even though the 1970s were the postwar era’s weakest decade of economic growth up to that point, federal revenue doubled between 1976 and 1981. Inflation averaged 9.7% during the economic malaise of 1977-80, while government revenue grew by an astonishing 14.8% a year, even as economic growth rates fell steadily and turned negative in 1980. . . . The Reagan tax cuts laid the foundation for a quarter-century of strong, noninflationary growth, which, despite three subsequent recessions, averaged 3.4% until the beginning of the Obama administration. And tax revenue was generated by an expanding economy rather than pilfered through bracket creep.

News
Aug. 3, 2017

Soda sales in Philadelphia have also declined since the tax went into effect at the beginning of 2017, threatening the long-run sustainability of the tax. According to some local distributors and retailers, sales have declined by nearly 50 percent.[13] This is likely primarily due to higher prices, which discourage purchasing beverages in the city. Some Philadelphia taxpayers took to Twitter as the tax took effect, noting their plans to shop for groceries outside the city.[14] This kind of tax avoidance is only feasible for consumers with means of transportation, making the tax even more regressive. Purchases of beer are also now less expensive than nonalcoholic beverages subject to the tax in the city.[15] Empirical evidence from a 2012 journal article suggests that soda taxes can push consumers to alcohol, meaning it is likely the case that consumers are switching to alcoholic beverages as a result of the tax. The paper, aptly titled From Coke to Coors, further shows that switching from soda to beer increases total caloric intake, even as soda taxes are generally aimed at caloric reduction.

News
July 28, 2017

A powerful California water agency is poised to adopt its own regulations that could protect more of the state’s wetlands from being plowed, paved over or otherwise damaged. Environmental groups are pressuring the State Water Resources Control Board to push back against Trump’s decision and adopt a wetlands policy that’s even stricter than former President Barack Obama’s. “The state board should be adopting a policy that is even more protective of California’s wetlands,” said Rachel Zwillinger, water policy adviser for Defenders of Wildlife. “This (proposed) policy is a critical opportunity for the state to step up and protect its own resources.” A fight over the proposed rules has been brewing for years and is about to come to a head. A year ago, a broad coalition of developers, homebuilders, farmers and other business groups submitted testimony against the regulations, saying they would create more red tape, higher costs and fewer rights for landowners.

News
July 23, 2017

Under “workers’ compensation,” enacted in 1914, workers would give up their right to sue employers for injuries and in return, employers would be obligated to pay for medical care and provide cash benefits while disabled employees recuperated. Today, work comp, as it’s dubbed, is a huge program – well over $20 billion a year – whose operating rules are a source of perennial political jousting. . . . However, it still left California employers with – by far – the nation’s highest work comp burden. The 2016 annual survey of costs by the Oregon Department of Consumer and Business Services kept California in the No. 1 spot with an average cost of 3.24 percent of payroll for work comp insurance, 76 percent above the national average. Obviously, working in California is not inherently more dangerous than in other states, and cash benefits to disabled California workers are not out of line, so the enormous cost differential must be rooted in the system itself, which explains why its rules are the subject of constant political infighting. One factor in those costs is what officials say is an enormous amount of fraud, concentrated in Southern California. Last year, the Center for Investigative Reporting reviewed work comp fraud cases that had been prosecuted and reported that they totaled more than $1 billion. But authorities believe that prosecutions merely are the tip of the iceberg.

News
July 14, 2017

Oblivious to the fact that these corporate and personal earnings [or just “earners”?] can move to other states or even other countries, Sacramento recently increased the gas tax and car tax by over $5 billion annually. The politicians do not spend this money well. Our freeways, once the envy of a great nation, are an embarrassment. Our dams, once an engineering marvel, threaten hundreds of thousands without warning because maintenance is deferred to cover up pension debt. The CalTrans budget was $13 billion in 2010, the year Governor Brown took office; by 2013, it was reduced to $11 billion. So here is the formula Sacramento politicians have dreamed up for sending our shining stars to other states: tax more, then spend less on the things that matter. Sacramento knows about this problem, but as usual, its solutions are ham-fisted. Here’s an example. Politicians paid Paramount Studios $22 million in tax bribes to film one of the myriad installments of “Transformers” in California instead of taking its business to another state. This is only one of the films in the Transformers “cycle” to be filmed in California; others have been shot in China, Britain and in other states. To keep some of the action in California, Sacramento has created a huge taxpayer-supported fund to help finance films with budgets of $75 million or more “to entice more major motion pictures to choose California and reverse the tide of runaway productions”. According to the LA Times, “California officials hope that more in-state film shoots will help spur local economics through spending and hiring.” Making crony deals with billion-dollar corporations will not stem the flow of our young entrepreneurs from California; it just makes them shake their heads at the pathetic condition of the state they used to love.

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