A new report from the New England Economic Partnership (NEEP) identified New Hampshire as having the best growth potential of the New England states. Not surprisingly, New Hampshire also has the lowest tax burden in the region.
New Hampshire is projected to grow faster than the national average in several categories including the value of the state´s goods and services and job growth.
According to a report that ran yesterday in USA Today, "Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.4% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debts combined."
What programs are the biggest culprits?
Medicare: $255,280
Social Security: $144,251
Federal Debt: $43,380
Military Benefits: $25,863
State and Local Debt: $17,537
Federal Civil-Servant Benefits: $14,374
State and Local Retiree Benefits: $12,114
Other Federal Obligations: $2,548
Total: $516,348
Needless to say, YIKES!
The Maine Legislature just passed a bill that will allow Dirigo Health's insurance product, called DirigoChoice, to be self-insured by the state.
Costs for this program have skyrocketed - from an initial estimate of $98 per member per month in 2003 to over $250 per member per month in 2007 (that's just the taxpayer-funded portion, the employer and employee pay another $250 PMPM).
Right now DirigoChoice is administered by Anthem Blue Cross Blue Shield, a WellPiont subsidiary, and is fully insured. Premiums rose 18 percent this year for individuals and are projected to rise another 15 percent next year - two to three times the average increase of plans nationally.
Rather than look at the fundamental flaws of Dirigo Health, the Governor and Legislature have decided that the problem is that a private insurer is running it and earning (small) profits. The State thinks that they can do a better job.
This attempt at government-run health insurance will fail like all the others. Only this time, the risk is totally on Maine taxpayers, unlike with a fully-insured product where the carrier holds the risk.
The Dirigo saga continues. Sadly, this is the way life is for Maine.
This week we published an Issue Brief reporting the latest state and local tax collection data for FY 2005. In a recent blog entry, I noted that the Census Bureau shows a dramatic increase in state tax collections for FY 2006. In fact, the nominal increase of $519,173,000 is the largest one year increase since FY 1950--even after adjusting for inflation. This begs the question: Can we estimate the level of state AND local taxation for FY 2006?
This just in from the Maine Association of Realtors...
The Taxation Committee of the Maine Legislature is considering increasing the real estate transfer tax (a tax paid at the time a property sells) from $4.40 per $1,000 to $12.50 per $1,000 (for properties under $500,000) and $20 per $1,000 (for properties $500,000 or higher). They claim this is "tax fairness" and that you as a real estate seller in Maine should have the obligation to solve the property tax crisis and other financial burdens in Maine when your home sells.
The Maine Association of REALTORS believes this is YOUR money and legislators need to keep their hands out of your home. We're also concerned that buyers will not be able to afford their additional taxes and it will further slow down the number of buyers willing to buy in Maine. Additional information about the proposal can be found at http://www.maineshakedown.com.
Most Mainers would agree that raising Mainers’ taxes will not result in a lower overall tax burden for Mainers. However, if you’ve been in Augusta recently you would realize that it is a commonly held belief among legislators.
Now I could be wrong in doubting the legislature. However, such an assumption would have to ignore the proven laws and principles of economics…and common sense.
The Portland Press Herald headline Tax relief may cost Mainers appropriately captured what the Legislature’s latest tax scheme means for Maine. Mainers would pay more in taxes under the legislative proposal.
A new report authored by J. Scott Moody reveals that the government now provides more than 50 percent of Washington County’s personal income. The private sector share of personal income in all Maine counties, except one, decreased. The lone Maine county with a growing private sector share, York County, experienced private sector share growth due to a reduction in government employment.
The report, Maine’s Private Sector Share of Personal Income by County, further examines Bureau of Economic Analysis personal income data that was analyzed in a December 2006 report, breaking down the data by county. That previous report, Maine Personal Income: An Analysis of the Private and Public Sector Components, was an extensive statewide analysis of personal income.
In a recent op-ed in the Bangor Daily News, I argued that taxes are a major driver of an area's cost of living. An article today on CNN.com reinforces that idea.
The article states: "Then there's the taxes. At just 14 cents a gallon, New Jersey has one of the smallest state gas taxes in the country. The national average is about 21 cents, according to gaspricewatch.com. The federal gas tax is 18.4 cents per gallon. In Pennsylvania, which sits just next door to New Jersey and has several refineries of its own, the average price is $3.073 a gallon, according to the motorist organization AAA. That's about 13 cents higher than New Jersey's $2.947. The difference is clearly due to the tax. In Pennsylvania, it's 17 cents higher. So minus the tax, New Jersey gas station owners are getting 4.5 cents more per gallon."
In a nutshell, Pennsylvania's gas tax is driving up the price of gasoline. Since gasoline is a major component of the cost of living index, higher gasoline prices mean a higher cost of living.
Last year, Maine’s Legislature enacted a law that made vernal pools a protected habitat, and in doing so, eroded property rights. Now, a year later, the law is playing out.
For those who are curious, a vernal pool is simply a depression in the landscape that temporarily fills with snow melt water. In short, they are mud puddles.
The idea behind the law was that these temporary pools can, at times, be home to animals such as salamanders, and thus must be protected. Property owners are now required to survey their land to account for these land depressions. And if they are looking to develop the property, they must have added approval and state imposed easements to do so.
While some would argue that the Maine Legislature was simply protecting the best interest of the wildlife, I would argue that the legislation was a blatant attack on property rights. As with the Endangered Species Act at the federal level, the vernal pool legislation limits the ability of individuals’ to manage their property as they deem appropriate.
Competing consolidation plans? No problem. Consolidate them.
