October 30, 2014

Could there be a Positive Benefit from a Senate Change?

Five days from now, the nation will learn if the U.S. Senate will have a "new sheriff." Will Harry Reid and the Democrats continue to control Congress' upper chamber, or will the Senate "flip" to the Republicans? That possibility seems greater this evening with the prediction by well-known Roll Call columnist Stuart Rothenberg this evening (HT Drudge Report) that "Obama’s midterm loss record could make history."

According to Rothenberg, Democrats "seem likely to lose from 5 to as many as 10 seats next week." Nate Silvers at 538 says GOP is a "slight favorite" while NY Times says "the Republicans have a moderate edge, with about a 71% chance of gaining a majority" (both as of today) although the Washington Post's Dan Balz wrote on August 6, 2014 that "three months out from November, many questions remain before the ballots can be counted."

With that context, let's turn to Demian Brday, blogging yesterday at the National Taxpayers Union's blog, Government Bytes. Brady says that "if the Senate flips, budget cutters would take reins of committees." According to his analysis:

" . . . A comparison of the spending platforms of the outgoing Democratic Chairs and the potential incoming Republican Chairs indicates that major changes could be coming to the “workshops” of the Senate: the Committees responsible for drafting legislation and setting the policy agenda in the next Congress.

"If the Senate switches, the average spending agenda of the outgoing and potential incoming Chairs could see a $232.7 billion swing as budget increasers would be replaced by net budget cutters."

Doing some number-crunching, Brady look at the "net spending agendas of outgoing and potential incoming Senate committee chairs in the 113th Congress. Two examples:

  • Appropriations Committee. The current chair is Senator Barbara Mikulski (D-Maryland) had a net spending agenda of $32.4 billion while the net spending agenda of potential chair Senator Thad Cochrane (R-Mississippi) was a minus $98.2 billion.
  • Environment and Public Works. Senator Barbara Boxer (D-California) is the current chair, and her net spending agenda is $45.6 billion. The potential chair is Senator James Imhofe (R-Oklahoma) whose net spending agenda is a minus $196.1 billion.

Click here to see how the remaining 14 committees compare. Kudos to Demian Brady for this most helpful analysis. While many pundits say there's not a "dime's worth" of difference between the two parties, there is indeed a difference as Demian's comparison shows.

If Arlington County residents have any questions about next Tuesday's, November 4, 2014, general election, they should contact Arlington County's Office of Voter Registration, or call (703) 228-3456.

October 29, 2014

Family and Economic Prosperity

Prosperity and economic prosperity are frequent topics at Growls. You can confirm that by using the search facility in the lower right-hand column.

So when the title of a new report from the American Enterprise Institute (AEI) appeared in a headline today at Hot Air, it caught my attention. The report, by W. Bradford Wilcox and Robert I. Lerman, is entitled, "For richer, for poorer: How family structures economic success in America." Following is the report's executive summary:

"This study documents five key findings about the relationships between family patterns and economic well-being in America.

  1. The retreat from marriage—a retreat that has been concentrated among lower-income Americans—plays a key role in the changing economic fortunes of American family life. We estimate that the growth in median income of families with children would be 44 percent higher if the United States enjoyed 1980 levels of married parenthood today. Further, at least 32 percent of the growth in family-income inequality since 1979 among families with children and 37 percent of the decline in men’s employment rates during that time can be linked to the decreasing number of Americans who form and maintain stable, married families.
  2. Growing up with both parents (in an intact family) is strongly associated with more education, work, and income among today’s young men and women. Young men and women from intact families enjoy an annual “intact-family premium” that amounts to $6,500 and $4,700, respectively, over the incomes of their peers from single-parent families.
  3. Men obtain a substantial “marriage premium” and women bear no marriage penalty in their individual incomes, and both men and women enjoy substantially higher family incomes, compared to peers with otherwise similar characteristics. For instance, men enjoy a marriage premium of at least $15,900 per year in their individual income compared to their single peers.
  4. These two trends reinforce each other. Growing up with both parents increases your odds of becoming highly educated, which in turn leads to higher odds of being married as an adult. Both the added education and marriage result in higher income levels. Indeed, men and women who were raised with both parents present and then go on to marry enjoy an especially high income as adults. Men and women who are currently married and were raised in an intact family enjoy an annual “family premium” in their household income that exceeds that of their unmarried peers who were raised in nonintact families by at least $42,000.
  5. The advantages of growing up in an intact family and being married extend across the population. They apply about as much to blacks and Hispanics as they do to whites. For instance, black men enjoy a marriage premium of at least $12,500 in their individual income compared to their single peers. The advantages also apply, for the most part, to men and women who are less educated. For instance, men with a high-school degree or less enjoy a marriage premium of at least $17,000 compared to their single peers.

