October 1, 2016
Some states’ tax codes are more hospitable to business than others. The new edition of the Tax Foundation’s State Business Tax Climate Index ranks them all. Here’s an idea that’s almost never been tried: Make budget decisions based on whether programs are working. Have CON laws been turned into a special interest con? There’s evidence that says they have. Six investors account for one-third of social- or policy-related shareholder proposals—many of which are submitted multiple times despite failing to garner support. The SEC should consider new rules to control this nuisance. A new report finds Russia was involved in the downing of a Malaysian plane in 2014. What should be done about the Russian threat?
How does your state’s tax business climate rank? According to the 2017 edition of the Tax Foundation’s State Business Tax Climate Index, the states with the ten best business tax climates are Wyoming, South Dakota, Alaska, Florida, Nevada, Montana, New Hampshire, Indiana, Utah, and Oregon. The states with the ten worst business tax climates are Louisiana, Maryland, Connecticut, Rhode Island, Ohio, Minnesota, Vermont, California, New York, and New Jersey. [Tax Foundation]
If it’s not working, stop it. The federal government owes its creditors $19.4 trillion. What can the next president do to get the federal budget under control? David Muhlhausen writes that holding programs accountable for results would be a good start: “During the George W. Bush Administration, the OMB created the Program Assessment Rating Tool (PART) to help inform budget decisions by holding federal government programs accountable. Debuting in President Bush’s fiscal year (FY) 2004 budget recommendation, PART was an attempt to assess every federal program’s purpose, management, and results to determine its overall effectiveness. The extremely ambitious PART was a first-of-its-kind attempt to link federal budgetary decisions to performance. Such accountability had never been attempted by a President. PART placed ‘unprecedented focus and sustained pressure on executive agencies to improve performance.’ Unfortunately, President Barack Obama terminated the original PART.” [Internal citations omitted.] [The Heritage Foundation]
Limiting supply in order to control costs turns out not to work. Thirty-five states and the District of Columbia require health care providers to justify new capital expenditures on health care facilities. The theory behind these restrictions—called Certificate of Need laws—is that health care’s third-party payment set-up incentivizes providers to overinvest in facilities, raising health care costs, insurance premiums, and government outlays. Wouldn’t a simpler solution be to change the policies that created the third-party payment problem? But aside from that point, there’s another problem with the laws, writes Matthew Mitchell: They don’t work: “A review of 19 peer-reviewed academic studies finds that CON laws have worked largely as economic theory predicts and that they have failed to achieve their stated goal of cost reduction. The overwhelming weight of evidence suggests that CON laws are associated with both higher per unit cost s and higher total expenditures. The evidence is mixed on whether CON laws have increased the efficiency of particular hospitals by channeling more patients through fewer facilities, and there is no evidence that CON decreased overall investment as its proponents had hoped. The weight of evidence suggests that CON regulations persist because they protect politically potent special interests from competition.” [Mercatus Center]
Reining in the corporate gadflys. Shareholder activism continues to rise, and while proposals related to social or policy issues rarely pass, the shareholder-proposal process does cost companies. What can be done? James Copland and Margaret O’Keefe write that one idea is to allow companies to exclude resubmitted proposals that do not receive a minimum threshold of shareholder support: “Of the 3,392 shareholder proposals introduced on the proxy ballots of companies in the Proxy Monitor database between 2007 and 2016 (through August 31, 2016), 1,063—31% of all shareholder proposals—were resubmissions of a preceding proposal. A total of 608 proposals were resubmitted at least once, and 100 were resubmitted three or more times. A plurality of shareholder proposals resubmitted (39%) involved social or policy concerns, as were 36% of those resubmitted three or more times. Were the SEC to make its baseline threshold for share-holder support 10% rather than 3%, 149 of the 608 shareholder proposals to be resubmitted at least once would not have been eligible for resubmission over a five-year window. Were the SEC to adopt a 33% threshold as a threshold, 215 of the 608 resubmitted proposals would have been ineligible for resubmission.” [Manhattan Institute]
Report: Russian missile shot down Malaysia plane. Investigators from Australia, Belgium, Malaysia, the Netherlands, and Ukraine claim in a new report that Malaysia Airlines Fight 17, which crashed on July 17, 2014, was brought down by a missile fired from Russian-controlled territory in eastern Ukraine. President Obama and the Dutch Safety Board had also previously pointed to Russian culpability. Daniel Kochis sums up what the report means for America’s Russia policy: “The interim report findings should serve as a reminder to Americans that Russian President Vladimir Putin’s Russia is not a friend that can be bargained with, rather it is a brutal regime that has brought war back to Europe, a war which continues to this day and has cost thousands of innocent lives. Furthermore, Russia’s reaction to the shooting down of MH17 and subsequent investigations into the tragedy are clear examples of how Russia uses propaganda, cyberattacks, and obfuscation to advance its narrative of events, even when irrefutable evidence exists to prove Russian disinformation incorrect. Whoever takes over the White House in 2017 will face an aggressive, revanchist Russia that is a threat to the United States and our allies. No amount of wishful thinking can obscure this fact.” [The Daily Signal]
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