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>>AKNS +9.71%, $1.13, on fire...congrats all traders
>>COPPER Gappers: TGB +4.56%, PCU +3.58%, ABX +3.30%, JJC +2.97%, RTP +3.05%, BHP +1.83%
>>COAL GAPPERS: RTK +5.61%, ANR +3.84%, BUCY +3.56%, PCX +3.30%, CNX +2.37%, MEE +2.23%, JOYG +1.95%, BTU +1.91%, ACI +1.76%, WLT +1.49%, JRCC +0.83%
STEEL/IRON Gappers: VALE +2.45%, X +2.86%, AKS +2.49%, MT +1.98%, STLD +1.89%, NUE +1.75%, SLX +1.64%
LOL...cheaper Grecian Formula too...no, wait
CASINO Gappers: LVS +2.20%, MPEL +2.14%, MGM +1.99%, WYNN +1.17%...CALLS in play
GM! PC Gappers: ORCL +1.84%, MSFT +1.06%, DELL +1.08%, INTC +0.93%, HPQ +0.80%, AAPL +0.76%, CSCO +0.76%, IBM +0.48%, ADBE +0.32%
LOL...and that was just over the phone...imagine if I had been closer.
BANKING Gappers: FAS +2.69%, BAC +1.31%, JPM +1.23%, MS +1.07%, XLF +0.79%, GS +0.79%
FERTILIZER Gappers: TRA +21.65%, CAGC +3.76%, IPI +2.32%, AGU +2.09%, POT +2.02% ($113.85%), MOS +1.99%, TNH +0.28%, MON +0.26%
AIRLINES a bit green: UAUA +0.31%, LCC +1.47%, DAL +0.16%
Index bull plays are up: TNA +3.27%, SSO1.68%, QLD +1.46%, DDM +1.35%, CME +0.83%, SPY +0.79%, DIA +0.78%, ICE +0.49% ($101)
Good morning! I can only type so fast as I injured my hand over teh weekend (and spent the night at the ER on Friday, arggggh)
Now with a splint on a finger, so let's see. Cut and paste are OK...typing, for now, a bit trickier
U.S. Stock-Index Futures Advance; Newmont, Alcoa, JPMorgan Shares Climb
By Adam Haigh
Feb. 16 (Bloomberg) -- U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 Index will extend last week’s first rally in five weeks, as commodity prices pushed raw-material stocks higher and Barclays Plc’s earnings topped estimates.
Newmont Mining Corp. and Alcoa Inc. both advanced more than 1 percent as metals rose. JPMorgan Chase & Co. and Citigroup Inc climbed in German trading after Barclays, the U.K.’s second- largest bank, beat analysts’ earnings forecasts.
Futures on the S&P 500 expiring in March gained 0.2 percent to 1,081 as of 7:23 a.m. in New York. Dow Jones Industrial Average futures climbed 0.1 percent to 10,128 and Nasdaq-100 Index futures rose 0.2 percent to 1,787.
“We are optimistic about the outlook for corporate profits,” said Cormac Weldon, the head of U.S. equities for Threadneedle Asset Management Ltd. in London, which manages the equivalent of about $95 billion. “We see the scope for asset allocation flows to favor equities as the recovery matures.”
The S&P 500 rose 0.9 percent last week, cutting its 2010 retreat to 3.6 percent, after European officials pledged to help Greece close its budget deficit and the U.S. economy gained momentum, overshadowing China’s actions to limit inflation. The measure has recouped about half of its declines since Feb. 4 when concern about growing budget gaps in Greece, Portugal and Spain spurred the biggest sell-off since April. U.S. markets were closed yesterday.
Earnings Slump
A record nine-quarter earnings slump is projected by analysts to have ended in the fourth quarter with an 80 percent increase in S&P 500 profits. Forty-five companies in the index are scheduled to release results this week, including Hewlett- Packard Co. and Wal-Mart Stores Inc. More than 350 companies in the S&P 500 have reported fourth-quarter earnings since Jan. 11, and about 76 percent have beaten analysts’ estimates, according to data compiled by Bloomberg.
A government report today may show manufacturing in New York state improved this month. The Empire Manufacturing report is due at 8:30 in New York. Private surveys have also signaled manufacturing is recovering. The Institute for Supply Management’s factory index in January showed the fastest pace of expansion since 2004.
Newmont Mining, the world’s second-largest gold producer by sales, climbed 2 percent to $47.44 in German trading. Alcoa gained 1.2 percent to $13.44.
JPMorgan, Oracle
JPMorgan rose 1 percent to $39.34, while Citigroup advanced 0.9 percent to $3.21 in Germany. Barclays jumped in London trading after saying 2009 profit more than doubled, lifted by investment banking and the sale of a fund management unit. The bank said net income rose to 9.39 billion pounds ($14.8 billion) from 4.38 billion pounds a year earlier. That beat the 8.78 billion-pound estimate of 14 analysts surveyed by Bloomberg.
Merck & Co., the maker of the Gardasil vaccine, posted fourth-quarter adjusted profit of 79 cents a share. That was more than the 78 cents average of analysts surveyed by Bloomberg. The shares rose 0.6 percent to $37.13.
Oracle Corp. may rise to $32 during the next 12 months as the purchase of Sun Microsystems Inc. boosts its revenue and earnings, Barron’s reported, citing Brendan Barnicle, an analyst at Pacific Crest Securities in Portland, Oregon. The shares gained 1.9 percent to $23.85 in Germany.
U.S. executives are boosting earnings estimates at the fastest rate in at least eight years just as optimism fades among analysts, a signal that preceded gains for the S&P 500 in the past.
Raising Forecasts
Companies from Kellogg Co. to McKesson Corp. pushed the number of U.S. companies raising forecasts to 10 percent this quarter, while 4.1 percent lowered them. The gap is the widest on record, according to data from Bespoke Investment Group LLC.
At the same time, analysts have cut first-quarter profit projections by 0.2 percent on average in the past month, data compiled by Bloomberg show. The last time companies were raising forecasts at a comparable rate while analysts reined them in was the start of 2004, when the S&P 500 gained 9 percent.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
Last Updated: February 16, 2010 07:24 EST
GT: CT Dems want bonus surcharge, but is it legal?
By Brian Lockhart, Staff Writer
Published: 09:29 p.m., Monday, February 15, 2010
A few days before the start of the 2010 legislative session, Derek Slap, spokesman for state Senate Democrats, circulated to the caucus a $20 million proposal to assist small businesses that would be funded by a two-year surcharge on certain executive bonuses.
Slap wrote in the accompanying e-mail that Senate President Donald Williams, D-Brooklyn, and Majority Leader Martin Looney, D-New Haven, "feel it is important to begin session week with some specific proposals to jump-start job growth."
But two weeks after Williams and Looney announced their jobs agenda, it is uncertain whether they have the legal authority to impose the bonus surcharge, how it would work or even if Democrats have enough votes to pass it.
Hoping to tap into outrage over the latest round of bonuses paid to Connecticut residents employed by banks and insurers that received federal bailouts, Williams and Looney during a Feb. 1 press conference said they wanted to place a 2.47 percent surcharge on bonuses of $1 million or more.
They would apply the surcharge retroactively to bonuses awarded this winter and next year, using the as-yet-unspecified revenues for a small business loan fund.
