On Armstrong and Getty for a Couple Hours This Morning

7 AM Hour - Just a Wee Bit Less Dynamic: features our guest, Craig, the Obamacare Guru, who joins Jack to discuss...

• The escalation of Christmas...
• The Trump/Colorado ruling...
• Jack's confrontation conundrum...
• Immigration...
• Those magical family moments! 

8 AM Hour - Just Eat Your Cotton Candy! features Craig, the Obamacare Expert, who joins Jack to discuss...

• The Trump/Colorado decision...
• Weight Loss Drugs...
• The Ukraine/Russia War.

Plus...

• Expert military analyst Mike Lyons joins the show to talk about the Israel/Hamas war.

  

Tax Burden By State

I'm a sucker for all of these types of lists. This one is from Wallet Hub.  The map below is interactive, and you can hover over any state to see where it ranks. If you hit the Wallet Hub link you can review their methodology.  

5 States with the lowest tax burden (best at bottom):

1. New Hampshire
2. Wyoming
3. Deleware
4. Tennessee
5. Alaska

5 states with the highest tax burden (worst at top): 

1. New York
2. Hawaii 
3. Maine  
4. Vermont
5. Minnesota

Source: WalletHub

These States Maximize Your Business & Entrepreneurial Opportunity in a Post-COVID World of Social Unrest

American businesses teeter on the precipice of an onslaught of COVID-19 related lawsuits. The return-to-work decision is a difficult one in every aspect. But the question of employer liability for employees or customers who claim to have contracted the virus in the workplace is about to make things considerably more precarious.

Freedom loving people have always focused on taxation, regulatory burden, state debt and an unencumbered Second Amendment when analyzing whether it is time to move their business or just take their talent to a more appreciative state. The exodus from high tax, legislatively stifling states to states offering more liberty accelerated in recent years as documented regularly by ZeroHedge:

• 3 Simple Charts That Help Explain Why 9,000 Businesses Have Left California In Just 7 Years
• It's Time To Go: Over Half Of All California Voters "Have Considered Leaving The State"
• Leaving Illinois: "Does Anybody Care About People Like Us?"
• Over-Taxed: The Middle Class Is Being Wiped Out, NJ Residents Flee In Droves

Historically, I used the below metric to show clients, family and friends which locations are likely to present them with the best business, employment and homeownership opportunities.

Sources:

1) Freedom in the 50 States, Cato Institute,2018
2) Ranking the States by Fiscal Condition 2018 Edition, Mercatus Center
3) 2020 State Business Tax Climate Index, Tax Foundation 
4) Kiplinger's Most Tax Friendly States in the U.S., 2019

This then results in these final rankings: 

2020, however, requires the addition of a few more considerations as we now see the potential for crippling business lawsuits due to the coronavirus and widespread social unrest.

Overview of the Employer Liability Rules in Play

In general, workers injured in the workplace will receive compensation and benefits under the applicable state’s workers’ compensation laws. Benefits are provided irrespective of fault and are generally the exclusive remedy for workplace injuries, illnesses, or fatalities. Nearly all workers in the United States are covered by workers’ compensation.

The system is sometimes referred to as a grand bargain between employers and workers. It developed early in the 20th century in response to dissatisfaction with the tort system as a method of compensating workers for workplace injuries, illnesses, or deaths. Under this grand bargain, workers receive guaranteed, no-fault benefits for injuries, illnesses, and deaths, but forfeit their rights to sue their employers absent some form of willful, extremely reckless or grossly negligent employer behavior. Employers receive protection from lawsuits but must provide benefits regardless of fault.

COVID-19 now has states, employers and the federal government scrambling to come to grips with how the resulting illnesses and deaths will impact employer tort liability and workers’ compensation laws. Beyond the worker impact of COVID-19, businesses must further consider tort suits brought by customers and venders who claim that the business failed to act as a reasonably prudent business in the same or similar circumstances and that failure resulted in a COVID-19 infection. This legal upheaval is no small matter, no matter how it is approached. As stated by The Hill:

One U.S. law firm suggested coronavirus litigation could be “the new asbestos,” referring to a wave of personal injury litigation in the 1970s and '80s related to the carcinogenic material that was once commonly used in building construction.

“If you just let it all go now, it would be a disaster,” said David Rivkin, a partner at Baker Hostetler, who supports Congress granting businesses temporary immunity. “It would be a tsunami of lawsuits. Hundreds have already been filed.”

Therefore, as we review the list of states presenting entrepreneurs and businesses with the best opportunity to thrive, it makes sense to take an early look at how states plan to handle business liability for COVID-19 as well as the states most (and least) likely to have destructive riots and looting.   

