Business

Bubblegum Politics Good for Youth, Killing Small Businesses (Added: California Hates Business)

Published by Papa Giorgio

HotAir nails it!

Since it’s not a web ad featuring a super cool, hipster-celebrity making suggestive analogies about President Obama’s oh-so-dreamy and glamorous political qualities, I doubt it will get nearly the same traffic as Team Obama’s recent Lena Dunham ad — which is most unfortunate, because rather than a cotton-candy, war-on-women appeal to the youths, we actually see the real-world effect that Obama’s policies have had on hardworking, middle-class Americans.

President Obama’s policies have been brutal to the business world, and small businesses in particular. An onslaught of red-tape regulations, ObamaCare, the threat of higher taxes, generally poor economic growth — none of these have been kind to entrepreneurs or owners trying to grow their outfits. Despite the Obama administration’s several showy moves to come to the aid of small business, their vital signs just haven’t picked up, via Bloomberg Businessweek:

The measure estimates employment at independent companies with fewer than 20 employees that use Intuit’s online payroll product. Companies with fewer than 20 workers make up nearly 90 percent private employers in the U.S. …

Companies with fewer than 20 employees have actually shed jobs during the economic recovery; the Intuit Small Business Employment Index was 0.9 percent lower in October 2012 than in July 2009. Moreover, since May, the index has moved in the opposite direction from BLS estimates of overall employment, with Intuit reporting a loss of 10,000 small business jobs in each of the last two months alone. …

Compensation and hours are similarly weak. Adjusting for inflation and seasonality, monthly compensation for all employees (including the owners) at businesses with fewer than 20 employees is 10.2 percent lower than when the president took office.

California is in a worse boat that Virginia, for instance, we [California] have ranked dead last 8-years in a row as far as a business friendly environment goes:

Editorial (OC Register): CEOs rate California dead last for business, again

It was alarming the first three or four times California was ranked last among 50 states for business environment. Now, Chief Executive magazine’s annual ranking, based on a survey of 650 chief executives on taxation, regulation, workforce quality and living environment, again places California dead last, 50th of 50 – for the eighth year in a row.

Eight years in a row ceases to be alarming. It now is a defining status.

[….]

Gov. Jerry Brown insists those who say California is unfriendly to business are wrong. But Mr. Brown, of course, is not the chief executive officer of a private business. He is the top executive of a deficit-burdened, intrusive, bloated government bureaucracy that has perfected squandering other peoples’ money while botching delivery of services such as education and lavishing public employees with unaffordable pay and benefits.

California public school teachers are the nation’s highest-paid, while their students’ performance ranks among the worst. The state’s various unfunded pension and retirement health care benefits promise to bankrupt the already overextended government.

As chief executive opinions go, Mr. Brown’s are considerably less credible than CEO magazines’ private-sector leaders.

“California’s enduring place of perpetual decline continues in this year’s ranking,” the magazine said. “Once the most attractive business environment, the Golden State appears to slip deeper into the ninth circle of business hell.”

The CEOs aren’t alone in their harsh critique. The state got an “F” grade in January from Thumbtack.com and the Kauffman Foundation in a survey of 6,000 small businesses across the nation, and the Tax Foundation ranked California 48th worst on business taxes.

There is little prospect of improvement. Despite finding itself in a hole, state government keeps digging. This week the state Senate Judiciary Committee killed a California Chamber of Commerce-sponsored job-creator bill to protect employers from inappropriate litigation.

Mr. Brown’s Air Resources Board is ratcheting up costly new regulations and preparing an ill-advised cap-and-trade carbon-emissions auction to coerce private energy providers to do things the government’s way. The governor and other Big Government champions also are advancing proposals for the November ballot to extract upwards of another $20 billion per year in taxes.

As CEO magazine’s poll shows, the state’s failings are obvious to business people. But Mr. Brown and California’s other governmental leaders just don’t get it.

Will the progressive lefts health care plan allow for choice or job growth?

Published by Papa Giorgio

In the above video we see Obama saying the following:

“IF you are already getting health insurance on your job, then, that doesn’t change. Health insurance reform passed was passed six months ago. I don’t know if anybody here has gotten a letter from their employer saying, ‘you have to go on government health care’….”

This statement is just false. I have posted in the past on this topic of companies dumping their plans because it will be cheaper for them just to dump their employees onto the government plan. Here is a recent example exemplified over at HotAir – 3M to dump retirees from medical coverage:

Remember when Barack Obama repeatedly promised that no one’s current coverage would have to change if Congress approved the health-care overhaul he demanded?  When the ObamaCare bill passed, the Associated Press suddenly discovered that the change of tax law that would supposedly generate billions of dollars to pay for the costs of the bill would also drive companies to dump retirees from their existing drug coverage and push them into Medicare.  Minnesota-based 3M became one of the first large corporations to do just that — and push retirees off of all their plans as well:

3M Co., citing new federal health laws, said Monday it won’t cover retirees with its corporate health-insurance plan starting in 2013.

Instead, the company will direct retirees to Medicare-backed insurance programs, and will provide reimbursement for that coverage. It’ll also reimburse retirees who are too young for Medicare; the company didn’t provide further details.

The company made the changes known in a memo to employees Friday; news of the move was reported in The Wall Street Journal and confirmed Monday by 3M spokeswoman Jackie Berry.

