Wednesday, February 24, 2010

Up in smoke: Cigar taxes to hurt local businesses

Governor Patrick wants to raise state taxes on cigars.
Jetmira Kaziu is the COO of Cigar Masters, a cigar bar and lounge in the Back Bay. As a smoking bar, by law, at least 60 percent of its revenues must come from tobacco sales. Kaziu is worried that if the excise tax increase passes, she will feel like she’s stealing from her customers because they could easily get their favorite cigars cheaper elsewhere. Maintaining that 60-percent requirement would be difficult.
Glance: Cigars Taxes

“We are in between two states, New Hampshire, which doesn’t have any tax, and Rhode Island, which has just a 50-cents tax,” Kaziu said.

“So that means that all my customers, they’ll buy their regular cigars from the states next to us or probably go online and buy them, and as such we might even go out of business … and obviously the employees thrown out on the street in this economy is not such a viable thing to do.”

Joe Corrado, a 24-year old bartender, is a regular at Cigar Masters. He’s there a couple times a week, spending $30-50 a week, and he says if the excise tax hike passes, he would still most likely be a fixture in the bar, but his habits would change.

“Where I’m smoking $10 to $12 cigars now, I might bump down to the lower grades,” he said. “Or alternatively, I have aunts and uncles and friends that make frequent trips to New Hampshire, 40 minutes away or less, they make a day of it and stock up for the month.”
The governor acts as if the law of diminishing returns doesn't apply to state tax revenues.

Tuesday, February 23, 2010

Rockefeller Institute: Revenue picture for states still bleak

According to the Nelson A. Rockefeller Institute of Government, state revenue losses were the most pronounced in the American Southwest. However, New England didn't fare that badly in part because Massachusetts was able to collect more in taxes.
The Southwest region suffered the worst falloff in tax collections, with revenue down by 18.1 percent overall. New England was the only region reporting growth in overall tax collections at 0.5 percent — mostly due to a growth in Massachusetts, where an increase in collections is attributable to legislated changes.

“Calendar 2009 will be remembered as bringing historically sharp declines in tax revenue to states,” the report says. “Revenue gains toward the end of calendar 2009 were often driven by legislated tax increases rather than growth in the economy and tax base.”

Despite revenue gains in some states during the fourth quarter, the report concludes, “another negative quarter for the nation as a whole would not be unexpected. The troubling fiscal picture for states remains clearly in place.”
That Massachusetts tax hike or "legislated change", however, comes at a cost to the state's economy.

Plight of the states: What happens when the feds stopping sending money?

Edward Glaeser:
I don’t think that states should cut spending now, but I’m not happy with the idea that the federal government is stepping in and eliminating the states’ need to handle their own obligations. In principle, states can create sufficient rainy-day funds and allow for sensible borrowing during economic downturns. Moreover, handling state budget shortfalls with federal bequests creates all manner of oddities.

Thursday, February 18, 2010

As a watchdog, CBO fails

Former BHI intern, SUNY-Albany PhD candidate and owner of the Sociological Imagination, Josh McCabe doubts whether the Congressional Budget Office (CBO) lives up to its reputation as a fiscal watchdog, particularly when it comes to health care.
In reality, the CBO is underestimating their underestimation. Skopol’s fiscal watchdogs must be asleep on the job. Evidence from my home state of Massachusetts confirms my view that healthcare costs will only vastly increase if the package passes. Despite the fact that Obama is basically proposing a federal version of the plan already in place in Massachusetts, nobody likes to talk about the Massachusetts healthcare experiment for partisan reasons. Republicans don’t want to talk about it because it was pushed by then Republican Governor Romney while Democrats don’t want to talk about it because it’s largely a failure. Despite assurances otherwise, the number of new coverage mandates has continued to expand and now Governor Patrick wants to institute ad hoc price controls on insurance rates because nothing has been done to curb rising costs.
Read the whole blog entry.

Wednesday, February 17, 2010

Thanks to a rap tune, Hayek is hot again!

Hayekians, along with a few fly girls, strike back: In the long run, it's your theory that's dead



I'm sure the success of this viral video was not designed.

More on the making of this video with creator and economist Russ Roberts here.

Monday, February 8, 2010

No PLA for new Rockland school project

The Rockland School Building Committee has voted to turn down a request to slap a PLA on a new school project in town.

The Patriot Ledger:

The school building committee had a wealth of information for weighing the pros and cons, Chairman John Rogers said.

“A lot of Rockland people pay taxes and are not in the union; they deserve a crack at a cut of (the project),” said Rogers, who described himself as “not anti-PLA.”

Rogers said he voted in favor of a project labor agreement for redevelopment of the South Weymouth Naval Air Station several years ago, when he was serving on the board overseeing the redevelopment. He believes the school-project circumstances are different.

He said he was concerned about whether the committee would be able to successfully defend itself if it approved a project labor agreement and that approval was challenged in court.

A previous court decision suggests that the court would analyze the complexity, duration and size of the project.

“The cost of legal fees to defend a court challenge was also a consideration for committee members,” Rogers said.

“Union people can still bid on the project,” he said.

More from the Brockton Enterprise.

Friday, February 5, 2010

Cato Journal publishes BHI research on Project Labor Agreements


The latest issue of Cato Journal dedicated to current labor issues is now out and it includes the latest from BHI: "Why Project Labor Agreements Are Not in the Public Interest" by executive director David G. Tuerck.

Unemployment rate takes a dip: 9.7%

Small, but welcome, improvement:
The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs.
More coverage.

Tuesday, February 2, 2010

Laffer throws Obama a curve

No rosy scenario:
Arthur Laffer, creator of the Laffer Curve that showed how low tax rates boost economic growth, is warning anyone who will listen that the economy is headed for a “train wreck” in 2011 that will make the current recession look tame by comparison.

The famed economist, whose supply-side, tax-cutting policies enacted by President Reagan in 1981 put the economy on a record-breaking, 25-year economic trajectory of growth and prosperity, is telling Americans not to be lulled by sporadic signs of growth this year, because the economy is headed for a sharper decline next year when tax rates are expected to jump sharply, sending the economy into a new tailspin.

“It will make the decline in U.S. output from 2010 to 2011 worse than the decline in output in 2008 and 2009 which will catastrophic,” Laffer said in an interview with HUMAN EVENTS.

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