States Seeking to Shield Business from Onerous Lawsuits  

“Bless this immunity.” - Tool, Fear Inoculum

From The Hill:

Many states have granted some form of liability immunity to health care workers and facilities. Utah and North Carolina have gone the furthest, passing laws that offer the strongest immunities yet for a range of industries as stay-at-home orders and business closures are eased.

In Utah, Gov. Gary Herbert (R) signed legislation earlier this month that makes all businesses and individuals immune from litigation based on others’ exposure to coronavirus on their property, with exceptions for things like willful misconduct. Oklahoma lawmakers have sent similar legislation to its governor.

North Carolina’s law is narrower than Utah’s and applies to “essential businesses” as defined in the state’s emergency declaration, but still offers more protection than other states.

At least six states — Alabama, Illinois, Louisiana, Ohio, South Carolina and Wyoming — have introduced legislation that would also shield more than just health care workers and facilities, according to the National Conference of State Legislatures (NCSL).

Alabama Governor Kay Ivey signed a proclamation that provides liability protections for businesses, healthcare providers, and other covered entities during the COVID-19 pandemic. I provides that businesses are not liable for a person’s death, injury, or property damage that results from an act or omission related to COVID-19, in any way, unless clear and convincing evidence otherwise proves that the harm was caused by the entity’s wanton, reckless, willful, or intentional misconduct.

The proclamation also creates a standard of care, which requires entities to reasonably attempt to comply with applicable public health guidance in response to COVID-19; and protects businesses from liability for damages from mental anguish, emotional distress, or for punitive damages.

States Making Things Worse for Employers

“Enumerate

All that I'm to do

Calculating steps away from you” – Tool, Fear Inoculum

As David Lindsay and Erinn Rigney wrote at the National Law Review:

Perhaps the most significant pronouncement was by California Governor Gavin Newsom, who issued an executive order on 6 May 2020 that establishes a rebuttable presumption in workers’ compensation claims, presuming that covered workers who are diagnosed with COVID-19 contracted the illness at work, without the employee having to provide any further proof. Although this presumption is rebuttable—meaning that an employer can provide evidence to refute the presumption, it is likely to be a high burden for employers to meet, especially given the wide variety of ways COVID-19 can be transmitted. Further, California extended the presumption to any worker who reported to work outside of the home at the direction of their employer and received a positive test or physician diagnosis, a far broader category of workers than most other states. Therefore, in California, most eligible workers’ claims relating to on-the-job COVID-19 exposure likely will be covered by workers’ compensation.  

Riots Destroying Your Investment

On the good news front, auto, homeowners, and business insurance policies generally include coverage for property losses caused by riots and civil commotions. Standard business property insurance policies provide coverage for the structure of the building as well as the contents inside. Furthermore, Business Interruption (BI) coverage generally does reimburse losses when a covered peril forces a business to temporarily close its doors and pays employees, venders, rent and electric bills.

Nevertheless, this coverage is far from an inoculum against the perils of social unrest. Sixty percent of businesses with less than 100 employees do not even have (BI) coverage. For those that do, the lost income is calculated on a 12-month, look-back assessment of a business’ income prior to the date of loss. This means a business that has been shut or operating at a limited capacity due to COVID-19 will receive a reduced payout for any business income claims due to the recent rioting and looting.

Furthermore, no business owner wants to deal with the cleanup, claim process and resultant escalation in premiums after the fallout of such social unrest. So, as we consider the freest and most economically viable states for relocation, it makes sense to also factor in that state’s proclivity for social unrest and rioting. The below map was created at 11:30 AM PST on May 31, 2020 in the midst of the protests and social unrest resulting from the horrific alleged murder of George Floyd at the hands of former Minneapolis police officer Derek Chauvin. As of the time of this post, Derek Chauvin has been charged with 2nd degree murder in Minnesota.

Interactive US Map of Active Protests and Riots as of 11:30 AM PST on May 31, 2020.

As you can see from this map, some of the freest and most desirable states for business and employment also happen to be some of the least likely places that a business will confront rioters and looting. Montana, Idaho, Wyoming and the Dakotas form a 5-state zone remarkably free from social unrest and property damage.

Best States in 2020-2021 

Before 2020, businesses and entrepreneurs were leaving deep blue states for greener pastures in less encumbered jurisdictions. The pandemic, social unrest and devastating economic collapse coupled with the fact that so many more people are learning they can effectively do their job remotely through video-conferencing platforms will only accelerate this trend. Additionally, some states now seek to encourage the reopening of business by shielding employers from an onslaught of lawsuits due to complains that employees and customers could have contracted COVID-19 in the workplace. Conversely states like California seek to pin that responsibility on employers by creating a presumption that an employee’s sickness resulted from the workplace.

