Hurricane Sandy Hits Home

For the most part, I live a somewhat sheltered life. It’s not that I shun television (far from it) or approach life with a “Candy Land” mentality, but I tend to focus on “my” world – the one that revolves around my family, friends and beloved pets. But in the midst of Hurricane Sandy, I’m reminded that “it’s not all about me.”

Sandy has claimed precious lives and caused unimaginable damage on the East Coast. Power outages have left many residents without electricity, a frightening prospect as temperatures begin to drop. Seen through children’s eyes, the storm washed away their long-awaited Halloween celebrations. It sounds trivial compared to the scale of destruction residents are facing, but it’s a sad reality they won’t soon forget.

Remembering my childhood travels through the East Coast on the way to Connecticut to my grandparents’ wooded cabin connects me to the part of the country enduring nature’s wrath. I’ll never forget the breathtaking views, scrumptious food, historic destinations and laughter. 

As residents of New Jersey, New York and other states face Hurricane Sandy’s aftermath, there are four words of hope I can offer. They’ve come from my dad, one of the wisest men I know, through the years as my family weathered storms of our own: “We’ll get through this.”

Double the Taxing ‘Pleasure’ on April 17

There’s something ironic (not pleasant, but ironic) about Tax Freedom Day this year occuring on April 17 — the same day taxes are due. The day, according to the Tax Foundation, is when people finally work long enough to pay their taxes for the year.

The latest Tax Freedom Day took place on May 1, 2000. With the economy booming that year, Americans paid 33% of their total income in taxes. A century earlier was more pleasant with "freedom" arriving on January 22, 1900.

State tax burdens vary the tax timeframe. Indiana residents will "celebrate" on April 14, which ranks 26th nationally. As for the best of 2012:

  • Tennessee, March 31
  • Louisiana and Mississippi, April 1 (no foolin’)
  • South Carolina, April 3
  • South Dakota, April 4

And the worst:

  • Connecticut, May 5
  • New Jersey and New York, May 1
  • Washington, April 24
  • Wyoming and Illinois, April 23

My Day in NYC on 9/11

It’s hard to believe it’s been a decade since the world as we knew it – one in which terrorism was scarcely given much thought – was turned upside down.

A native Hoosier, I had moved to Connecticut three years prior to the attacks and commuted daily to my job in New York City. These are my personal recollections from that day.

… Many of us went to the windows that pointed south toward the World Trade Center. It was one thing seeing it on TV, but to look out and see firsthand the large plumes of smoke was completely surreal.

Unease was officially setting in throughout the office. 

My mind was playing what-ifs and drifting to my two recent visits to the Twin Towers complex in as many weeks: One for pleasure – shopping at the vast underground center – and the other a breakfast business meeting at the Marriott hotel, which sat between both towers and was connected to them….

Full story here.

Indiana’s Business Tax Climate: Not a Perfect One, But a Good 10

We’re No. 10! We’re No. 10! Not exactly the rallying cry one is used to hearing, but a refrain that deserves more plaudits than usual. Here’s why Indiana’s ranking in the Tax Foundation’s 2011 State Business Tax Climate Index is noteworthy:

  • It’s not easy to make substantial improvements in this area. Indiana has ranged between No.12 and No. 14 over the last five years
  • The top eight seemingly head the list by default as they do not impose one of the big three taxes (sales, income or corporate income). So, without too much of a stretch, you could say Indiana is second on the list
  • We’re far away from the bottom 10; in order from No. 50, that’s New York, California, New Jersey, Connecticut, Ohio, Iowa, Maryland, Minnesota, Rhode Island and North Carolina

The Indiana Chamber’s advocacy efforts certainly are contributing factors to the state ranking. Historic tax restructuring in 2002 (including elimination of the inventory and corporate gross receipts levies) is among the Decade of Policy Victories document reflecting major legislative accomplishments from 2000-2009. The Chamber has also achieved success in general property tax reductions and an expansion of a variety of tax credits (good for business, but not earning high marks in this report).

According to the Tax Foundation, the worst tax codes tend to have:

  • Complex, multi-rate corporate and individual income taxes with above-average tax rates
  • Above-average sales tax rates that don’t exempt business-to-business purchases
  • Complex, high-rate unemployment tax systems
  • High property tax collections as a percentage of personal income

Indiana’s rankings in the five categories are: corporate tax index, 21st; individual income tax index, 11th; sales tax index, 20th; unemployment insurance tax index, 12th; and property index, 4th.

Since this tax analysis game is not for the faint of heart, a little more from the Tax Foundation on how it all works.

The methodology of the State Business Tax Climate Index is centered on the idea of economic neutrality. If a state’s tax system maintains a “level playing field” for businesses, the index considers it neutral and ranks it highly. However, each state’s final score depends on a comparison with the other 49 states.

