06/18/2018

News

Prop. 13 fight looming over how California taxes business properties

The Legislative Analyst’s Office estimated this week that the change could increase property tax revenues by about $6 billion to $10 billion annually, though it also warned that the switch would introduce far more volatility into the funding stream. About 60 percent of that money would go to local governments and the remaining 40 percent […]

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Steven Greenhut: Is California’s ‘Third Rail’ Still the Kiss of Death?

Session after session, California’s leaders find new taxes to raise. There’s never enough money to pay for all the social programs they desire — not just for the citizenry, but for anyone who might happen to be here legally or otherwise. Indeed, the single-payer healthcare proposal that actually passed the state Senate would have crushed the entire state budget, even by the Legislature’s own analysis. Any resident would be entitled to “free” medical care even if they wandered here last week. This would certainly have provided a new spin on the term “medical tourism.” Someone needs to pay for this. And someone also needs to pay for all those six-figure public-employee salaries, pensions, and pension-spiking gimmicks. Someone needs to pay for throngs of highly paid Caltrans workers who, according to a state audit, have little to do. Someone also has to pay for a needless $68-billion high-speed rail system and that needless $17 billion project to bore twin tunnels underneath the California Delta and that needless mini state-based Social Security system that’s meant to deal with the common folks’ “pension envy.” (I know, legislators promise that the latter won’t burden taxpayers.) That someone is, of course, us.

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Wells Fargo, AT&T, others cite tax overhaul in plans to boost wages, pay bonuses

Several major companies, perhaps eager to boost public opinion for the tax overhaul that dramatically slashed their taxes, said Wednesday that they will boost employee pay and bonuses in the wake of federal tax law changes.

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Editorial: Tax Reform Take 2: The States

Congress passed the most sweeping tax reform since 1986 on Wednesday, and with any luck that success for the country will trigger a new reform debate in many states. To wit, how much will they have to cut income-tax rates to retain and attract the high-income earners who finance so much of their state budgets? You can figure out who most needs reform by the decibels of protest. Amid other apocalyptic warnings, New York Gov. Andrew Cuomo last weekend declared that the GOP bill’s limit on the state-and-local tax deduction will trigger “an economic civil war” between high- and low-tax states. California Governor Jerry Brown has likened Republicans to “mafia thugs” while Mr. Cuomo calls the bill a “dagger at the economic heart of New York.” By heart, he apparently means the state’s top earners who pay for Albany’s ever-higher spending. 

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Workers’ Compensation Insurance, The State Needs to Strengthen Its Efforts to Reduce Fraud

Despite the State’s efforts, we identified certain weaknesses in its processes for detecting workers’ compensation fraud. For example, although state law requires insurers to refer to CDI and district attorneys’ offices any claims that show reasonable evidence of fraud, insurers vary significantly in the number of fraud referrals they submit. We calculated the referral rates for 21 insurers that each had more than $150 million in earned workers’ compensation premiums for 2015 and 2016.

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Canada’s Health-Care Queues

The Los Angeles City Council voted Wednesday to impose a new fee on development to raise millions of dollars a year for affordable housing as the city copes with rising rents and surging homelessness

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Occupational Licensing Reduces Interstate Mobility

Occupational licensing has come under increased scrutiny across levels of government, and desire for reform is bipartisan. The Federal Trade Commission has held two roundtables disseminating research about the effects of licensing on economic opportunity. The Council of Economic Advisers in both the Obama and Trump administrations has suggested that these regulations impede work and opportunity. 

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California can preserve state and local tax deduction, even if Congress ends it

But California could shift its tax burden away from income tax — one of the highest in the nation —and onto employers via the state payroll tax. Unlike individual taxpayers, employers would still be able to deduct this state tax on their federal returns. A group of tax law experts that includes Hemel and University of California, Davis Law Professor Darien Shanske write in a paper published Dec. 7 that such a tax “would function, in economic terms, very similarly to an income tax imposed directly on the employee.”

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Corporate CEOs Say Increased Capital Spending Rests on Tax Reform

Leaders of America’s largest companies expressed strengthening confidence in plans to ramp up capital investment and ultimately productivity over the next six months, contingent on Congress’s ability to pass tax reform.

Chief executives’ plans for capital investment rose to their highest level since the second quarter of 2011, according to the Business Roundtable’s fourth-quarter survey of CEOs.

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They’re leaving California for Las Vegas to find the middle-class life that eluded them

Like other transplants I spoke to in Nevada, Herndandez didn’t want to leave California. It’s home. It’s where she went to school and where her parents still live in the house she grew up in. But unless you choose a career that will pay you a small fortune to manage costs driven higher by a stubborn shortage of new housing, California is not a dream, it’s a mirage.

Moving to get a better job or move up the workplace chain is nothing new. But what’s going on here seems different — people leaving not for better jobs or pay, but because housing elsewhere is so much cheaper they can live the middle-class life that eludes them in California.

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State budget seems healthy, but it isn’t

Brown will likely give a little on spending, insist on fattening reserves a little more and claim that he’s tamed the budget crisis he faced upon returning to the governorship in 2011 after a 28-year absence.

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California’s most recent cap-and-trade permit auction raises more than $800 million

California’s cap-and-trade program received another boost Tuesday, with its most recent permit auction reaching record-high sales, according to details released by regulators Tuesday.

In November’s auction, every permit offered by the state was sold, and prices reached their highest-level in the program’s five-year history.

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Commentary: Another reminder that there’s no free lunch

It’s doubtful whether more than a relative handful of Californians have heard of the Unemployment Insurance Fund. It is, however, one of state government’s largest activities – and a case study in political mismanagement. Currently, California employers pay about $6 billion in payroll taxes into the UIF each year. And currently, the state Employment Development Department annually pays almost that much to jobless workers. Superficially, that would appear to be a sustainable equation, but in reality, it’s not. During periods of high payrolls and low unemployment, such as this one, the UIF should be building reserves that could cope with an economic downturn, when claims for jobless benefits increase. That’s the way it used to work – until political expediency and recession undid it.

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Emissions fall under California’s cap-and-trade program

Industries regulated under California’s cap-and-trade program reduced greenhouse gas emissions by nearly 5% in 2016, according to new data released by state officials. Richard Corey, executive director of the California Air Resources Board, said the numbers show the state is on track to meet its emission-reduction targets in 2020 and 2030.

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The small business myth

A key moment in the modern myth-making around small business came in 1978. That’s when MIT economist David Birch published claims – which he repeated in testimony before Congress – that small firms had accounted for 80 per cent of all new employment opportunities between 1968 and 1976. Critics quickly pointed out that Birch’s findings were quite wrong, largely because he defined firm size according to how many employees worked in a given location (like a branch office, factory, or store), not how many the firm employed altogether. In fact, most job creation, in the 1970s and today, comes from a small number of very fast-growing firms, while most small firms either fail (killing jobs) or remain small. Birch later admitted that the 80 per cent figure was a ‘silly number’, but the claims took firm root in popular mythology and political rhetoric by the 1980s. ‘Small businesses create eight out of every 10 new jobs,’ said Richard Lesher, president of the largest pro-business lobbying organisation, the US Chamber of Commerce.

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