Utah, North Carolina, Wyoming and Alabama’s bold leadership in this regard elevate those states status for consideration in the new, post-pandemic workplace. In Utah and Oklahoma’s cases, you could argue that it might move them up into the top 10. While Alabama and North Carolina’s efforts are good for business, they are not enough to overcome those states’ weaker performance in other economic indices.

Choice of jurisdiction matters. As we move through ever-increasing tumultuous times, that choice becomes that much more important. California, New York, New Jersey and Illinois have co-opted individual liberties, saddled their people with an unsustainable debt, regularly punish the job creators and entrepreneurs while also being the most likely states to encounter social unrest. Meanwhile, South Dakota, Wyoming, Idaho, New Hampshire and Tennessee reward hard work, creativity and honor constitutional freedoms. Keep that in mind as you vote with the location your homes and businesses.

California Seeks to Expand Government Healthcare for Undocumented Persons

From California Healthline:

California could become the first state to extend full Medicaid benefits to undocumented immigrants up to age 26 after two key legislative committees last week approved money for such an expansion. 

The Assembly and Senate budget committees both approved using some of the money from California’s recently passed tobacco tax to cover up to 80,000 unlawfully present young adults under the state’s version of Medicaid, known as Medi-Cal. 

The committees approved different amounts of money for the next budget year — about $54 million in the Assembly and about $86 million in the Senate — and they must agree on a single amount before starting state budget negotiations with Democratic Gov. Jerry Brown, who would have the final say. ... 

Beginning last May, California allowed eligible children who were in the U.S. without permission and under 19 to receive full Medi-Cal benefits. An estimated 190,000 such children have signed up for it since then. Previously, they were eligible for emergency services only under Medi-Cal. 

The federal government generally pays at least half of Medicaid costs, but California uses its own money to pay for these expanded Medi-Cal benefits. U.S. law largely bars the use of federal money for providing non-emergency Medicaid coverage to immigrants here without permission. 

Health Access, a Sacramento-based advocacy group, estimates that anywhere from 50,000 to 80,000 young adults without papers might enroll in Medi-Cal were the expansion to be approved. ...

John Oliver on Public Money for Professional Stadiums

Cities spend massive amounts of public money on privately-owned stadiums: often for multi-billionaire owners. John Oliver takes a look at this absurd trend abusing tax-exempt municipal bonds to further enrich team owners as only can.  Hilarious and mildly enraging.

 

Stories Causing Atlas to Shrug, Dec 17th Edition | Calif Propaganda Rap Vids; The Obesity Epidemic and Food Stamps; Fed vs. Private Citizen Pay and More

Federal spending savvy: it costs 1.7 cents to make a penny and 8 to make a nickel. Sounds about right.


Making Everyone a Criminal: The Obamacare & Atlas Shrugged similarity - once you're made into a "criminal" you become far more compliant.


The removal of work requirements increases food stamp use by 50% even while unemployment is roughly halved over the same period.

• In America, the long term unemployed actually get fatter. 
• 2/3 of children in America are living in homes on federal aid programs. 

Total compensation (wages plus benefits) for federal, civilian employees was $115,524 in 2013, as opposed to $66,357 in the private sector.


Obamacare results in a historic jump in part time work and will cause $1 trillion in lost economic output by 2023.


Employees Can Use Work E-mail Systems for Union Business. The National Labor Relations Board has ruled that employees’ use of e-mail for organizing purposes on nonworking time must be permitted. This overruled a 2007 decision that held that employees can have no statutory right to use their employer’s email systems for union purposes.


Slurpees, Hot Dogs, Lotto Tickets and Obamacare: Obamacare ads will now appear on 7-Eleven receipts at more than 7,000 stores nationwide as government officials expand taxpayer funded advertising of how to get taxpayer funded healthcare.


The video, California: We Do Things Different, features California State Superintendent of Public Instruction Tom Torlakson rapping state-sponsored propaganda. Yep, this how we spend your tax dollars.  It's a good thing the state and federal government have such a massive surplus:

Obamacare cartoon of the week: 

And in the spirit of the season:

  

The Best and Worst Run States in America | Ranking of All 50

Annually, 24/7 Wall St. (a USA Today content partner offering financial news and commentary) ranks each state's operation and efficiency.  To determine how well states are managed they compile key financial ratios as well as social and economic outcomes such as:

• Debt per capita;
• Credit Rating; 
• State unemployment rate; 
• Median household income; and 
• Poverty rate. 

The study notes that, "the worst-run states ... tend[] to have weak fiscal management, reflected by low pension funding, sparsely padded coffers, and poor credit ratings from Moody’s Investors Service and Standard & Poor’s (S&P). Illinois, the worst-run state in America, received lower ratings than any other state from both agencies. By contrast, the majority of the 10 best-run states had perfect ratings from both agencies."  