But some key votes, like Sen. Andrew McDonald, D-Stamford, have questioned the legality of the move.
"I'm very much in favor of creating a revolving loan fund," McDonald said. "I think the notion of a surcharge presents some unique legal issues that are not yet resolved."
Sen. Eileen Daily, D-Westbrook, co-chairman of the Finance, Revenue and Bonding Committee, said Monday "we're quite sure that we can" impose the surcharge.
But a Freedom of Information request submitted by Hearst Newspapers to Senate Democrats did not yield any formal legal documents from staff attorneys authorizing Senate leaders to move forward.
"There's no kind of formal opinion," Slap said. But he said the matter has been thoroughly researched and discussed by counsel.
Based on the FOIed documents, Senate Democrats' staff began discussing the surcharge in earnest on Jan. 27, sharing news reports and blog items about similar debates in Congress and in England and France.
One e-mail refers to a "final outline" for a bonus surcharge proposal that was floated during Connecticut's 2009 legislative session.
Staff also reviewed a 17-page report titled "Retroactive Taxation of Executive Bonuses" issued in March 2009 by the Congressional Research Service.
It appeared the 2010 effort was in jeopardy when, on Jan. 28, Senate Democrats' legal counsel reviewed an item from The Plum Line political blog. The blog reported that Laurence Tribe, a Constitutional law professor at Harvard University and one-time adviser to Barack Obama's presidential campaign, viewed a similar effort in Congress as an illegal "attempt to punish an identifiable set of individuals who are the subject of understandable outrage."
"That's a show stopper," Joel Rudikoff, an attorney for Williams and Looney, wrote in an e-mail. "What a buzz kill."
But just a few minutes later another state Senate Democrat attorney, Natalie Wagner, referred Rudikoff to another The Plum Line post quoting a contrary opinion from Yale Constitutional Professor Jack Balkin.
"While Harvard may be concerned, a Yale law professor seems to think it's okay," she wrote.
Asked to comment on why Senate Democrats chose to side with Balkin, Daily said there "could be 200 (opinions) back and forth.
"There hasn't been a final decision made on implementation," Daily said. "We'll be having public hearings. We'll get more information that way."
In a January 29 e-mail, Wagner wrote that if the question of constitutionality is raised at the Feb. 1 press conference, "a response ... should generally be that this issue has been researched by constitutional scholars, congressional researchers and our staff over the last year and we believe that the proposal we are putting forward meets the Constitutional parameters suggested by those efforts."
Sen. Bob Duff, D-Norwalk, co-chairman of the Legislature's Banks Committee, has other concerns. Duff on Jan. 31 e-mailed Slap wondering how lawmakers would identify bonus recipients for the surcharge.
"As far as I know, bonuses are categorized under `wages and tips' on a W2 form. It is treated as ordinary income," Duff wrote.
Duff said he has not received an answer.
Christopher Uzpen, a tax and estate-planning attorney in Greenwich for Withers Worldwide, said the Legislature may be able to impose an additional withholding requirement on firms with executives living in Connecticut.
"Administratively, while difficult, that's probably how I guess they would do it," Uzpen said. "They impose the withholding obligation on the employer."
Asked if he thought the idea passed constitutional muster, Uzpen said: "My gut reaction is any time you're choosing to go after a particular group it's a little bit questionable ... This is, I'd guess, just political grandstanding on behalf of the Democrats."
Rudikoff identified "an interesting complication" in a Feb. 2 e-mail, noting Bank of America "announced they're going to spread bonuses earned last year over three years, and pay in some cases 95 percent of them in stock and not cash."
Despite state Republican leaders in the General Assembly expressing outrage last year over bonus payments, some GOP lawmakers said they oppose the surcharge.
"Rather than getting serious about cutting out-of-control government spending, the Democrats are trying to be demagogues by attacking Fairfield County residents," said state Sen. Dan Debicella, R-Shelton, who is challenging freshman U.S. Rep. Jim Himes, D-Greenwich. "Raising taxes on financial services professionals will just cause them to move out of state, hurting the middle class who will have to make up the lost taxes." But Daily argues even with the surcharge, Connecticut's tax rates will remain competitive with those of neighboring states.
"There was concern that it would make some people set up shop out of state, so this is being crafted to be not higher than any other state," Daily said.
State Sen. L. Scott Frantz, R-Greenwich, said bonuses are the wrong target.
"They should not be punishing those who are paying the bills for Connecticut residents, no matter how angry they are about the financial market meltdown," Frantz said. "I also think it shows a certain amount of lack of understanding of how this problem was created. There's a lot of blame to be passed around."
Senate Democrats will need to win over their counterparts in the House of Representatives.
Rep. Christopher Perone, D-Norwalk, a Finance Committee vice-chairman who is also helping draft a job creation proposal for his caucus, said, "Even if the surcharge is legal -- I have some qualms about it -- I just think it would be a hard sell down in Fairfield County."
Republican Gov. M. Jodi Rell's office would not comment on the surcharge proposal, but Senate Democrats would likely not have the numbers to override a veto.
All 24 Democrats would have to vote for an override, and Sen. Gayle Slossberg, D-Milford, said while backing aid for small businesses she is against the surcharge.
"To single out particular people for additional taxes based on where they work doesn't necessarily make a lot of sense," Slossberg said. "Everyone is struggling."
Staff writer Brian Lockhart can be reached at brian.lockhart@scni.com
http://www.greenwichtime.com/local/article/Dems-want-bonus-surcharge-but-is-it-legal-366108.php
GT: Greenwich CT resentful of status as state income tax cash cow
By Neil Vigdor, Staff Writer
Published: 02:20 p.m., Saturday, January 30, 2010
Greenwich Times
If Greenwich had a town song, "You Don't Bring Me Flowers" would be in the running.
For every $142 local residents pay out in state income tax, Greenwich gets about $1 back in municipal aid annually, according to a new study by the South Western Regional Planning Agency that has town officials once again saying that they are stuck in a one-way relationship.
"When the hard-working people of southwestern Connecticut and other pockets of Connecticut end up subsidizing large bureaucracies that do not demonstrate much accountability and tend to grow at unsustainable rates, then you're going to have, at some point, a breakdown in the system," said state Sen. L. Scott Frantz, R-36th District, which includes Greenwich and parts of Stamford and New Canaan.
"As tax rates go up to the point where people realize that they are paying much more than their fair share, they tend to leave the state."
Greenwich provided the state with $758 million, or just over 14 percent, of its income tax revenue in 2007, the most recent year that figures were available to the eight-municipality planning consortium.
On a per-capita basis, that works out to $12,420 for each of the town's 61,101 residents as estimated by the 2000 Census.
The next closest municipality was Stamford, which accounted for $241 million, or 4.5 percent, in state income tax revenue.
Greenwich received $5.3 million in state statutory grant aid for the fiscal year starting July 1, 2007, and ending June 30, 2008.
Stamford collected $15.7 million in state aid in return for the same period.
Rep. Cameron Staples, D-New Haven, co-chairman of the General Assembly's Finance, Revenue and Bonding Committee, said the system was never intended to provide a return on contribution.
"State aid is not supposed to be, in my view, equitably distributed to towns," Staples said. "State aid for the most part goes for services that the state needs to supplement at the local level. A town like Greenwich has the ability to fund most of its own services. The city of Bridgeport is not capable of fully funding its own education system."