Stephen L. Bowen
Kennebec Journal & Morning Sentinel Thursday, May 10, 2007
Time is running out for the Legislature to develop a broadly acceptable plan to squeeze some administrative savings out of Maine's school systems. The education and appropriations committees have produced two plans to choose from, but neither seems to have widespread legislative support.
The education committee's plan would do little more than maintain the status quo. The appropriations subcommittee plan takes a more aggressive approach and ultimately gives the unelected State Board of Education the final say over which school districts will be merged or eliminated. That plan focuses too much power and influence in Augusta.
The solution, therefore, is to find an approach that generates budget savings but does so without sacrificing local control -- one that will improve educational services and increase accountability without saddling the state with enormous regional school districts.
Read the entire column at:
http://kennebecjournal.mainetoday.com/view/columns/3889933.html
Following Maine’s lead in 2002, school districts across the U.S. enthusiastically jumped headlong into implementing laptop programs. However, now that these programs have been tried, schools are retreated from that initial excitement.
The New York Times recently wrote an article that outlined the problems associated with the computer programs.
The major knock against the laptop programs is that no measurable academic achievement increases have resulted from the huge investments in technology. Add to the weak academic performance, illegal hacking, test cheating, and expensive maintenance and repairs, now school boards are pulling the plug on laptops.
Maine was the national leader in implementing a laptop program. However, now that the preliminary research is in, revealing that the computers may not be worth the investment of limited resources; will Maine follow the lead of other states and refocus education dollars to proven teaching methods? Time will only tell.
Many politicians in Augusta believe that Maine's tax systems should be even more progressive than it is currently. Progressive in the sense that those who earn more also pay a higher percentage of their income in taxes. At the same time, many of the same folks believe that we must invest more in education in order to improve the economy. Unfortunately, the two ideas may be mutually exclusive.
A new article by Gary Becker, the 1992 Nobel Prize winner, and Kevin Murphy, the 1997 John Bates Clark Medal winner, finds that tax progressivity acts as a disincentive to people wanting to earn a higher level of education. They state:
"This brings us to our punch line. Should an increase in earnings inequality due primarily to higher rates of return on education and other skills be considered a favorable rather than an unfavorable development? We think so. Higher rates of return on capital are a sign of greater productivity in the economy, and that inference is fully applicable to human capital as well as to physical capital. The initial impact of higher returns to human capital is wider inequality in earnings (the same as the initial effect of higher returns on physical capital), but that impact becomes more muted and may be reversed over time as young men and women invest more in their human capital . . . For many, the solution to an increase in inequality is to make the tax structure more progressive--raise taxes on high-income households and reduce taxes on low-income households. While this may sound sensible, it is not. Would these same individuals advocate a tax on going to college and a subsidy for dropping out of high school in response to the increased importance of education? We think not. Yet shifting the tax structure has exactly this effect."
Recently, the U.S. Census Bureau released their annual state tax collection report for state fiscal year 2006. Unfortunately for Mainers, the news is not good. Taken as a percent of personal income, the level of state taxation has climbed to an all-time high of 8.61 percent (excluding the spike in 1976 when the state attempted, but ultimately failed, to take-over the local property tax). There is little relief in sight. In fact, the governor's budget calls for yet more tax hikes.
The New York recently ran an article, As Health Plan Falters, Maine Explores Changes, that laid out the failures of the Dirigo Health program. The program attempted to solve high health insurance rates by providing state subsidies. However, the program was doomed to fail because it never addressed the underlying cost drivers to the health insurance system: state mandates.
Policymakers want a cure to high health insurance costs, but fail to recognize that they, and the policy mandates that they have placed on the marketplace, are the reason for the high health insurance premiums. Rather than attempting to solve the problems they created through government intervention with more government intervention, Maine policymakers should look to proven market reforms.
The vast majority of other states have lower health insurance premiums. It is time that Maine take a queue from those states and provide Mainers with the same affordable health insurance options available elsewhere.
The Illinois Legislature created the Adequate Health Care Task Force to analyze and recommend a "universal health proposal." In April 2006, I was invited by the Task Force to testify about Maine's Dirigo Health initiative (a costly debacle, in case you haven't heard). The Task Force would pay travel - airfare, hotel, etc. I testified before the committee, although apparently had little impact given the majority report of the Task Force or Governor Blagojevich's subsequent health reform proposal - Illinois Covered. Although that is beside the point.
Then the fun begins.
Due to procrastination, I submitted my travel reimbursement a few months after testifying. I heard nothing. I called to follow-up and was told to resubmit the almost $700 in expenses. I did. Two months went by, and I still heard nothing. I called again and was transferred to another person in another office. I was told that I needed to submit a copy of my debit card statement to show the airfare was actually paid (apparently that fact I arrived was not enough). I submitted that. Another two months passed, and I still heard nothing. I was now approaching the one year anniversary of my testimony. I called again and was told the fiscal year had ended in June 2006, and they couldn't pay the bill. I was told that I could go through a court process to get the reimbursement. I complained to a supervisor and was told to resubmit. I did. I was still not paid. I called and was told that I had to fax a sworn statement that I had actually paid for the per diem meals that I was claiming - $30. I did. I waited. I then was told to submit a faxed W-9 to verify my Social Security Number. I did. Just two days ago, I was sent a form to sign to swear that I actually drove the mileage claimed from my house to the Portland, Maine airport to fly to Chicago. A faxed signature is not valid, so I need to mail this latest form.
Wouldn't it be nice if the government paid for all our health care bills and we could go through similar process for life-sustaining treatment as well?
Today the Tax Foundation also weighs in on the Portland Press Herald Op-Ed. Click here for their blog.