Additionally, unemployment is low in the nation’s best-run states. "North Dakota, the top-ranked state, had an unemployment rate of 2.9% last year, the best in the U.S. In all, eight of the 10 best-run states were among the 10 states with the lowest unemployment rates." 

Top Ten States:  

          

North Dakota

1. North Dakota

> Debt per capita: $2,880 (19th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aa1

> 2013 unemployment rate: 2.9% (the lowest)

> Median household income: $55,759 (19th highest)

> Poverty rate: 11.8% (10th lowest)

Wyoming

  2. Wyoming   
  > Debt per capita: $2,269 (12th lowest)

  > Credit Rating (S&P/Moody’s): AAA/NGO

  > 2013 unemployment rate: 4.6% (6th lowest)

  > Median household income: $58,752 (13th highest)

  > Poverty rate: 10.9% (6th lowest)

3. Nebraska

> Debt per capita: $1,110 (2nd lowest)

> Credit Rating (S&P/Moody’s): AAA/NGO

> 2013 unemployment rate: 3.9% (3rd lowest)

> Median household income: $51,440 (25th highest)

> Poverty rate: 13.2% (17th lowest)

4. Iowa

> Debt per capita: $1,995 (10th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 4.6% (6th lowest)

> Median household income: $52,229 (21st highest)

> Poverty rate: 12.7% (14th lowest)

5. Minnesota

> Debt per capita: $2,441 (16th lowest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 5.1% (9th lowest)

> Median household income: $60,702 (9th highest)

> Poverty rate: 11.2% (7th lowest)

6. Utah

> Debt per capita: $2,436 (15th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 4.4% (4th lowest)

> Median household income: $59,770 (11th highest)

> Poverty rate: 12.7% (14th lowest)

7. Alaska

> Debt per capita: $8,039 (4th highest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 6.5% (18th lowest)

> Median household income: $72,237 (2nd highest)

> Poverty rate: 9.3% (2nd lowest)

8. Texas

> Debt per capita: $1,725 (6th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 6.3% (17th lowest)

> Median household income: $51,704 (23rd highest)

> Poverty rate: 17.5% (13th highest)

9. Vermont

> Debt per capita: $5,411 (10th highest)

> Credit Rating (S&P/Moody’s): AA+/Aaa

> 2013 unemployment rate: 4.4% (4th lowest)

> Median household income: $52,578 (20th highest)

> Poverty rate: 12.3% (12th lowest)

10. South Dakota

> Debt per capita: $4,270 (13th highest)

> Credit Rating (S&P/Moody’s): AA+/NGO

> 2013 unemployment rate: 3.8% (2nd lowest)

> Median household income: $48,947 (22nd lowest)

> Poverty rate: 14.2% (23rd lowest)

The Bottom Five: 

46. Kentucky

> Debt per capita: $3,436 (23rd highest)

> Credit Rating (S&P/Moody’s): AA-/Aa2

> 2013 unemployment rate: 8.3% (7th highest)

> Median household income: $43,399 (5th lowest)

> Poverty rate: 18.8% (6th highest)

47. Rhode Island

> Debt per capita: $8,761 (3rd highest)

> Credit Rating (S&P/Moody’s): AA/Aa2

> 2013 unemployment rate: 9.5% (2nd highest)

> Median household income: $55,902 (18th highest)

> Poverty rate: 14.3% (24th lowest)

48. Mississippi

> Debt per capita: $2,405 (14th lowest)

> Credit Rating (S&P/Moody’s): AA/Aa2

> 2013 unemployment rate: 8.6% (6th highest)

> Median household income: $37,963 (the lowest)

> Poverty rate: 24.0% (the highest)

49. New Mexico

> Debt per capita: $3,621 (20th highest)

> Credit Rating (S&P/Moody’s): AA+/Aaa

> 2013 unemployment rate: 6.9% (24th highest)

> Median household income: $43,872 (6th lowest)

> Poverty rate: 21.9% (2nd highest)

                

50. Illinois

> Debt per capita: $4,992 (11th highest)

> Credit Rating (S&P/Moody’s): A-/A3

> 2013 unemployment rate: 9.2% (3rd highest)

> Median household income: $56,210 (17th highest)

> Poverty rate: 14.7% (25th lowest)

Select Western States with Comments: 

15. Washington

> Debt per capita: $4,173 (15th highest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 7.0% (23rd highest)

> Median household income: $58,405 (14th highest)

> Poverty rate: 14.1% (22nd lowest)

This is probably close to the right spot for Washington.  It might be a tiny bit overrated based on the authors' fascination with Washington's progressively high minimum wage laws.  Many economists would view that as a pitfall rather than a bolstering quality.  But all in all, I think 15th is about right.