SWRPA shared its analysis of the state income tax this month with chief elected officials in its member cities and towns, including Republican First Selectman Peter Tesei of Greenwich.
"I think it's a validation of what many people have expressed -- that we pay a disproportionate share of the taxes and receive a smaller portion of the revenue," Tesei said. "Therefore when we get to looking at the state budget situation, given the political composition, we're not adequately represented."
Republicans have been in the minority in the General Assembly since 1997.
Staples was quick to point out that the GOP has held the governor's office since 1994, however.
Perhaps Tesei should have said geographical composition instead.
With the exception of Deputy Senate Majority Leader Andrew McDonald of Stamford, the leadership ranks in legislature and executive branch have recently been dominated by lawmakers from outside Fairfield County.
"I certainly agree that Fairfield County has a lot to gain by being a lot more politically involved in Hartford because they're paying a lot more than their fair share of the bill," said Tom Foley, a Greenwich Republican running for governor.
Foley said the average household pays $8,600 annually in aggregate taxes to Connecticut, making it the worst state in a ranking by the Washington, D.C.-based Tax Foundation.
He added that the average income in the state is $68,000.
"One in eight dollars in the household is going to state government," Foley said. "That's way too high."
Members of Greenwich's political establishment uniformly called on the state to rein in its spending and do more to grow the tax base.
"We're facing, over the next four years, a deficit forecast at $12.5 billion," Frantz said. "We immediately need to shore up our fiscal situation by stopping any unnecessary spending and, for the longer term, we need to adopt a sincere pro-growth approach towards running this state."
Frantz criticized his Democratic colleagues for supporting tax increases.
"To be honest with you, I think the majority party in the General Assembly missed the opportunity of a lifetime by increasing the top marginal tax rate on income and capital gains by 30 percent," Frantz said. "We could have almost overnight expanded our tax base significantly by attracting families, corporations and partnerships to the state of Connecticut from New York and New York City alone."
Staples said changes to the income tax were proposed by Republican Gov. M. Jodi Rell and were still quite competitive compared to the rates in New York and New Jersey.
Calling Frantz's comments "rhetoric," Staples said that Republicans have come up with few proposals for streamlining state government on their own while controlling the governor's office.
Democrats, he said, are doing their part.
"There certainly is an ongoing effort to find economies of scale, encourage regionalization of services and encourage consolidation of state agencies in an effort to streamline the state bureaucracy," Staples said.
-- Staff writer Neil Vigdor can be reached at neil.vigdor@scni.com or at 625-4436.
http://www.greenwichtime.com/local/article/Greenwich-resentful-of-status-as-state-income-tax-343275.php
http://www.stamfordadvocate.com/local/article/Greenwich-resentful-of-status-as-state-income-tax-343275.php
RJ: Connecticut #1 State Losing Residents
By Mary Ellen Godin
Record-Journal staff
Jan. 24, 2010:
After nine years in retirement, James and Anne Marie Thadieo saw they were spending more and enjoying it less.
So they shopped around and found a smaller home in North Carolina, where they say the taxes are lower and they don’t need winter coats. They sold their house on Catherine Drive and moved in October.
“We love it here,” James Thadieo said. “I live on a fixed income and I gotta go where my dollar can get the best value. I sold my house and bought another one and we’re mortgage free.”
It’s not just the snowbirds who are heading to warmer climes; its families and job seekers, and many are staying for good.
Connecticut has seen a steady outbound migration for several years, especially among 18- to 34-year-olds. But the exodus continued to add all ages, including retirees, at the start of the recession two years ago.
“They are trying to go somewhere where there are job opportunities, the states with the best employment,” said Janice Warro, office manager for Little John’s Moving & Storage in Meriden.
A recently released study by Atlas Van Lines on 2009 migration trends reports that Connecticut had the highest percentage of moves out of state. Out of 2,031 shipments related to the state last year, 1,230 were outbound, or 60.5 percent, with the 801 inbound shipments comprising 39 percent.
New Jersey and South Dakota followed Connecticut in the percentage of people leaving home. The state continued a nine-year pattern of being classified as an outbound state, which means that more than 55 percent of shipments moved out.
The report shows that people are leaving Connecticut and the Rust Belt states and moving to the Southwest pocket — with Texas, New Mexico and, for the first time in five years, Oklahoma receiving more than 55 percent of shipments related to their states. Other growth areas are in Washington, D.C. — with the highest percentage of inbound traffic — and Maryland, which made the list for the first time since the company created it in 1993. North Carolina has been an inbound state for the past six consecutive years.
But according to Kerri Hart, spokeswoman for Atlas, the survey doesn’t always reflect economic patterns. For instance, both North and South Dakota were outbound states and their employment numbers are high.
Bargains in distressed housing markets such as Florida and Las Vegas could be driving retirees into those areas. A $350,000 home in Florida two years ago can now be bought for about $180,000, agents said.
But local real estate agents said the Carolinas have surpassed Florida as a retirement destination and for job opportunities, although those have slowed with the recession.
“They’re called half-backs,” said Sandy Maier Schede, an agent with Maier Real Estate, about people who move to the Carolinas instead of Florida. “It’s warm half of the time there.”
The Las Vegas area has also become a hot spot for bargain-hunting retirees, but not so much for people in the job market.
Household moves cooled industry-wide in 2009, according to the Atlas study. The company reported a 16 percent drop from 2008, but the summer months were higher than average.
Not surprisingly, Rust Belt states follow closely behind Connecticut. Michigan is number four for most outbound moves, with Ohio and Indiana and Missouri also considered outbound states, and Illinois shifted into the outbound column this year.
Western states such as California, Nevada and Oregon, which have suffered job losses in construction, manufacturing and tourism, have also become less popular destinations.
But the first-time homebuyer’s tax credit helped move housing inventory at all levels.
Joseph Criscuolo, a broker for The Home Store Real Estate in Wallingford, said he’s had one of his best years ever. Out of 54 transactions, three or four were out of state, including the Thadieos. The rest were moves in different areas within the state, he said.
Peter Gioia, a vice president for the Connecticut Business & Industry Association, said the employment and housing problems in Florida and California have helped slow some of Connecticut’s outward migration of young people, although as the stock market rebounds more retirees will feel more comfortable leaving.
The job market in the Texas, Oklahoma and New Mexico market is brighter because of its strong export-based economy with Latin America, the petroleum industry and military-industrial operations.
William Villano, executive director of Workforce Alliance, the private firm that contracts with the state Department of Labor for job development in New Haven and Middlesex counties, said the contrast with the state is significant. Connecticut has lost around 90,000 jobs since the start of the recession. And although the numbers have leveled off, hiring has not picked up in any significant way. Manufacturing has shifted to southern states and offshore. Union construction jobs are also feeling the pinch.
“On some levels, it’s not surprising,” Villano said about the state’s ranking. “If you’re laid off...or if you’re going to take a pay cut, it makes sense to do it where it costs less to live.”
But the state’s unemployment rate of 8.9 percent continues to lag the national rate of 10 percent, and the number of initial unemployment claims decreased by more than 200 from November to December — a 10 percent decline over last year, according to statistics from the state DOL. However, only two major sectors have shown growth over the past year — health and education.
