News

The Nixon episode shows, says Mr. Cogan, that entitlements have been the main cause of America’s rising national debt since the early 1970s. Mr. Trump’s pact with the Democrats is part of a pattern: “The debt ceiling has to be raised this year because elected representatives have again failed to take action to control entitlement spending.” . . . Can an entitlement expansion, once granted, ever be taken back? Mr. Cogan refuses to say “never,” but says such rescindments “occur under rather extraordinary circumstances.” He offers a remarkable example: “You might ask, ‘Who achieved the largest reduction in any entitlement in the history of the country?’ Well, surprisingly, it was FDR, a person whom we normally associate with launching the modern era of entitlements.”

Some mistake the corporate income tax as the entirety of a business’s tax burden. However, businesses pay many types of taxes outside of the corporate income tax, including sales tax, property tax, excise tax, payroll tax, and more. The corporate income tax makes up only 9.5 percent of total business taxes.

Today’s map shows how much state governments collect in corporate income taxes per capita. New Hampshire collects the most at $433 per capita, with Delaware shortly behind at $424 per capita. Delaware also levies a gross receipts tax in addition to the corporate income tax. Alaska’s ranking of fifth highest in the country may surprise people, but it is mainly due to a large number of extractive companies and the relatively small population.

Merchants on Fillmore Street in San Francisco were hit by more than a dozen “grab and run” thefts in August, leaving employees at the businesses feeling unsafe and owners calling for more police presence in the area. The New Fillmore reports that the thefts have hit businesses on the street including Sandro, Curve, SpaceNK, Intermix, Scotch & Soda, Rebecca Minkoff, Mio and Eileen Fisher.

It should come as no surprise that when the California Legislature recently began the process of divvying up proceeds from the state’s cap-and-trade auctions, a cavalcade of local officials, community activists and lobbyists rushed to Sacramento, with hands out.

Billions of dollars burning a hole in the state’s pocket has that effect on people, and the competition is fierce. Appeals from advocates to fund pet projects were spread over two days in late August, in windowless rooms before sometimes distracted officials. The requests are for cash for electric vehicles, to create green spaces, even for machines to cut pollution from cow manure.

Brevity is prized in this legislative equivalent of speed dating, which plays out in front of committees in the Senate and Assembly. There’s scant time to make the case for your cause. Talk too much, and you risk irritating the panelists. Nobody wants the stink eye from the people with the purse strings.

California lawmakers introduced legislation Friday to bypass a key state environmental law that would dramatically ease the construction of rail, bus and other transit projects connected to Los Angeles’ bid to host the Olympic Games in 2028. Under the bill, any public transportation effort related to the city’s Olympics bid would be exempt from the California Environmental Quality Act, the state’s primary environmental law governing development. The law, known as CEQA, requires developers to disclose and minimize a project’s impact on the environment, often a time-consuming and costly process that involves litigation. The measure, Senate Bill 789, also provides major CEQA relief to help the construction of an NBA arena for the Los Angeles Clippers in nearby Inglewood.

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.

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.

nsurance premiums for health plans on Covered California’s small business exchange will rise 5.6 percent in 2018, Covered California announced Thursday. Nearly 36,000 Californians receive health insurance through the small business exchange, where companies with 100 or fewer employees can purchase health plans for their workers. The small business exchange is not as widely used as Covered California’s more well-known exchange for individuals, through which 1.2 million people buy health insurance. Premium rates for the individual exchange are slated to rise 12.5 percent in 2018.

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.

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.

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.

Many California cities have issued “pension obligation bonds” to cover rising retiree benefit costs with borrowing rather than tax money, based on the same assumption that arbitrage – betting that the difference between loan interest rates and investment earnings – can be a net winner. However, like Orange County and SANDAG, some learned that trying to predict global markets is dangerous. The largest single debt owed by the city of Stockton when it declared bankruptcy was a pension obligation bond. Hundreds of school districts issued “capital appreciation bonds” that postpone repayments for decades while the accumulated interest magnifies debt. Poway Unified in rural San Diego County became a poster child for financial irresponsibility when it was revealed that its $105 million bond would cost $1 billion to repay.