16. Idaho

> Debt per capita: $2,447 (17th lowest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 6.2% (15th lowest)

> Median household income: $46,783 (13th lowest)

> Poverty rate: 15.6% (25th highest)

I also agree with this ranking.  If I were going to move Idaho I'd slide it up a few spots and maybe slide Washington down a couple.  Idaho also has one of the nation's lowest rates of violate crime at 217 incidents per 100,000 people and, according to the study, "the state’s college-attainment rate grew more than in the vast majority of states between 2009 and last year."  Idaho is trending in the right direction.

20. Oregon

> Debt per capita: $3,507 (22nd highest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 7.7% (15th highest)

> Median household income: $50,251 (23rd lowest)

> Poverty rate: 16.7% (18th highest)

Oregon appears to be slightly overrated in this ranking.  Nearly 20 percent of Oregon residents was on food stamps last year.  That is the highest figure nationwide.  I would have expected Oregon to be in the high 20s to low 30s.  

30. California

> Debt per capita: $3,987 (17th highest)

> Credit rating (S&P/Moody’s): A/Aa3

> Unemployment rate: 8.9% (4th highest)

> Median household income: $60,190 (10th highest)

> Pct below poverty line: 16.8% (17th highest)

I'm not sure how California pulled off this high of a ranking. It should almost certainly be in the bottom 15 of not the bottom 7 states. Certainly its high median income buoys it, but the cost of living in California is among the highest in the nation so that pure income calculation can be misleading.

Image not from study.  Originally published in UT San Diego.

38. Nevada

Reno, Nevada with Mt. Rose in background

> Debt per capita: $1,397 (5th lowest)

> Credit Rating (S&P/Moody’s): AA/Aa2

> 2013 unemployment rate: 9.8% (the highest)

> Median household income: $51,230 (25th lowest)

> Poverty rate: 15.8% (24th highest)

Nevada's unemployment is what weighs it down.  It's outstanding debt ratio, modest poverty rate and a relatively high median income (the cost of living in Nevada is much lower than in California, Oregon or Washington) should probably have this state in the top 20.  It would certainly be in the top 10 to 15 for retirees, for whom unemployment is much less of a concern.  

45. Arizona

> Debt per capita: $2,140 (11th lowest)

> Credit Rating (S&P/Moody’s): AA-/Aa3

> 2013 unemployment rate: 8.0% (12th highest)

> Median household income: $48,510 (21st lowest)

> Poverty rate: 18.6% (9th highest)

Frankly, this state's relatively low debt per capita rating, recent upgrade in credit rating and middle-of-the pack ranking for median income make me think that Arizona should be rated quite a bit higher than this - at least in the top 25 or 30.

Link to full study here.
Link to USA Today article about the study here.
  

Economic Freedom in North America | Yes, California is in the Worst Quintile

The Fraser Institute just released their annual study:

In the United States, the most free states were Texas and South Dakota, both at 7.8, followed by North Dakota at 7.7 and Virginia at 7.5. (Note that since the indexes were calculated separately for each country, the numeric scores are not directly comparable across countries.) The least free state was Maine at 5.2, followed by Vermont and Mississippi, both at 5.3. New York was next, ranked 47th with 5.5. 

California tipped the scales at 43rd.  Frankly, seventh from worst is much better than I'd have suspected based on similar, comparable rankings. Generally speaking, California rates in the bottom three in all employment and business rankings while it does to a smidgen better in the analyses that weigh more heavily on personal freedoms.

This in an excerpt from a summary from the National Center for Policy Analysis:  

What does economic freedom translate into? Higher incomes for state residents. As Stansel wrote in the Washington Examiner, Texas, South Dakota and North Dakota had average incomes 20 percent higher than Maine, Vermont and Mississippi. Similarly, the top 10 most free states saw a 3.5 percent growth in employment and 8 percent economic growth, while the 10 least free states saw hardly any employment growth and only 2 percent economic growth.

The full set of studies (including both the US and North American versions) can be found at the Fraser Institute. 

  

Interestingly, when analyzing all of North America, the top three jurisdictions (and four of the top five) are Canadian, with Alberta at 8.2 in first place and Saskatchewan at 8.0 in second. Newfoundland & Labrador, Texas, and British Columbia are tied for third with 7.7. The 18 lowest-ranked jurisdictions are all states in Mexico.  Sadly, economic freedom has been on the decline in each of the United States, Mexico and Canada since 2000.  Canada's economic freedom has declined the least of all three countries while the U.S. has declined the most.  

Also from the study (at page 9 of the linked PDF):  

What is economic freedom and how is it measured in this index?
Writing in Economic Freedom of the World, 1975–1995, James Gwartney, Robert Lawson, and Walter Block defined economic freedom in the following way.