Opportunities for young people may not be as strong in California or Florida in the past two years, but other cities in the country are doing more to attract young talent.
Affordable housing and cultural activities are driving young people to cities such as Austin, Texas. AT&T has invested millions to build and equip a technology center at the University of Texas there and maintains a strong partnership with the school.
The company has added hundreds of jobs in Austin, Oklahoma and Nevada. In the past decade AT&T cut about 1,000 well-paying jobs in its landline customer service and repair sectors in Connecticut, but added more openings in the state for its broadband Internet and wireless products.
Pratt & Whitney is in a legal battle to eliminate 1,000 high-paying jobs in its jet engine repair divisions in Cheshire and East Hartford. If it wins, the work will shift to Georgia and Singapore.
“The availability of quality jobs has been diminishing,” Villano said. “There are some opportunities for people who have significant skills and talent. The problems with the types of jobs we’re growing (is that they) are lower-end jobs.”
Paul Ott is a veteran real estate agent with William Raveis Real Estate in Cheshire. He’s now working with three clients in foreclosure who have moved to Texas, Florida and North Carolina, respectively, in the hopes of finding jobs or to be with family. In the case of one client who walked away from his home on Paddock Avenue in Meriden, it was for warmth.
The client, who did not want to be interviewed for this story, was laid off by Atlas Container last summer, Ott said. (The company is not related to Atlas Van Lines). He collected unemployment but fell behind in his payments and owed more than the home was worth.
“He said ‘It’s better to be homeless in a warmer climate,’” Ott recalled. “That’s scary stuff. The jobs are not here to keep them here.”
Kathleen Quinn, operations director for the CT Works career centers, said the agency and the state labor department are working overtime to keep up with the need for services for the unemployed and underemployed.
“The first thing that comes to my mind is they have exceeded their benefits,” Quinn said.
Connecticut has a 21-month time limit for receiving cash assistance, while the federal limit is 60 months. Often, people who have exhausted their 21-months will travel to another state where the limit isn’t as severe and can continue to collect.
“It could be people are exhausting their benefits,” Quinn said.
mgodin@record-journal.com
(203) 317-2255
__________________________________________________________
Murray
MyRecord-Journal.com New Member Join Date: Oct 2008
Posts: 37
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I am one of those who moved out of CT last year and am now a resident here in the midwest. It is a different way of living out here.....in a very good way.
There are lots of parks so you can get out to enjoy the great outdoors and the clean air. When you drive around, one of the things you notice is that there isn't trash strewn on lawns, streets and on the side of the highways. People are friendly, considerate, welcoming and take pride in their community. Crime is low and respect for the law is high.
The cost of living is much lower. I opened my gas and electric bill for December and was shocked....it was 1/2 of what just my gas bill was with CL&P. At the closing of my brand new condo, I asked what the property taxes were. Almost fell off my chair because back in Meriden they were 8 times higher. Dining venues are full since a couple can have a wonderful dinner out for under $40.00 and finding lunch under $5.00 per person is the rule not the exception.
Close to Chicago and other major cities but if it's too far to drive, we have an international airport 15 minutes from home.
Love of country and pride in the military is high. When you go anywhere be prepared for eye contact, smiles and hellos.
Would I move back to CT? No. When I do start to miss family and friends there is always email, the telephone and a plane to take me back for a visit.....just a visit.
________________________________________________________________
Bustopher Jones
MyRecord-Journal.com Member Join Date: Aug 2008
Location: Wallingord
Posts: 334
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I love Connecticut. I have lived here all my life, as has my wife. We raised our kids here. I would never consider moving voluntarily. But with that said, I don't know if I am going to be driven out. I am facing retirement on a fixed income that is comprised of little more that my Social Security benefits. With the way that property taxes have been escalating in Wallingford, and taxes and fees growing by leaps and bounds at the State level, I might have no choice someday but to pack my wife and my dog into the truck and head somewhere with a lower cost of living. And when that day comes, I will be heartbroken...
>>California Crashing...Be Afraid America
Crashing and Burning, California Style: Be Afraid, America, Be Very Afraid
Posted by James Hudnall Feb 6th 2010 at 11:53 am in Economics, Featured Story | 12862Comments(121)
http://bigjournalism.com/jhudnall/2010/02/06/crashing-and-burning-california-style-be-afraid-america-be-very-afraid/Crashing+and+Burning%2C+California+Style%3A+Be+Afraid%2C+America%2C+Be+Very+Afraid2010-02-06+19%3A53%3A15James+Hudnall
California has long had the reputation of being trend-setter to the nation. The Golden State was practicing Obamanomics back when Barack was still called Barry. And now its ways are catching up to it like a hard partier who looks in the mirror one day and sees the portrait of Dorian Gray staring back at him.
Get ready America: California’s unsustainable path is echoed by the federal government. One will crash before the other, giving us all a preview of things to come.
Part of what is slowly destroying California is its move from a land of plenty to a land of locusts. The state taxes and regulates resident companies to such an extreme extent it has driven many of them, and many tax-paying citizens, to other states. For decades California was a place to migrate to. Now it’s suffering an exodus. The fault lies in a political shift from being a conservative, low- tax state to a statist, high-tax nanny state. Californians used to be the freest people in the United States and the world, and now? Not so much.
A recent Heritage Foundation study of economy freedom found the U.S. to be No. 8 on the list, down there with Chile and under quasi-socialist Canada. California has been a leader of governmental policies for years, and whichever new law they pass usually makes its way east to Washington. Look where that got us.
You can trace the problems back to assemblyman Willie Brown’s tenure as State Assembly Speaker for 15 years. He was so effective getting entitlements and other statist policies through that Republicans had to get a term limits bill passed to retire him. By then the rot had set in.
Not surprisingly, Brown hails from San Francisco, the town that gave us Nancy Pelosi, Barbara Boxer and Dianne Feinstein. It’s the worst run city in the US, and the flagship of what today is arguably the worst-run state. What a sad descent from the vibrant place of plenty and promise it was in the 1950s.
If driving away tax revenue producers wasn’t enough, California has over five hundred government agencies, departments, and commissions regulating just about everything under the sun. Such as the California Acupuncture Board, the California Avocado Commission and the California Children and Families Commission. A search on some of these commissions will find plenty of articles about questionable spending and waste. When you compound that with the fact they all have massive payrolls you come to the other card holding up this shaky edifice.
CALPERS (CALifornia Public Employees’ Retirement System) is a time bomb, like Social Security and Medicare. Many people depend on it, and it may financially collapse the state. For decades, people thought government jobs were the safest bet for long term retirement and benefits. But the money paying for that comes from somewhere. Namely, the taxpayers that the state has been driving away. The Wall Street Journal noted that:
Approximately 85% of the state’s 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, “This year alone, $3 billion was diverted to pension costs from other programs.” There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility.
Many of these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year’s pay. The pensions for these (and all other retirees) increase each year with inflation and are guaranteed by taxpayers forever—regardless of what happens in the economy or whether the state’s pensions funds have been fully funded (which they haven’t been).
It’s no surprise that so many people have sought government jobs. President Obama wants to lure college students who take government loans to take government jobs. Many of his schemes involve, naturally, more public sector jobs. We already have more people working in civil servant jobs than in the private sector. Government jobs only exist by taking money from tax payers to fund them. That means there are more vampires that blood donors.