The overall index is composed of five specific indexes devoted to major features of a state’s tax system. Each of these five indexes is composed of several sub-indexes.

Each state’s laws and tax collections were assessed as of July 1, 2010, the first day of the 2011 fiscal year. Newer tax changes are the subject of commentary in an appendix but are not tallied in the scores and rankings.

The Tax Foundation has data charts, further analysis and a full 60-page report. By the way, you have to go west for most of the rest of the top 10 (in order): South Dakota, Alaska, Wyoming, Nevada, Florida, Montana, New Hampshire, Delaware and Utah.

And finally, going into a state budget year that will bring pressure to raise revenues, let’s all keep the vital importance of the tax climate in mind on business attraction and expansion decisions.

Tax News: Good to Be Tied to Arkansas in This Case

Interesting numbers from the Tax Foundation, which is in the business of analyzing interesting (tax) numbers. Its annual review of what states did with their tax policies included some strong praise for Indiana. A few excerpts from the release and a link to the full study, which takes some to task for targeted tax hikes and accounting gimmicks (instead of reducing spending).

Nine states increased individual income tax rates (five states reduced their rates), six states raised general sales tax rates, 17 states increased excise taxes on cigarettes and five states increased rates of alcohol excise taxes.
“Two states – Arkansas and Indiana – managed to roll back spending growth commitments and take actions to limit spending, but other states have either kicked the budget can down the road or increased taxes,” said Tax Foundation Director of State Projects Joseph Henchman, who authored Tax Foundation Fiscal Fact No. 204, “A Review of Significant State Tax Changes During 2009.”  

“With state revenues declining due to the tough economic situation, most state leaders in 2009 have tapped high-income earners, smokers, out-of-state business transactions, or other targeted groups, those being the only people that politicians feel safe raising taxes on,” Henchman notes. 

California, Connecticut, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon and Wisconsin increased individual income tax rates. States that increased sales taxes include California, Massachusetts, Minnesota, Nevada, North Carolina and the District of Columbia.
Other miscellaneous tax changes in 2009 include obesity and soda taxes, excise taxes on plastic bags (often mischaracterized as “fees”) and “Amazon” taxes, which force out-of-state retailers to collect sales taxes from customers if the companies have affiliate and advertising relationships with in-state businesses.

Changing Chairs (Without the Music) in the Senate

Washington insiders and business interests in several industries are keeping a close eye on what happens as a result of last month’s death of longtime Massachusetts senator Edward Kennedy. The question is who will be the new permanent chair of the Health, Education, Labor and Pensions (HELP) Committee.

Christopher Dodd (D-Connecticut), who guided health care overhaul legislation through HELP as acting chairman, must decide whether to remain as head of the Banking Committee or make the move to HELP. He cannot serve as chair for both.

Bankers are apparently hoping Dodd makes the latter choice. They say Dodd has taken a hardline approach against their industry in an effort to boost his sagging poll numbers as he approaches re-election. If Dodd moves on, Tim Johnson (D-South Dakota) would likely be offered the Banking Committee chairmanship. Johnson would be expected to be a more moderate influence on the panel.

An outside possibility has Iowa’s Tom Harkin giving up leadership of the Agriculture Committee to take over HELP.

Stay tuned. Decisions should be made soon.

The Gray Area of Green: Green Jobs Discussion Should Focus on Reality, Not Buzzwords

A brief but to-the-point column from Governing’s Christopher Swope attempts to inject some reality into the green jobs discussion. He notes that while it makes for admirable rhetoric to tout "green jobs," one must look deeper than a label to determine if a green job is actually green:

Suddenly, everyone is talking about "green jobs." Task forces in Connecticut, Minnesota and New Mexico, among other states, are looking at how to attract, create and retain them. Meanwhile, the U.S. Conference of Mayors has been trumpeting a report predicting 4.2 million new green jobs over the next 30 years.

That sounds nice. But what exactly is a green job? It’s a maddeningly difficult question to answer. There’s more hype than there is good research on the subject, and just about any claim anyone wants to make seems to stick.

That’s unfortunate. Because throwing around wild numbers masks where the real economic opportunities are. For example, manufacturing and installing wind turbines would create brand-new job markets in a country that never really has had much of a wind-power industry. But most of the jobs that get labelled "green" these days are positions that already exist and bear only tangential relationships to the environment. A study done for the state of Colorado counts some Wal-Mart employees as green, because a percentage of the products the retailer sells are Energy Star-certified. Cashiers, janitors, accountants, secretaries, lawyers, even government officials — all can be "green workers" if their work touches energy efficiency in almost any way.

Not that using less electricity and putting people to work aren’t worthy goals. But rather than chasing buzzwords, policy makers should recruit specific industries that have realistic chances of success in their states. When you dig into the numbers being touted on green jobs, you find a lot fewer photovoltaic specialists and geothermal engineers — and a lot more cashiers and truck drivers — than you may want.