Individuals have economic freedom when (a) property they acquire without the use of force, fraud, or theft is protected from physical invasions by others and (b) they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. Thus, an index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions. (Gwartney, Lawson, and Block, 1996: 12) 

The freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions such as what is to be produced, how it is to be produced, how much is produced, and for whom production is intended. As government imposes restrictions on these choices, there is less economic freedom.  

Methodology

The researchers looked at six different "areas" of freedom, including governmental size, regulatory takings and discriminatory taxation, overall regulation, the legal system and property rights, monetary policy, and freedom of trade.  Each area is composed of many sub-categories.  Each of these categories of freedom was then scored on a scale of 0-10 with 10 being the most free and different weights applied to the appropriate category. For example, the weight for Area 1 (size of government) was 33.3%. Area 1 has three sub-categories, each of which received equal weight in calculating size of government, or 11.1% in calculating the overall index. Their entire method and all data sets can be found here (on pages 9 to 16 and page 65 in the linked PDF).
  

Simple Rules for Voting with Audio from Armstrong and Getty

I'm veering a smidgen off topic for some election day fun this afternoon.  When I was a kid I could recall going on hunting and fishing trips with my Dad and uncle.  I knew something was not right about me because I often enjoyed the political discourse as much as the outdoor adventure.  And while that may pass as acceptable in adulthood, it certainly was not normal for a 9 year old.  I decided to distill some of Uncle Don and Dad's lessons into four simple rules with the help of Armstrong and Getty - Rule 3 is bedrock A & G doctrine.

Jack and Joe had some fun today pontificating the prudence of these principles early in the 7 AM hour of Today's Armstrong and Getty Show.  Here is that audio:

For a trio of outstanding columns from Megan McArdle, the Coyote Blog, and Mike "Mish" Shedlock dealing with the same concepts check out the following:

• Many Propositions that seem outwardly liberty-enhancing are actually Trojan Horses that do the opposite. (Coyote Blog.) 

• Forget the claim, "it's for the children". Politicians do whatever they want with the money once the tax hikes pass.  (Mike "Mish" Shedlock.) 

• Unsure?  Don't vote. Apathy “is a good sign that the country does not need your ill-informed, half-hearted opinion." (Megan McArdle at Bloomberg.) 

 

Short Synopsis of the Utter Distopia of Our Corporate Tax Code

The amount of dead loss time, money and energy we spend as a society rent seeking to avoid the arcane and oppressive tax code is mind numbing.  

From the Washington Post: 

... In apparent desperation, the group of 13 Democrats and one independent, led by Sen. Carl Levin (D-Mich.), are proposing legislation that would make it more difficult for U.S. firms to buy a smaller foreign company in order to incorporate in countries with lower taxes. The practice is known as tax inversion, and companies are using it aggressively to avoid paying the U.S. corporate tax rate of 35 percent.

The rush to incorporate abroad can be seen a simple cost-cutting measure, but it's also reflection of how just unlikely big companies think Congress is to pass any sort of tax reform. "I view tax inversions as motivated by existential tax despair," said Ed Kleinbard, a law professor at the University of Southern California.

The most recent corporation to attempt this maneuver was Pfizer, which tried (unsuccessfully) to buy AstraZeneca in order to become a British company, even though there didn't seem to be any good reason for a merger beyond avoiding the U.S. tax rate. (The British rate is scheduled to drop to a mere 20 percent.) A passel of other pharmaceutical companies, such as Endo International, have successfully relocated through tax inversions.

Levin's bill would require that foreign shareholders own 50 percent of the combined company's stock before it can reincorporate abroad through a merger -- the current threshold is 20 percent. The bill resembles an earlier proposal from the Obama administration, which expects that thwarting inversions would raise $17 billion over 10 years. The bill also follows an editorial by Sen. Ron Wyden (D-Ore.) earlier this month calling for a broadly similar change in policy.

Under the current system, the profits that U.S. firms make abroad they keep overseas to escape the U.S. rate. According to a report from Moody's cited by the Financial Times, firms have accumulated some $947 billion this way. The amount has increased rapidly in the past few years, partly as a result of the explosion of value in intellectual property. Because copyrights and patents have no physical location, pharmaceutical firms and technology companies have found it easy to shift their profits around the globe to find lower tax rates. Google has designated intellectual property as existing in Bermuda, allowing it to shift nearly $10 billion in annual revenue to an island nation with no corporate tax.