California is going broke. It spends more than it takes in and it shows no sign of stopping. The state could easily cut tons of worthless projects and commissions. They could make California more attractive to businesses by cutting taxes. They could try to change their union deals, which are out of control. But they seem more likely to just ask the federal government to bail them out.
Take a look at the CAFR (Comprehensive Annual Financial Report) for the state from 2008 to see what kind of money they’re playing with. The numbers listed are in the thousands, so it’s higher than it looks at first glance. The United States is being run the California way to a much more ridiculous degree.
And that way lies madness.
http://bigjournalism.com/jhudnall/2010/02/06/crashing-and-burning-california-style-be-afraid-america-be-very-afraid/
Comments (119)
+7 Vote up Vote down Ewald_the_Black 58p · 1 week ago
California's a wreck. I should know, I live there. Our city and state governments spend money on ridiculous crap, our bureaucracy is a bloated, inefficient wreck that lives to squeeze every single, solitary cent it can from its citizens. Our legislature is trying to add a $200 Billion dollar single-payer system to the existing budget we already can't pay for with a criminal rate of taxation.
Wherever the Corps stations me will be better than here.
+5 Vote up Vote down Randyl2 86p · 1 week ago
$100,000(retirement) x 15,000(retired) = $1,500,000,000 per year
- retire at age 50 with a pension that equals 90% of their final year’s pay -
Life expectancy is 78, so that's 28 years at 90% pay
SWEET
2 replies · active 1 week ago -6 Vote up Vote down naturalfake · 1 week ago
Will the G.O.P. man up?
Or are they
A PARTY OF CRAWFISH?
http://naturalfake.wordpress.com/2010/02/06/a-par...
3 replies · active 1 week ago
+6 Vote up Vote down Tennessee_Jed 94p · 1 week ago
There is no better example than the not so golden state as to where socialism leads. (B. Obama: "justice includes economic justice.") Fortunately, at the national level, people are seeing this trainwreck coming and may be able to jump out of the way at the last second.
2 replies · active 1 week ago
+6 Vote up Vote down ALLAMERICAN 87p · 1 week ago
California a once great, proud state ravaged so bad that the Feds don't want to go near it. Take a long hard look America at what happens in a Progressive Utopia and what it really looks like. Lets not make this cancer spread to the other 49 states come 2010 & 2012 elections. It Can be Stopped and Must Be.
+3 Vote up Vote down harley2002 69p · 1 week ago
Very sad. We lived there for 15 years. I loved the state. Had to move out in 1998 could not afford it. My friend is one who will retire at 50 he is a Prison Guard. I have to say I envy him. Why should I have educated myself through hard work in computers. All I needed to do was follow him and watch the caged animals and be rich when I retire.
justpassingthrough · 1 week ago
I could have sworn I read an article about California legislators proposing a single payer health care plan.
2 replies · active 1 week ago +4 Vote up Vote down Larry · 1 week ago
I'm from California, the operative word being 'from'.
0 replies · active less than 1 minute ago
+7 Vote up Vote down mousiemarie 76p · 1 week ago
I'm a homeowner in California, and the state of this state is terrifying. I'd move if I could, but I can't.
People here are very disgruntled, but they haven't a clue what to do about it. And when you have two areas of urban mass, you wind up with leftists having a huge influence. Unfortunately, people are leaving -- not that I blame them -- and the state just can't support the overwhelming number of idiots.
I mean, Matt Damon is considered a deep thinker out here, for crying out loud. Please.
0 replies · active less than 1 minute ago
+7 Vote up Vote down mousiemarie 76p · 1 week ago
No wait! California taxpayers! Please don't leave! If you go, then there will be no alternative but to turn control of the state over to the Feds, who will then tax all of us who don't live there to pay for your entitlements! With you gone, California will turn into a giant, sunny "Detroit," and we'll be paying for it all!
2 replies · active 1 week ago +4 Vote up Vote down yeti · 1 week ago
What is going on in California is substantial. Once a trendsetter along with Denver, NYC, Florida, and Atlanta, we are seeing these bastions of trend now falling one by one as progressive policies fail and trending becomes more non-centralized. The current major trendsetter, the Tea Party Movement, is flexible, non-central, non-institutional, and ubiquitous, non-demographic, yet shares fundamental values anywhere one goes in America. We are witnessing a 21st century shift back to the basics.
0 replies · active less than 1 minute ago +7 Vote up Vote down Jenna · 1 week ago
California's economy is what happens when the majority who pay nothing are supported by the minority who pay for almost everything. And our national economy is on that very same path. The United States has reached the point where 50% of its people don't pay a single dime in federal and state income taxes, while 10% pay the lion's share.
I don't care how poor you are, if you can afford a cell phone, a big screen TV or a car, you can pay $1,000 each year for the privilege of living in this country. I've been paying my fair share since I was 18 years old and rather than continually increasing my fair share, the government should require the perpetual freeloaders to contribute their fair share.
Just think how much revenue would be generated if the 50% who currently pay nothing contributed the equivalent of their monthly cell phone bill to the national piggy bank. The career politicians have ignored this situation for years, preferring to use the promise of entitlement programs to lure voters to their side. Who cares how much the government spends if it's not coming out of your pocket?
2 replies · active 1 week ago +1 Vote up Vote down imgonnabsick · 1 week ago
The truth of it all breaks my heart I grew up in CA went away for college and haven't been back, though I want to. One of the most beautiful places on earth... Let's rescue it <very timid hopeful smile>.
6 replies · active 1 week ago +5 Vote up Vote down ben · 1 week ago
Californians yearn for the days when Ronald Reagan was Governor. How sad for the State to have now sunk to potential bankruptcy status. Sadly, America will go nowhere unless California joins in, and California is on the brink. And, too many other States have encountered problems including cities. The city of Harrisburg, PA is rumored to be considering bankruptcy. Couple this with the problems of other countries and we have every right to be worried.
0 replies · active less than 1 minute ago +2 Vote up Vote down Steve · 1 week ago
You state that "We already have more people working in civil servant jobs than in the private sector," but the graph shown at the link doesn't support that statement. The graph compares government workers versus "goods making workers," who are just a small slice of the private-sector pie. I agree with your overall analysis, but the truth is never strengthened by misrepresentation.
1 reply · active 1 week ago +6 Vote up Vote down Rob · 1 week ago
One of the biggest drains on the revenue in California is the massive illegal alien population. In addition to taking jobs they are killing our already terrible education system and receiving so much taxpayer money in aid it is bankrupting us. Between them and all the government employees and their pensions it is hopeless. The bleeding heart cowards who are so afraid to say anyting about the illegals are about as stupid as they come and obviously don't really care about their children's and grandchildren's futures.
3 replies · active 1 week ago +7 Vote up Vote down sensible99 · 1 week ago
Even as they hang on the precipice California continues to spend money like a horny lottery winner in strip club while Obama buys drinks for the house.
1 reply · active 1 week ago
+4 Vote up Vote down Jamesb 125p · 1 week ago
Pehaps the indignation of bankruptcy is needed in Loonyland. Maybe that'll put 'em on a budget.