The ObamaCare bill created a fund to subsidize employers who didn’t dump their retirees, but the WSJ notes that it simply wasn’t enough to change the negative incentives created by the government interventions:

The changes won’t start to phase in until 2013. But they show how companies are beginning to respond to the new law, which should make it easier for people in their 50s and early-60s to find affordable policies on their own. While thousands of employers are tapping new funds from the law to keep retiree plans, 3M illustrates that others may not opt to retain such plans over the next few years. …

Democrats that crafted the legislation say they tried to incentivize companies to keep their retiree coverage intact, especially until 2014. The law creates a $5 billion fund for employers and unions to offset the cost of retiree health benefits. More than 2,000 entities, including many large public companies, have already been approved to submit claims for such reimbursement. 3M did not apply.

How did Democrats come up with the $5 billion figure for subsidies to protect retirees from losing their plans?  From the looks of it, they simply made it up.  They also didn’t do much calculation to determine whether the subsidies would actually incentivize employers into rejecting this strategy for cost savings.  To some extent, they may not have been able to make that calculation, because thanks to the massive amount of ambiguity in the bill, no one can really say for sure what the future costs would be.  And of course, that’s why 3M chose now to dump the retirees.

3m has 23,000 retirees, many of them likely to be living in Minnesota.  They’re also likely to vote in the upcoming midterms, perhaps even more likely now than ever.  That won’t be good news for House Democrats in the Minnesota delegation hoping to win a new term in four weeks.

We already know we will not know the ultimate costs… and going off of experience, we know all government programs are always more than what we are told:

This is a concern for the Dems and will be a losing issue (among the many others). Here are a couple examples of the impact this ridiculous bill has had on business:

The Snooki Tax

Published by Papa Giorgio

Take note that the persons opposed to tanning altogether are the ones who got this 10% tax added. They know that even a 10% tax (just like all the taxes added to smoking) dissuades someone from that action. Similarly, all the taxes coming down the pike will do what exactly to consumers wanting to go out and spend??

Politico:

In one scene, Snooki — with her impressively orange tan — broke the shocking news that she’s been staying away from her home away from home: Tanning salons.

“I don’t go tanning anymore because Obama put a 10% tax on tanning. McCain would never put a 10% tax on tanning. Because he’s pale and would probably want to be tan,” she said.

Snooki was referring to a provision in the Health Care and Education Reconciliation Act that mandates tanning salons impose a 10 percent tax on UV-ray sessions.

McCain and Jersey Shore team up. Why would a President who is concerned about jobs and people (supposedly) put a 10% on small business owners that would do nothing but hinder job growth. Many of his policies hinder this.

Miami Was The Easy Choice For LeBron James – Econ 101

Published by Papa Giorgio

For all the links out and more of the post, click story title:

Jilted Basketball Fans Should Blame the Income Tax, not LeBron James

by Dan Mitchell

Supporters of the Cleveland Cavaliers, especially the owner of the team, are upset that basketball superstar LeBron James has decided to sign with the Miami Heat. The anger is especially intense because the Cavaliers offered $4 million more over the next five years. But their anger is misplaced, because more money in Cleveland, Ohio, actually translates into about $1 million less disposable income when the burden of state and local income taxes is added to the equation. Rather than condemn James for making a rational choice, local basketball fans should tar and feather Ohio politicians.

This story from CNBC walks through the calculations.

…if you match up what James’ salary would be for the first five years in Cleveland and the five years in Miami, you find that the Cavaliers are only offering him $4 million more. That advantage gets erased — and actually gives the Heat the monetary edge over — when you consider the income tax difference. …Playing in Cleveland, LeBron would face a state income tax of 5.925 percent, plus a Cleveland city tax of two percent. Over the first five years of a new contract with Cleveland, James would give back $3,953,060 combined to the state and city for the 41 games each season he’d play at home. But James would have to pay none of that for home games in Miami since Florida doesn’t have an income tax. Athletes have to pay income taxes to states that they play in on the road, so the games he’ll play away from home — whether he played for Cleveland or Miami — are essentially a wash. But there are, on average, 11 away games per season where James would have to pay Ohio and Cleveland taxes. Why? Because he has to pay when he plays in the six areas – Florida, Texas, Washington D.C., Illinois, Toronto and Tennessee – that have no jock taxes. That’s another $1,061,128 he’ll have to pay in taxes that he wouldn’t have to pay in Miami.

New York basketball fans also should be angry. With some of the highest taxes in the nation, many of which target highly productive people as part of class-warfare policy, New York is bad news for professional athletes.

The New York Post, commenting on the probability that James would sign with the Miami Heat, identified the real villains.

…blame our dysfunctional lawmakers in Albany, who have saddled top-earning New Yorkers with the highest state and city income taxes in the nation, soon to be 12.85 percent on top of the IRS bite. There is no state income tax in Florida. On a five-year contract worth $96 million — what he’d get from the Knicks or the Heat — LeBron would pay $12.34 million in New York taxes. Quite a penalty for the privilege of working in Midtown.

Now let’s look at the big picture. The calculations that LeBron James made when deciding to sign with the Miami Heat are the same calculations that companies make when deciding whether to build factories and create jobs…

…(read more)…