This article was originally published Sunday, May 31 in the Delaware State News and on the website. After years of doing business as usual and putting tough spending cut decisions to the side, the General Assembly is now facing the harsh reality that yes, we do need to make spending cuts. The roughly $70 million gap in Gov. Jack A. Markell’s proposed budget versus tax revenue collection simply cannot be made up just by increasing taxes.   There is one area of the budget which

The Tax Foundation has recently released its 2015 State Business Tax Climate Index. As usual the "tax you until you leave" states of New Jersey, New York and California fall at the bottom of the rankings. Besides the "energy belt" states, it is no surprise that Florida, New Hampshire and Texas make it into the top ten best business tax climate states. Although surrounded by high tax states, Delaware ranks a competitive 14 th in business taxes. Why? As in past years, Delaware

What would you think of officials who spend tens of millions of your tax dollars every year and never check on whether citizens get what they pay for? That’s what’s happening with Delaware’s questionable program to buy jobs. The state regularly gives your tax dollars to companies that promise to create or maintain jobs here. The catch is that nobody ever checks on whether the companies keep the promises they made about jobs. A new study by the Pew Center on the States evaluat

Administration economists and officials keep touting the multiplier effects from additional government spending. Extended unemployment benefits generate more than a dollar’s worth of activity in the economy. More agricultural subsidies will pump up economic growth.   This is macroeconomic smoke and mirrors. Why?   First, many industries have a higher output multiplier than government. For example, according to the U.S. Bureau of Economic Analysis, the multiplier impact of a d

This article first appeared at delawareonline.com on March 27, 2015, and in the News Journal on March 28, 2015. Normally, and from a professional point of view, I do not spend my time replying to politicians’ op-eds. They usually are full of ideological and partisan talking points without facts, data and analysis supporting them. However, as a co-author of one of the few analyses of the methodology used for the Prevailing Wage system implemented in Delaware and actually work

General Electric may be looking for a new home for its corporate headquarters in response to a whopping $150 million Connecticut state tax increase.  The company already moved once as a tax refugee from New York City to its current Fairfield, Connecticut location.  Delaware could get on the list of potential candidates for GE’s five hundred highly paid headquarters employees.   Connecticut already has a high corporate income tax rate of 9% of earnings but changed to a “combin

Despite Lois Lerner and the flow of individuals 1040s to the White House, the IRS does some positive things as well. One of these things is compiling state to state migration data based upon the year to year changes in individual tax filings. The recently released 2010-11 data for Delaware provides some insights into our states household migration patterns.   CRI identified the top ten states with whom Delaware had a net loss (out flow) of adjusted gross income between 2010 a

Again and again and again politicians have to learn that raising taxes above a reasonable level results in less tax revenue by encouraging tax avoidance. The current tax rate of 35% on the repatriated income of the foreign operations of U.S. firms, the highest rate in the developed world, is a classic example.   Rather than turn over more than one-third of their net income earned abroad to the U.S. government, companies simply keep that net income overseas. This means, of cou

Governor Markell recently proposed to the State Employee Benefits Committee increases in the monthly health insurance premium and health care deductibles for active and retired State employees and their dependents. The Governor has made a difficult, and long overdue, decision, and deserves commendation for making it.   State employee and retiree health care costs have been rising exponentially and are not sustainable. The claims have jumped 20% over the past three fiscal year

The state of Delaware gross receipt tax is levied against total business income, regardless of whether a firm makes a profit or not. Following the onset of the recent recession, one of the state’s answers to falling revenues was to twice raise the gross receipt tax. First, an increase of 25% in January of 2009 and then another jump of 8% in January of 2010.  As shown in the chart below, state gross receipts tax revenue then soared almost 50% during a time when earnings by Del