0 replies · active 1 week ago
+6 Vote up Vote down rovers 82p · 1 week ago
I've been to CA. Spent a lot of time there. It is a place where most of the people are legends in their own mind. Almost everything wrong in this country today, started in Ca. I do not feel sorry for any of them aside from maybe the farmers. If it wasn't for farmers we would be better off if the entire state slid slowly into the specific ocean and stayed there.
0 replies · active 1 week ago +3 Vote up Vote down peteee · 1 week ago
the bit about what happens in california moves east, just look at the payroll taxes. they changed the withholding amounts for every pay level, yet taxes haven't gone up, yet! most people should have noticed less money in their paycheck, for the same work as last year. well california started the free public loans. they upped the withholding by 10%, and when you file your taxes, by law they are supposed to pay tax refunds first, but you now get a iou. now with the higher federal withholding, are they going to start issuing iou's too? and the following year when they owe this years iou and last years iou, when will they pay?
0 replies · active less than 1 minute ago +3 Vote up Vote down peteee · 1 week ago
then when california started paying with iou's they then told the businesses to now pay your tax for the sales. the businesses tried to pay with the newly issued iou's, and the state said, no money thank you. then the state tried to pay banks with iou's, and the banks said, sorry, but we only accept cash. so now what does california do with all these iou's??
0 replies · active less than 1 minute ago
+4 Vote up Vote down quivive 80p · 1 week ago
What a pity. I know quite a few people who or lived in California all of them nice pragmatic people. It is befuddling how Californians allowed their government and representatives to get so out of hand. I believe the moral of the story is when good intentioned people meet power mongering pandering politicians you have the autobahn to bankrupting entitlement hell. I believe Californians are about to fix the root of the problem but between here and there, there is going to be a lot of despair.
+8 Vote up Vote down fantum 100p · 1 week ago
Liberal Democrats voted in a self-important, colossal idiot who has never done anything in his entire worthless life (other than voting present) to run our nation. Now he looks down his snoot as he gives us endless lectures and blasts America with hot-air...
How to create jobs...
...From a man who has never held a real job.
How to run our businesses...
...From a man who has never run a business..
How to run our education system...
...From a man who hides his college records.
How to manage our finances...
...From a man who spends money we don't have.
How he condemns cheating and dishonesty...
...From a man whose best friends are dishonest cheats.
How we should respect his faith...
...From a man who mocks Christian faith.
How he promotes openness and transparency...
...From a man who hides his birth certificate.
How to run our military...
...From a man who embraces those who attacked America.
How he respects our American Heritage...
...From a man who is dedicated to Socialism.
Obama Mocks Christian Faith
http://usataxpayer.org/?0033881580
Obama's Own Words
http://usataxpayer.org/?0097519370
Scott in Laguna · 1 week ago
I have lived here in SoCal for about 14years, from Atlanta. What a disaster the politics are here! Unions control all these stupid whores. Jerry Brown allowed the unions to organize statewide and they have little by little corupted and bankrupted the state. Republicans have very little chance of doing anything against this huge machine. The only politician from the this state with any common sense is Tom McClintock, a congressman. Arnold is an astonishing failure, totally freaked out by the union oposition. He gave up years ago and took up global climate hobbies. We have unbelivable fees, taxes and regulation. They pass new laws weekly. Nany state. I remember when I first voted here on a proposition that made trapping any animal a felony. They forgot about vermin, like rats. There are a thousand more nany stories. Throw in the Hollywood idiots who get political and you can see why we are never going to recover.my wife and I are out of here as soon as the housing market allows us to seel our overpriced home. The nice weather keeps us from killing each other, I think.
3 replies · active 1 week ago +3 Vote up Vote down sweethomealabama · 1 week ago
San Francisco is the 2nd worst-run city. Detroit, Michigan is 1st. Burned out buildings, burned out people, Democrat Party politics at its finest. Californians better snap out of it before the "detroit effect" kicks in.
Here's from Daniel Henninger @ The Wall Street Journal:
"In 1962, President John F. Kennedy planted the seeds that grew the modern Democratic Party. That year, JFK signed executive order 10988 allowing the unionization of the federal work force. This changed everything in the American political system. Kennedy's order swung open the door for the inexorable rise of a unionized public work force in many states and cities."
link to the entire article:
http://online.wsj.com/article/SB10001424052748704...
DISMANTLE GOVERNMENT EMPLOYEE UNIONS NOW!!!
mrcobaltblue 44p · 1 week ago
I am afraid the falling of the row of dominoes known as state economic fitness is already in motion and there is very little we can do about it. I live in Illinois. Here in IL the state government is like 15 billion dollars in the hole. New York, Pennsylvania, Florida, Where will it stop????? How do you climb out of a hole like this?
bluecollarbytes 67p · 1 week ago
From your 2007 linked article: Not that he denounces the authors' good intentions, LaMalfa said, but still ... "
And That is one of the biggest problems conservatives face, especially in light of the fact the Leftists have no problem whatsoever in denouncing Republican & conservative "good intentions".
I don't see "good intentions" when I see an Obama or Pelosi or Reid or Frank or any on the nannyists who have destroyed California. I see these people intentionally destroying the country as it is, so they can invent something else.
Jack Dean · 1 week ago
You can follow the nation's escalating public employee pension crisis daily on http://PensionTsunami.com.
FlexoRick 43p · 1 week ago
It is the blood sucking residents that are doing it to their neighbors and themselves.
It is a sad affair for those who own a home and cant sell it and get out.
I lived in Massachusetts when Ducacus turned Mass into Taxachusetts.
I moved my company to North Carolina and took as many people as would take a relo.
I think it was about 18 people who sold homes and found the SOL to be quite positive coming out of Mass
Two years later we saw a hefty increase in margins.
Steve · 1 week ago
I moved away from California 6 years ago. More of my paycheck went to government than to ME!
Good riddance to the Socialist State of California. It's about to crash and burn! Maybe then Californians will wake up!
strawman · 1 week ago
As a third-generation Californian and someone who loves this state, I have to sadly agree with most of the article--especially about the iron chains the unions and pension funds have placed on the body politic--but it doesn't go deep enough. Blame particular politicians all you want, but the underlying problem is structural. Funding and policy decisions get made by ballot initiative, instead of in the elected legislative bodies, which are mired in the same hyper-partisan, lobbyist-driven morass as the US Senate and House. Deep-pocketed union and corporate interests drive the narratives on the initiative campaigns, and under-informed voters cast their ballots based on emotions rather than reason. An "I want it, but I leave it to someone else to figure out how to pay for it" mentality prevails. Add to this dire situation the super-majority in the legislature required for all budgetary decisions, and you've got, "Hi, California, the third world welcomes you to its ranks!"
The only cure for this near fatal condition is a constitutional convention, which would at the very least get rid of the super-majority requirement and limit the scope of and funding for ballot initiatives, as well as require initiatives involving spending to have an immediate and verifiable funding source.
As the article points out, California is the bellwether for the nation. We need a Constitutional convention for the US as well, to get rid of the filibuster and provide public funds for qualified candidates, so no aspiring or incumbent politician has to be beholden to anyone but his or her constituents.
FarginBastiges 57p · 1 week ago
The Worst Part: California's parasites are moving out to spread their disease to other states. We should erect a wall and shoot on site.
