Maryland Congressman Sarbanes' Vapid Energy Ideas

Having written a note to the Congressman who rules my incredibly highly gerrymandered Congressional District in the Socialist State of Maryland that I support a free oil and gas industry, I received this pablum reply:

November 21, 2013

Dear Friend:

Thank you for contacting me to express your support for the oil and gas industry. I appreciate hearing from you and welcome the opportunity to respond.

It is my hope that our energy sector will innovate and adapt to the needs and opportunities of a clean energy future. I believe that if we rise up to meet the challenge of climate change, we can solve so many complicated problems that our country is facing. By developing a long-term and sustainable energy strategy, we can address economic, national security, and environmental policy priorities in one fell swoop. We can diversify our energy portfolio and end our dependence on energy sources from volatile parts of the world. By revolutionizing our energy industry and becoming an exporter of clean energy technologies, we will be able to maintain our competitive advantage as a nation and ensure a prosperous future for our children. Just as growth in information technology served as the driving force behind the economic boom of the 1990's, the development of clean energy technology and green jobs will spur tremendous growth and offer long-term relief to the American economy.

Marylanders know that preserving and protecting our environment can go hand in hand with economic growth. The Chesapeake Bay, one of our most treasured natural assets, is at the center of our regional economy. As a member of the House Committee on Energy and Commerce, I will continue to support reasonable measures that give Americans more energy choices. I will be sure to keep your thoughts in mind when voting on relevant federal legislation.

Again, thank you for your input on this important issue. Please do not hesitate to contact me about any matter of importance to you in the future.

Sincerely,

John P. Sarbanes
Member of Congress

I am sure that John will not keep my thoughts in mind when he votes on issuing orders that will cause oil and gas prices to rise for entirely irrational reasons and force residential and business users of energy to pay these high prices in exchange for unreliable energy.  John is advocating the same use of so-called green energy that is causing Germany and Spain so many problems now.

He talks about a degree of energy independence which alternative energy sources such as wind, solar, and biomass have never delivered, but that the widespread use of hydraulic fracturing is substantially delivering with oil and gas today.  Maryland Gov. O'Malley has forced electric utilities to buy future wind and solar energy with the intent to pass the high costs onto Maryland users.  This is how John Sarbanes plans to address our economic problems at the national level also.

Ah, but these black and blue energy projects, called green by John, will produce jobs in Maryland!  Well, so far the only reason jobs are in Maryland is because a large fraction of the federal government employees, who suck in tax revenues from the entire nation, live in Maryland.  In addition, larger businesses in Maryland tend to be heavy government contractors in defense, medicine, and other R&D.  This is what really explains John Sarbanes' wish to have the government strongly take control of the energy sector and of energy use.  He knows that increased energy R&D funded by the government will disproportionately be contracted out to Maryland institutions and businesses.

This is badly needed in Maryland because between 2007 and 2012, there were 24 tax and fee increases in Maryland, which cost the economy $2.4 billion a year.  The Tax Foundation ranked Maryland number 41 for the worst state tax environment for businesses.  Maryland lost 6,500 small businesses with fewer than 100 employees between 2007 and 2012, while losing 40,000 jobs and 31,000 taxpaying households.  Imagine the conditions if Maryland were not so heavily funded by the federal government.

So, it is hardly surprising that a Democrat Representative is eager to damage the People of the USA in order to have Marylanders suck in their productive output through a straw from DC.

By the way John, climate change is one of the primary reasons a rational individual prizes our ability to use oil and gas.  Of course I say that understanding that it is natural forces, not man's emissions of CO2, that produced climate change in the past, does now, and will continue to in the foreseeable future.

With dumb fools like Barbara Mikulski and John Sarbanes and evil fools like Ben Cardin thinking themselves the Progressive Elite and better capable of making my life decisions for me than I am, you can see why I am an enemy of Big Government in a very concrete form.  This trio gets virtually everything wrong.  One would live a better and happier life by doing the opposite of what they want every Marylander to do in every case than one would following their preferences.  Yes, they are that wrongheaded.