Yet while firms have much more money than they would if they'd been paying U.S. taxes all along, they can't really do much with it. They can't begin new, potentially profitable projects in the United States, which is what policymakers would like them to do, nor can they return the money to their shareholders, which is what Wall Street would like them to do. If they did, they'd get hit with a U.S. tax bill. They've been sitting on the money, hoping that Congress will eventually reform the tax system and reduce rates for U.S. corporations, or that legislators will grant another temporary holiday like the one in 2004 that allowed corporations to bring profits home free of tax. ...

Poll: 47% of Unemployed Have 'Completely Given Up' Looking for a Job

From Mark Hemingway at The Weekly Standard: 

A new poll suggests that finding employment, particularly for the long-term unemployed, continues to be a struggle for Americans. The poll, conducted by Harris Poll on behalf of Express Employment Professionals, asked questions of 1,500 unemployed adult Americans last month.

“This survey shows that millions of Americans are at risk of falling into the trap of prolonged unemployment, and it should give policymakers a greater sense of urgency to focus on the singular goal of creating jobs," said Bob Funk, CEO of Express and a former Chairman of the Federal Reserve Bank of Kansas City, in a release. "We can take heart that in these difficult times the American spirit of confident hopefulness endures, but we can’t accept this status quo—not for our country, not for our unemployed neighbors.”

Some of the key findings:

• 47 percent agree with the statement, “I’ve completely given up on looking for a job.” (7 percent said they “agree completely,” 7 percent “agree a lot,” 15 percent “agree somewhat,” and 18 percent “agree a little.”)   
• 60 percent say looking for work has been harder than expected. 10 percent say it’s been easier than expected. ...

State and Local Individual Income Tax Collections Per Capita

Full story from the Tax Foundation. 

Stories Causing Atlas to Shrug, April 22, 2014 Edition

• Because of welfare loss, Americans at every income level face a lifetime marginal net tax rate greater than 50%. 

• At 1.5 times the minimum wage ($32,100), working couples get to keep less than 20 cents out of each dollar they earn.

• Why We Spend So Much on Rx: Medicare pays doctors a 'commission' based on drug cost.  The more expensive, the greater a doctor's reward.  

• Obamacare in New Hampshire: 10 of 26 hospitals booted out and only 1 carrier participates. Fostering competition, eh? 

• Paul Krugman's claim of 17,000 deaths due to a failure to expand Medicaid is "outrageous & flies in the face of years of careful study by real economists." Dr. John Goodman dissects Krugman's claims, again.  

• Quiz, Canada or the U.S? Some physicians who work for hospitals say they’ve been asked to see patients every 11 minutes.  

• Medicare kept paying dozens of doctors even after those doctors were suspended or terminated from state Medicaid rolls or charged with fraud.  

• While open enrollment for coverage under the Affordable Care Act is closed, many of the newly insured are finding they can’t find doctors, landing them into a state described as “medical homelessness.”

Hat Tip to Dr. John Goodman and Dr. Kris Held for pointers to the above stories.  

  

State and Local Tax Burdens as a Percentage in the 50 States

Key Findings

• During the 2011 fiscal year, state-local tax burdens as a share of state incomes decreased on average. This trend was largely driven by the growth of income in all states.
• In 2011, the residents of New York, New Jersey, and Connecticut had the highest state-local tax burdens as a share of income in the nation. In these states, residents have forgone over 11.9 percent of income due to state and local taxes.
• Residents of Wyoming paid the lowest percentage of income in 2011 at just 6.9 percent. They replaced Alaska, which had previously been the least-taxed for multiple decades, as the lowest-burdened state in the nation. After Wyoming and Alaska, the next lowest-taxed states were South Dakota, Texas, and Louisiana.
• State-local tax burdens are very close to one another and slight changes in taxes or income can translate to seemingly dramatic shifts in rank. For example, the twenty mid-ranked states, ranging from Oregon (16th) to Georgia (35th), only differ in burden by just over one percentage point.
• On average, taxpayers pay more to their own state and local governments (73 percent of total burden). Taxes paid within states of residence decreased on average in 2011, while taxes paid to other states increased, leading to a slight decrease in total burden. Some states deviated from these national trends, however.

Source: Liz Malm and Gerald Prante, "Annual State-Local Tax Burden Ranking FY 2011," Tax Foundation, April 2, 2014.

Deep Underground, Federal Employees Process Paperwork by Hand in a Long-Outdated, Inefficient System

This is from "The Sinkhole of Bureaucracy" by David A. Fahrenthold writing in the Washington Post.  Hat tip: The Armstrong and Getty Show:  

In BOYERS, Pa. — The trucks full of paperwork come every day, turning off a country road north of Pittsburgh and descending through a gateway into the earth. Underground, they stop at a metal door decorated with an American flag. 

Behind the door, a room opens up as big as a supermarket, full of five-drawer file cabinets and people in business casual. About 230 feet below the surface, there is easy-listening music playing at somebody’s desk. 