Jan · 1 week ago
I moved to CA 10 years ago and at the time thought it was a dream come true, now I can't wait to leave :(
Mike · 1 week ago
Dear Californians,
Please don't head east, we don't want you voting in the same type of politicians into our State Governments.
Thanks.
RatsoFred · 1 week ago
Florida is closed ,go to New York.
Jamey 54p · 1 week ago
Sure am seeing a lot of California and Illinois license plates around my part of Texas..
NJSL: N.J. lost $70B in wealth as rich move to other states
N.J. lost $70B in wealth during five years as residents depart
By Leslie Kwoh/The Star-Ledger
February 04, 2010, 5:15AM
More than $70 billion in wealth left New Jersey between 2004 and 2008 as affluent residents moved elsewhere, according to a report released Wednesday that marks a swift reversal of fortune for a state once considered the nation’s wealthiest.
Conducted by the Center on Wealth and Philanthropy at Boston College, the report found wealthy households in New Jersey were leaving for other states — mainly Florida, Pennsylvania and New York — at a faster rate than they were being replaced.
“The wealth is not being replaced,” said John Havens, who directed the study. “It’s above and beyond the general trend that is affecting the rest of the northeast.”
This was not always the case. The study – the first on interstate wealth migration in the country — noted the state actually saw an influx of $98 billion in the five years preceding 2004. The exodus of wealth, then, local experts and economists concluded, was a reaction to a series of changes in the state’s tax structure — including increases in the income, sales, property and “millionaire” taxes.
“This study makes it crystal clear that New Jersey’s tax policies are resulting in a significant decline in the state’s wealth,” said Dennis Bone, chairman of the New Jersey Chamber of Commerce and president of Verizon New Jersey.
The report was commissioned by the state Chamber of Commerce and the Community Foundation of New Jersey to study the effects of wealth migration on charitable giving after executives noticed more affluent philanthropists were moving away. Wealth includes assets such as real estate, stocks, bonds, 401ks, mutual funds and vehicles.
But economists say there are many other implications for the state’s financial health.
Wealthy residents are a key driver for everything from job creation and consumer spending to the real estate market and the state budget, said Jim Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. In New Jersey, the top 1 percent of taxpayers pay more than 40 percent of the state’s income tax, he said.
“That’s probably why we have these massive income shortfalls in the state budget, especially this year,” he said.
Until the tax structure is improved, he said, “we’ll probably see a continuation of the trend, until there are no more high-wealth individuals left.”
He added the report reinforces findings from a similar study he conducted in 2007 with fellow Rutgers professor Joseph Seneca, which found a sharp acceleration in residents leaving the state. That report, which focused on income rather than wealth, found the state lost nearly $8 billion in gross income in 2005.
Findings from the Boston College report show that about 302,780 households left New Jersey between 2004 and 2008, only slightly lower than the 323,350 households that moved into the state. However, the average net worth of the departing households was about 70 percent higher, at $618,330.
Those who left were also more likely to be older and more educated, with jobs as entrepreneurs or in the finance and professional industries, the study found. Those replacing them tended to hold management or support jobs in the manufacturing industry. The study analyzed data from three main sources: The Federal Reserve’s Survey on Consumer Finances, the Census Bureau and the Internal Revenue Service.
Experts pointed to an abundance of anecdotal evidence to support the numbers. Ken Hydock, a certified public accountant with Sobel and Company in Livingston, said in this 30-year-career he’s never seen so many of his wealthy clients leave for "purely tax reasons" for states like Florida, where property taxes are lower and there is no personal income or estate tax. In New Jersey, residents pay an estate tax if their assets amount to more than $675,000. That’s compared to a $3.5 million federal exemption for 2009.
Several years ago, he recalled, one of his clients stood to make $60 million from stock options in a company that was being acquired by another. Before he cashed out, however, the client put his home up for sale, moved to Las Vegas, and “never stepped foot back in New Jersey again,” Hydock said.
“He avoided paying about $6 million in taxes,” he said. “He passed away two years later and also saved a huge estate tax, so he probably saved $7 million.”
Meanwhile, Gov. Chris Christie’s administration said the report is just another reminder of the difficult tasks ahead.
“It’s the consequence that we’ve been talking about for so long, of the spending and taxing habits that we’ve all experienced,” said Mike Drewniak, a spokesman for Christie. “It’s the sort of thing that we feel the need to stop so we can get New Jersey back on a prosperous path.”
-Staff reporter Lisa Fleisher contributed to this report
http://www.nj.com/business/index.ssf/2010/02/nj_loses_70b_in_wealth_over_fo.html
Posted by learn3drive
February 03, 2010, 8:09PM
Well, just tax the remaining rich folk. And if there isn't enough revenue, then lower the definition of "rich". Eventually our goal will be met, and we will all be lower class except for the politically connected.
Posted by grmpyolfrt
February 04, 2010, 10:44PM
The rich would never feather their nests at our expense.....no, never.
The rich would never do that!
Goodbye and good riddance.
PS-Take some AIG garbage with you on your way out
Posted by miketernal
February 04, 2010, 11:51PM
Then where is the state supposed to get the revenue to operate? From the poor and middle class? Next time, think before typing.
Posted by patriot1775
February 05, 2010, 9:29AM
Good riddance? Didn't you read the article? The "rich" are 1% of the population yet they now pay 40% of our taxes. Who do you think will be paying your tax bills once they leave? Not me, I'm leaving too. Good luck.
Posted by Laura
February 04, 2010, 10:09AM
It's not because old people are moving to Florida. We're losing the engine of our society. People with businesses are getting out of NJ as fast as they can and taking those businesses to Florida. That's why Florida has all the high-paying jobs and we have none
Posted by ed
February 03, 2010, 8:33PM
I have been saying this for years. The house of cards is about to fall. Maybe Jon Shure can continue his rant to tax the wealthy. Maybe we can continue the crazy pension system in the country. Maybe we can continue to keep useless County government. We need to have real jobs for real people. Save us Christie
Posted by ed
February 03, 2010, 8:35PM
PS South Carolina her I come. I am tired of paying pensions for hundreds of Police chiefs,fireman,school supers and county execs. I can't wait to go.
Posted by nephewplease
February 03, 2010, 8:36PM
Could you please provide us with a plan for ridding the state of the poor and keeping the middle class and rich.. I'm so tired of working to pay for generation after generation of people on the public dole. Let some other enjoy them for a little while. Its not fair that we hog them.
Posted by Laura
February 04, 2010, 10:13AM
We should work on getting rid of the middle class, as well as the poor. I know a lot of people think the middle class are ok because they usually have jobs. But what people don't realize is that they also have kids, who take up a lot of services. And people think they pay a lot in taxes. The ugly truth is that they pay a lot less than the rich. It's true. We should be actively trying to get rid of poor and middle class people, especially those with kids. We would have absolutely no budget problems if we only had rich people who had no kids. Think about it people. It's not rocket science.
Posted by Napier1
February 03, 2010, 8:38PM
Damn! I cannot wait until retirement allows me to do the same!!! Just a couple of more years. My needs are few, a small house with enough fenced back yard to share with 3 dogs. No "adult community living" for me, and goodbye to the ever-growing tax and insurance bills. Love you, NJ, but you don't love me.
Posted by 30-378mag
February 03, 2010, 8:40PM
And this is supposed to be a surprise? Keep raping the ones who work for their money and giving it to the ones who don't work for their money and this is what happens. Like our state keeps getting worse so does the country! Obama will put us all in the poor house!!!