Business Tax Climate Rankings by State

The Tax Foundation has produced the 2013 report on the tax climate rankings of the states as of July 2012.  The ten states with the most favorable business tax climate and the ten with the worst are color-coded in the map below with their rankings given.  The white states are the best.

2013 State Business Tax Climate Index Ranks and Component Tax Ranks
State	Overall Rank	Corporate Tax Rank	Individual Income Tax Rank	Sales Tax Rank	Unemployment Insurance Tax Rank	Property Tax Rank
Alabama	21	17	18	37	13	8
Alaska	4	27	1	5	28	13
Arizona	25	24	17	50	1	5
Arkansas	33	37	28	41	19	19
California	48	45	49	40	16	17
Colorado	18	20	16	44	39	9
Connecticut	40	35	31	30	31	50
Delaware	14	50	29	2	3	14
Florida	5	13	1	18	10	25
Georgia	34	9	40	13	25	30
Hawaii	37	4	41	31	30	15
Idaho	20	19	23	23	47	2
Illinois	29	47	13	34	43	44
Indiana	11	28	10	11	11	11
Iowa	42	49	33	24	34	37
Kansas	26	36	21	32	9	28
Kentucky	24	26	26	9	48	18
Louisiana	32	18	25	49	4	23
Maine	30	41	27	10	32	39
Maryland	41	15	45	8	46	40
Massachusetts	22	33	15	17	49	47
Michigan	12	7	11	7	44	31
Minnesota	45	44	44	35	40	26
Mississippi	17	11	19	28	7	29
Missouri	16	8	24	27	6	6
Montana	8	16	20	3	21	7
Nebraska	31	34	30	26	8	38
Nevada	3	1	1	42	41	16
New Hampshire	7	48	9	1	42	43
New Jersey	49	40	48	46	24	49
New Mexico	38	39	34	45	15	1
New York	50	23	50	38	45	45
North Carolina	44	29	43	47	5	36
North Dakota	28	21	35	16	17	4
Ohio	39	22	42	29	12	34
Oklahoma	35	12	36	39	2	12
Oregon	13	31	32	4	37	10
Pennsylvania	19	46	12	20	36	42
Rhode Island	46	42	37	25	50	46
South Carolina	36	10	39	21	33	21
South Dakota	2	1	1	33	35	20
Tennessee	15	14	8	43	26	41
Texas	9	38	7	36	14	32
Utah	10	5	14	22	20	3
Vermont	47	43	47	14	22	48
Virginia	27	6	38	6	38	27
Washington	6	30	1	48	18	22
West Virginia	23	25	22	19	27	24
Wisconsin	43	32	46	15	23	33
Wyoming	1	1	1	12	29	35
Dist. of Columbia	44	35	36	42	48	24
Note: A rank of 1 is more favorable for business than a rank of 50. Rankings do not average to total. States without a tax rank equally as 1. D.C. score and rank do not affect other states. Report shows tax systems as of July 1, 2012 (the beginning of Fiscal Year 2013).

The scores of the ten best business tax climate states are:

1)  Wyoming, 7.66
2)  South Dakota, 7.56
3)  Nevada, 7.45
4)  Alaska, 7.34
5)  Florida, 6.88
6)  Washington, 6.38
7)  New Hampshire, 6.25
8)  Montana, 6.22
9)  Texas, 6.09
10) Utah, 6.04

There is not much difference between the top four ranked states.  There also is not much difference in those ranked from 6 through 10.

The ignominious final ten states are:

50) New York, 3.40
49) New Jersey, 3.40
48) California, 3.67
47) Vermont, 4.08
46) Rhode Island, 4.12
45) Minnesota, 4.18
44) North Carolina, 4.21
43) Wisconsin, 4.37
42) Iowa, 4.47
41) Maryland, 4.47
40) Connecticut, 4.47

The three worst states, New York, New Jersey, and California really stand out from the rest with their very low scores.  The remainder of the worst ten states all have close scores between 4.08 and 4.47.