"Given the economic importance of strong and stable families, policy makers, business executives and owners, and civic leaders should experiment with a range of public and private policies to strengthen and stabilize marriage and family life in the United States. Such efforts should focus on poor and working-class Americans, who have been most affected by the nation’s retreat from marriage. Specifically:

  1. Public policy should “do no harm” when it comes to marriage. Accordingly, policymakers should eliminate or reduce marriage penalties embedded in many of the nation’s tax and transfer policies designed to serve lower-income Americans and their families.
  2. Federal and state policy should strengthen the economic foundations of middle- and lower-income family life in three ways: (a) increase the child credit to $3,000 and extend it to both income and payroll taxes; (b) expand the maximum earned income tax credit for single, childless adults to $1,000, increasing their marriageability; and (c) expand and improve vocational education and apprenticeship programs that would strengthen the job prospects of less-educated young adults.
  3. Civic institutions—joined by a range of private and public partners, from businesses to state governments to public schools—should launch a national campaign around a “success sequence” that would encourage young adults to sequence schooling, work, marriage, and then parenthood. This campaign would stress the ways children are more likely to flourish when they are born to married parents with a secure economic foundation."

The entire report is 58-pages, which you can access here. The report was released today at an AEI event, which included discussions by two panels. You can watch the two panel discussions here, which last just under three hours.

The following chart from the report provides a policy pathway.

Kudos to the two authors of the study and to the American Enterprise Institute (AEI).

October 28, 2014

Virginia's Business Tax Climate Continues to Erode

The Tax Foundation released its state business tax climate index today. According to  the study's executive summary:

"The Tax Foundation’s State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems, and provides a road-map to improving these structures.

"The 10 best states in this year’s Index are:

1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. Montana
7. New Hampshire
8. Indiana
9. Utah
10. Texas

"The absence of a major tax is a common factor among many of the top ten states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate tax, the individual income tax, or the sales tax. Wyoming, Nevada, and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.

"But this does not mean that a state cannot rank in the top ten while still levying all the major taxes. Indiana and Utah, for example, have all the major tax types, but levy them with low rates on broad bases.

"The 10 lowest ranked, or worst, states in this year’s Index are:

41. Iowa
42. Connecticut
43. Wisconsin
44. Ohio
45. Rhode Island
46. Vermont
47. Minnesota
48. California
49. New York
50. New Jersey

"The states in the bottom ten suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates. New Jersey, for example, suffers from some of the highest property tax burdens in the country, is one of just two states to levy both an inheritance and an estate tax, and maintains some of the worst structured individual income taxes in the country."

The following map of the United States shows the 10 best states (green) and 10 worst states (pumpkin):

Virginia's overall rank has eroded over the past four years, going from #23 in 2012, to #24 in 2013, to #26 in 2014, and settling in to #27 for 2015.

Figure 1 of the study, in addition to reflecting an overall ranking of #27 for 2015, also shows Virginia with a corporate tax ranking of #6, an individual tax ranking of #39, a sales  tax ranking of #6, an unemployment tax ranking of #37, and a property tax ranking of #26.

Today's Wall Street Journal commented on the study on its editorial pages ($ -- behind its paywall), saying:

"The annual ranking measures the impact of policies in place as of July 1 on five types of taxes on business activities, mainly considering the amount a state takes from its citizens but also the weight of its compliance burden . . . ."

In conclusion, the Journal said:

"Tax climate isn’t the only determinant of state prosperity. Regulation also matters, as do human capital and natural resources like Wyoming’s oil and gas. But the latter are more likely to reach their potential in states with low tax rates."

Readers of Growls who are concerned that Virginia's business tax climate has eroded from #23 just four years ago to #27 for 2015 are urged to contact Governor Terry McAuliffe and Senators and Delegates who represent Arlington County in the General Assembly.

  • Contac6 information for members of the General Assembly can be found here (using one of the "quick links").

We growled about Virginia's 2014 business tax climate here.

Kudos to Scott Drenkard and Joseph Henchman of the Tax Foundation for their work producing the 2015 state business tax climate index and to the Tax Foundation.

October 27, 2014

A Thought about Liberty and Equality

"The irony is that free people usually create far more wealth than the coerced, which makes the lower echelons better off, a fact that reminds “equality” is usually about empowering progressive elites rather than materially helping the poor. Moreover, in a free society, there are all sorts of forces — religion, constantly improving and ever cheaper technology, family pressures, honor, shame, philanthropy — that redistribute wealth either naturally or through the consent of the giver, and far more effectively than creating a huge government equalocracy that seeks power to bully others and exempt itself.

~ Victor Davis Hanson

Source: His January 14, 2014 column, posted at National Review Online.

October 2014
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Items in Growls are written by individual ACTA members and do not necessarily represent the views of the Arlington County Taxpayers Association, Inc. Please send comments about Growls to The Growl Meister