Posted by Manville56
February 03, 2010, 8:51PM
I have a small home in Montclair, but the taxes, including 1000 a year to the sewer authority, are driving me out. The teachers and police may want more, but who will be left to give it to them?
Posted by talkiseasy
February 03, 2010, 8:51PM
This statement was great - Until the tax structure is improved, he said, "we"ll probably see a continuation of the trend, until there are no more high-wealth individuals left."
Uh, do you really think all the rest of the middle and lower income folks will be able to stay? I always said just the opposite, that only the rich will remain as nobody else will be able to afford to pay the taxes.
Posted by kavork
February 03, 2010, 8:56PM
Florida here I come 8 months to go see ya suckers
Byrne: Are taxes driving dollars away from New Jersey?
Sunday, February 14, 2010
Last updated: Sunday February 14, 2010, 8:03 AM
BY TOM BYRNE
The Record
Tom Byrne is a former chairman of the state Democratic Party and is currently chairman of the New Jersey Tax and Fiscal Policy Study Commission. He is president of Byrne Asset Management LLC in Princeton. The views expressed are solely his own. Send comments about this column to Op-Ed Page Editor Peter Grad at grad@northjersey.com.
THERE HAVE been three recent studies of out-migration from New Jersey and the overall effect on state revenues, which were spurred in part by the state’s “millionaires tax.” The studies were conducted at Rutgers, Princeton and, most recently, Boston College.
Although there is much common ground among the reports, much focus has been placed on where these reports differ. The three studies, each of which examines slightly different time periods and relies on different databases, all note that people are leaving New Jersey, but differ as to how many and why.
These studies are particularly important because we need to understand how tax policy affects our economy and funds available for needed government services.
More acutely, we need to better understand why income tax revenues fell by 19 percent in the past year. Clearly, the major factor behind the drop is the recession and the resulting decline in employment and earned income.
But no one has isolated how much of the decline is due to our state’s abnormally heavy reliance on taxing capital gains. Nor is it clear how much revenue has been lost due to people leaving the state and to a slowdown in new people coming to New Jersey.
Dispersal of tax burden
It is important to understand the dispersion of the income tax burden. One percent of New Jerseyans pay about 40 percent of the state’s income taxes. About 20 percent of all income tax receipts, or nearly $2 billion, come from the top 0.1 percent, or about 3,900 households.
Even if this is the fairest way to tax, it is not optimal if too many of our biggest taxpayers change their domicile. Some would have headed south eventually anyhow, but we have a problem if tax considerations are prompting people to leave a decade or more earlier than they would have.
The Rutgers study looks at the period between 2000 and 2005 and uses Internal Revenue Service data. Its conclusion: “Since the start of the decade, New Jersey’s 2005 aggregate adjusted gross income was reduced by $7.9 billion. The total annual state tax loss to New Jersey in 2005 approached $539 million.”
However, this figure encompasses all income groups and all potential causes of out-migration. The millionaires tax did not take effect until 2004. Rutgers notes an acceleration in out-migration in 2005 and 2006, but does not explore how closely that might be tied to the single variable of the millionaire tax.
Indeed, Rutgers explicitly cites other potential variables, such as the high cost of living, high property taxes and stronger employment growth elsewhere.
An additional loss
The Rutgers authors point out that Merrill Lynch, using updated IRS data, in a recent report “Money walks” estimated that there was an additional net loss of $2.1 billion in adjusted gross income due to out-migration
from New Jersey in 2007.
The Princeton study began by looking more narrowly at the millionaires tax. It found that the then-new 8.97 percent tax bracket generated an average of $895 million per year in new tax revenue in its early years, 2004 through 2006. The study also estimated that the net out-migration of taxpayers who would have otherwise been taxed at the millionaires marginal bracket increased by 350 taxpayers per year from 2004-2006.
However, the study’s authors have since done additional research suggesting that almost all of this increase in tax revenue may have resulted from broader forces. The original study also estimated foregone revenue at $38 million from the incremental annual loss of 350 taxpayers per year. That estimate implies an average foregone tax of $108,571 per person per year from these migrants.
The unanswered question is: What if those who left the state were super-rich rather than merely wealthy? The tax loss would be far larger.
There is enough anecdotal chatter that we have indeed lost a significant number of super-rich people who are not tied down here by a salary. The Princeton study says that the super-rich were the most likely to leave even before the imposition of the millionaires tax.
While the Princeton authors seem reasonably sanguine about the overall impact of the millionaires tax, they acknowledge that there could be a time-lag effect; people who don’t leave immediately might nonetheless be planning an exit strategy.
The authors also noted that taxes other than the millionaires tax may play a greater role in out-migration decisions. In particular, they suggest that more research be done on the impact of estate taxes and capital gains taxes.
Making ends meet
The Princeton report also notes that most migrants from New Jersey are lower-income people who find it difficult to make ends meet here. It seems clear that further discussion should distinguish more sharply between the number of people who leave and the tax impact of people who leave.
The most recent study is from Boston College. It focuses much more on wealth as distinct from annual taxable income.
A principal conclusion of the Boston study is that the natural replacement of wealthy households by new arrivals has slowed dramatically in recent years. It concludes that from 2004 through 2008, a net of about $70 billion in wealth left New Jersey and that this marked a reversal of trend from the previous five-year period.
It further noted that the average wealth of out-migrating households as a proportion of the average wealth of in-migrating households is much larger for New Jersey than for either New York or Connecticut.
The report also mentions the high correlation between wealth and ownership of private businesses and the implications of that for job growth and New Jersey’s economic future.
The Boston study does not attempt to correlate these patterns to any one variable such as the millionaires tax or any other isolated factor, but it does state that “idiosyncratic factors” altered New Jersey’s migration pattern in ways that differed from those affecting New York and Connecticut.
It is also true that Bureau of Labor Statistics data show that New Jersey has had a sharper percentage decline in non-farm payrolls since 2004 than New York, Connecticut and Pennsylvania. A worrisome possibility is that the very wealthy have the most mobility and their own businesses and take jobs with them.
The bottom line? Two independent studies have found substantial out-migration and the Princeton study acknowledges at least some increase in out-migration. The Princeton study has found short-term revenue gain and only incremental losses from the millionaires tax, but its assumptions about average income of those moving may be way off.
From any of these studies, we can conclude that the prospect of continued out-migration is worrisome.
A short-term fix
Raising taxes on the rich is definitely a short-term fix. Wealthy families are not likely to move within a couple of months if the state raises their taxes, so such a tax may work for only a short period of time.
It is possible that the state’s tax burden will be spread over fewer and fewer people at the top of the income spectrum, which could spur a broader exodus. New Jersey may well lead the nation in determining whether and where a tipping point exists.
The risk is that once you tip, you sink.
One way to avoid that outcome is to focus as much on the spending side of the ledger; address both the cost per unit of service in government and a sustainable level of services. Such efforts would sharpen the focus on property taxes.
Our costs for many public services are markedly higher than in surrounding states. That is why property taxes, inescapable for most, are so high.
For our ship of state to remain afloat, we should neither tip it with taxes nor overload it with spending.
Send comments about this article to Peter Grad, Op-Ed Page Editor.
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