The Small Business & Entrepreneurship Council’s “Small Business Tax Index 2017” ranks the states from best to worst in terms of the costs of their tax systems on entrepreneurship and small business. This year’s edition of the Index pulls together 26 different tax measures, and combines those into one tax score that allows the 50 states to be compared and ranked.

The 26 measures are: 1) state’s top personal income tax rate, 2) state’s top individual capital gains tax rate, 3) state’s top tax rate on dividends and interest, 4) state’s top corporate income tax rate, 5) state’s top corporate capital gains tax rate, 6) any added income tax on S-Corporations, 7) any added income tax on LLCs, 8) Section 179 expensing conformity, 9) average local personal income tax rate, 10) whether or not the state imposes an alternative minimum tax on individuals, 11) whether or not the state imposes an alternative minimum tax on corporations, 12) whether or not the state’s personal income tax brackets are indexed for inflation, 13) whether or not the state’s corporate income tax brackets are indexed for inflation, 14) the progressivity of the state’s personal income tax brackets, 15), the progressivity of the state’s corporate income tax brackets,16) property taxes, 17) consumption-based taxes (i.e., sales, gross receipts and excise taxes), 18) whether or not the state imposes a death tax, 19) unemployment taxes, 20) whether or not the state has a tax limitation mechanism, 21) whether or not the state imposes an Internet access tax, 22) remote seller taxes, 23) gas tax, 24) diesel tax, 25) wireless taxes, and 26) LLC fees.

The 15 best state tax systems are: 1) Nevada, 2) Texas, 3) South Dakota, 4) Wyoming, 5) Washington, 6) Florida, 7) Alabama, 8) Ohio, 9) North Carolina, 10) Colorado, 11) Arizona, 12) Alaska, 13) Michigan, 14) Indiana, and 15) Utah. The 15 worst state tax systems are: 36) Delaware, 37) Arkansas, 38) Maryland, 39) Nebraska, 40) Kentucky, 41) Connecticut, 42) Oregon, 43) New York, 44) Vermont, 45) Hawaii, 46) Iowa, 47) Minnesota, 48) Maine, 49) New Jersey, and 50) California.

As we noted when California inaugurated this policy, American federalism is based on the agreement that different states can pursue different policies (within Constitutional bounds) while retaining equal status within the union. California’s decision to escalate the culture war with “sanctions” against states with different political orientations represents a direct challenge to America’s federal structure.

This new order could have a major symbolic impact—for example, by making it difficult or impossible for University of California sports teams to compete against the University of Texas. And could lead to retaliatory measures by the targeted red states: They could, for example, up the ante not only by enacting reciprocal travel bans but also by refusing to cooperate with California’s government in criminal investigations, declining to share tax data, or prohibiting companies from selling products to California’s state government.

How long before a coalition of liberal states begins to collectively and systematically impose sanctions on conservative ones, or vice versa? To state the obvious: This has nothing to do with the legitimate democratic debate over the merits of the policies California is trying to sanction in the first place. Maybe some of these policies are reasonable compromises between LGBT rights and religious liberty; maybe others are unacceptable forms of discrimination. These are debates that need to be resolved by the courts, by federal civil rights agencies, and by the voters in those states. California’s brazen offensive dangerously short-circuits this process.

Illinois is grappling with a full-fledged financial crisis and not even the lottery is safe – with Republican Gov. Bruce Rauner warning the state is entering “banana republic” territory. Facing billions in unpaid bills and pension obligations, the state is hitting a cash crunch that is rare even by Illinois standards. . . . But the problems are years in the making, caused in large in part by the state’s poorly funded pension system— which led Moody’s Investors Services to downgrade the credit rating to the lowest of any state. The state currently has $130 billion in unfunded pension obligations, and a backlog of unpaid bills worth $13 billion.