This is one of the weirdest workplaces in the U.S. government — both for where it is and for what it does. 

Here, inside the caverns of an old Pennsylvania limestone mine, there are 600 employees of the Office of Personnel Management. Their task is nothing top-secret. It is to process the retirement papers of the government’s own workers.
But that system has a spectacular flaw. It still must be done entirely by hand, and almost entirely on paper. 

The employees here pass thousands of case files from cavern to cavern and then key in retirees’ personal data, one line at a time. They work underground not for secrecy but for space. The old mine’s tunnels have room for more than 28,000 file cabinets of paper records. 

This odd place is an example of how hard it is to get a time-wasting bug out of a big bureaucratic system. 

Held up by all that paper, work in the mine runs as slowly now as it did in 1977. 

“The need for automation was clear — in 1981,” said James W. Morrison Jr., who oversaw the retirement-processing system under President Ronald Reagan. In a telephone interview this year, Morrison recalled his horror upon learning that the system was all run on paper: “After a year, I thought, ‘God, my reputation will be ruined if we don’t fix this,’ ” he said. 

Morrison was told the system still relies on paper files. 

“Wow,” he said. ...  

 

The San Jose Sharks Made a Young Man's Dreams Come True

Sam Tageson, a lifelong San Jose Sharks fan with a health condition, gets to realize his dream of practicing and skating on the ice as a member of the Sharks.

Come out and support the San Jose Sharks Foundation to do more work like this on April 13 for a Bass Tournament launching at Russo's Marina and featuring legendary Shark and olympic gold medalist Owen Nolan, Randy Moss, Tim Ryan, Lisa Gonzales, and many other athletes and media personalities.

Real Unemployment (The U-6 Measurment) Is Still Much Too High at 12.6%

From Mish's Economic Trend Analysis: 

The official unemployment rate is 6.7%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is: ... U-6.

U-6 is much higher at 12.6%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Labor Force Factors

1. Discouraged workers stop looking for jobs
2. People retire because they cannot find jobs
3. People go back to school hoping it will improve their chances of getting a job
4. People stay in school longer because they cannot find a job
5. Disability and disability fraud ... 

Synopsis

On the surface this month modestly beat expectation with a decent report of 175,000 jobs. Beneath the surface, things looked worse. 

Non-Benefits Related: My Bike Crash & Joe Getty's Fun in Recapping it on Air

A great time turns into a separated shoulder, torn rotator cuff, and probable surgery.  But my head and spine are okay.  All mendable components.  Joe's recap is priceless.  We'll be back on the trail as soon as all my parts work...

Why The Stock Market Excels While Our Economy and Employment Suffer

It is important to realize that around 50 percent of the SP500′s earnings are generated overseas

This means that our stock market is to some extent decoupled from our economy. Statistics like ratios of corporate profits to GDP are not necessarily going to be indicative of movements in income shares. Imagine a foreign subsidiary getting profits without generating and GDP whatsoever. 

For full discussion click here. 

The 7 Deadly Email Sins For Your Psyche

This is from Science 2.0:

... You could be damaging your mental health and that of their colleagues too, according to Kingston University occupational psychologist Dr. Emma Russell.
Russell says she has identified 7 deadly email sins that can lead to 'negative repercussions' if not handled correctly. Some of the worst habits include 'ping pong' messages back and forth and 'read receipts', which accompany every missive sent, the study, looking into which email practices stress employees out, found. 

Russell analyzed 28 email users across different companies to see which habits had positive and negative influences on their working lives. She these 7 habits which can be positive if used in moderation but are likely to have a negative impact if not handled correctly:

1. Ping pong - constant emails back and forth creating long chains
2. Emailing out of hours
3. Emailing while in company
4. Ignoring emails completely
5. Requesting read receipts
6. Responding immediately to an email alert
7. Automated replies

Responding to out of hours emails, for instance, may make an employee look keen but it can also mean workers find it difficult to switch off, according to presentation. “This puts pressure on staff to be permanently on call and makes those they are dealing with feel the need to respond,” Russell explained. “Some workers became so obsessed by email that they even reported experiencing so-called ‘phantom alerts’ where they think their phone has vibrated or bleeped with an incoming email when in fact it has not. Others said they felt they needed to physically hold their smartphone when they were not at their desk so that they were in constant email contact.” ... 

Some [practices] create a problem for the sender rather than the receiver, she said, as they can lead to them giving out the wrong impression or not remaining in control of what they are doing.  For example having email alerts switched on and responding to email immediately can have positive benefits if one wants to show concern to the person who has emailed them.

However, it may have negative repercussions in terms of the sender feeling that responding to emails is taking them away from other tasks and impacting on their sense of well-being. ...