December 2006 Archives

The Insurance Premium Tax

The next installment of the "Hidden Tax/Fee of the Week" is available on the MHPC website.

Total Hidden Taxes/Fees to Date: 265

The Census Bureau just released their new population estimates for changes between July 1, 2005 and July 1, 2006. In total population growth, Maine ranked 43rd growing by a mere 3,354 people. Of this 1,166 from births exceeding deaths and 1,944 total in-migration. However, in-migration is divided between 1,017 from international sources and only 927 from other states--of which 5 is my family :-) Maine ranks 28th in terms of in-migration from other states; however, we rank as the second lowest amongst those states with positive net-inflow. This suggests that the recent surge in population due to in-migration from other states has perhaps run its course. Especially considering almost 50,000 people fleed Massachusetts and almost another 30,000 that fleed from Vermont, Rhode Island and Connecticut its surprising to see so few choosing Maine as a place to relocate. Could it be because there are no new jobs in Maine?

Results of other New England states:
New Hampshire grew by 8,076 people (2,170 net in-migration from other states).
Vermont grew by 1,521 people (-671 net out-migration from other states).
Massachussets grew by 3,826 people (-49,528 net out-migration to other states).
Rhode Island lost 5,969 people (-12,566 net out-migration to other states).
Connecticut gained 4,108 people (-16,944 net out-migration to other states).

Finally, here is an astounding population fact to ponder. Texas was the fastest growing state in the union—with a SINGLE YEAR INCREASE of 580,000 people! 344,000 of which came from migration—125k from international and 219k from other states. The total growth is almost half the entire population of Maine!

The Bureau of Economic Analysis today releases their 3rd quarter estimates for personal income. Not surprisingly, between the 2nd and 3rd quarter, Maine lags the national average in the 3rd quarter with 1.3 percent growth in personal income versus 1.4 percent nationally. Maine's growth rate ranks 32nd among the states and falls into the second-to-last quintile.

The rest of New England did not fare any better with Connecticut growing by 1 percent, Massachusetts growing by 1.2 percent, New Hampshire by 1 percent, Rhode Island by 1 percent and Vermont by 1.3 percent.

Here in Maine, Wal-Mart is discussing opening walk-in clinics, staffed by physicians, physician assistants and nurses. Watch for more soon about this trend spreading across the country and which promises more accessible and affordable healthcare to all - particularly the uninsured.

Below is some further information taken from HealthDecisions.org, summarizing a recent New York Times article:

A new podcast from the Tax Foundation finds:

Taxes are a major concern to businesses when they make decisions such as where to locate, repatriation of profits, and how they organize, among others, according to Mihir Desai, associate professor of finance at Harvard Business School.

"Taxes are, in fact, a first order of concern for firms when they make a variety of decisions," he said. Foreign direct investment "is much more about a global production process where cost factors, especially taxes, are central."

Professor Desai's comments come from the Tax Foundation's most recent Tax Policy Podcast, which is available here. He discussed corporate taxes, his research on how they affect companies and productivity, and ways to reform the corporate tax structure to promote efficient use of business capital.

Taxes discourage companies from "harvesting" big gains, he explained. "That’s really quite costly to all of us, in the sense that they aren’t making efficient investment decisions that they would have made otherwise."

He said the corporate tax system needs reform in order to remove disincentives to realizing capital gains and should use a global perspective in considering the effective rate of taxation on companies.

"It’s impossible to think about corporate taxes without thinking about the international provisions. And those international provisions are highly complex, highly burdensome, and actually may put American firms at a disadvantage when they compete to buy assets around the world. "

Just last week, as one of the final acts of the outgoing Republican congress, federal legislation was passed making Health Savings Accounts even more attractive. Earlier this year, MHPC wrote about how Health Savings Accounts are providing affordable, consumer-focused private health insurance here in Maine (with premiums 28-35% lower than traditional insurance). As the WSJ reports, consumers can now contribute even more to their HSAs, beginning in 2007.

Previously, consumers could only deposit into their HSA the amount of their deductible or $2,700 for an individual plan or $5,450 for a family plan, whichever was less. Now consumers can contribute the full amount, which rises to $2,850/$5,650 in 2007, as long as their deductible meets the minimum for an HSA plan - $1,100 for an individual or $2,200 for a family for 2007. Employers can also make a larger HSA contribution to employees earning less than $100,000 a year, making HSAs even more attractive to lower wage employees. Lastly, people can roll IRA funds over to an HSA one time tax-free.

All Maine insurers offer HSA plans, so ask your employer about setting up an HSA today or buy one directly from Anthem. Unfortunately, Anthem's individual HSA product is very expensive, due to Maine's costly insurance regulations, but that's a subject for another blog.

In my recent sales tax study, it was noted that gross receipts taxes are the worst form of sales taxes since it maximizes the economic distortions due to tax pyramiding (which leads to paying a tax on a tax).

A new study by the Tax Foundation further explores the negative economic consequences of gross receipts taxes. Continue reading for the Executive Summary.

Yesterday, Blue Cross Blue Shield of Texas announced that, beginning in January 2007, it is posting Texas physicians' prices and medical outcomes online. The information will be available to the public (not just members) on its website.

Such information will allow Texans to better compare price and quality of physician services and vote with their feat. With almost 57,000 physicians and 22.5 million residents, a more competitive healthcare marketplace in Texas means good things for the US as a whole.

Maybe Anthem or Aetna will take a lesson from the Lone Star State and make such information available to Mainers.