The middle states of Arizona with a score of 5.13 and Kansas with a score of 5.10 lag the lowest state of the top ten more than they exceed the best state of the bottom ten states.  There are more states with high tax policies than there are with low tax policies.  Indeed, the states ranked 20 (Idaho) through 30 (Maine) are only separated by scores differing by 0.27.  All of these states are closer to New York in score than they are to Wyoming.  The average of the Wyoming and New York scores is 5.53 and the state having the score closest to this is Missouri with a score of 5.46 and a rank of 16.  So, the top few states in the rankings are very much better than the average state.  Even in the top ten the differential score between #1 and #10 is much greater than that between #50 and #40.

I live in the beautiful state of Maryland with a really awful state government.  Its business tax climate rank of 41 makes it a terror for businesses.  Much of my family is in Oklahoma with a poor ranking of 35.  One sister owns a business in North Carolina, which actually worse than Maryland!  Another sister tries to do business in Kansas with a ranking of 26, which as I mentioned puts it much closer to New York than to Wyoming.

I hear that parts of Wyoming are beautiful.  I will have to do some business scouting there and see if there is a suitable way to do business as a materials laboratory there.  After all, almost all of our customers send us materials to analyze by Fed Ex and UPS anyway.  My laboratory could be anywhere.

The 2011 State Business Tax Climate Index from the Tax Foundation

Kail M. Padgitt, of the Tax Foundation produced the 2011 State Business Tax Climate Index in October.  The report evaluates the effects of state taxes of the following types with the relative weighting following as a percentage:

• Individual Income Tax, 29.64%
• Sales Tax, 25.16%
• Corporate Tax, 19.35%
• Property Tax, 14.57%
• Unemployment Tax, 11.28%

The results of the evaluation are shown in the map below by rank:

In the scoring, the average was set at 5.00 on a scale of 10.00.  I have made up two tables giving the score of each state assigned by the Tax Foundation Study and its rank for 2011 and the rank for 2010.  To this I have added my calculated growth in the state's Gross State Product from 2005 to 2008.  I have also indicated the party in control of the governor's office, the State House, and the State Senate in 2010.

The highest ranked three states, South Dakota, Alaska, and Wyoming, stand out from the other states with their high scores.  The second set of three states, Nevada, Florida, and Montana, also enjoys some significant separation from the other states.  Then New Hampshire and Delaware stand out a bit also.  Beyond that, very small differences in state scores can mean changes of several rank positions, until you get to the bottom 7 positions beginning with Maryland.

Do high taxes discourage the growth of the state Gross State Product (GSP)?  The top 10 ranked states grew by an average of 17.59% from 2005 to 2008, while the bottom ten states grew by 13.36%.  Low taxes provided a 4.23% growth rate advantage to the low tax states in that three year period.  Let us do the math to find the effect this difference in growth would have over 5 three year periods:  1.1759 to the fifth power is 2.248, while 1.1336 to the fifth power is 1.8720.  The difference is that the low tax state economies become 2.25 times larger, while the high tax economies become 1.87 times larger.  Such growth differences matter to the quality of the People's lives.

Let us examine if there is any difference in tax ranking that correlates with the party holding power in the states.  Of course, the 2010 powers that be were not likely to have instantly changed many state taxation traditions, so the duration of control by a given party is also important.  But to keep things simple, we will just consider the party in power in 2010.  Besides, according to Judge Napolitano on Fox Business on Sunday, there is only one party, the Big Government Party, so we should find equality in this tabulation if he is right.  For the top 10 states in the business tax ranking, counting 1 for each case of control of a governorship, house, or senate, the Republicans score 17 and the Democrats score 11.   For the bottom 10 states, those with the worst business taxes, the score is Republicans 6, Democrats 24.  Sorry Judge Napolitano, but on the matter of the business tax climate, it appears that it matters quite a bit which party controls a state.

Of course, there are exceptions.  For instance, Arizona was controlled in all three state government components by Republicans and yet it was in the 34th position and had actually fallen from the 28th position in 2010.  Bad Republicans in Arizona!  I will also chide Oklahoma, where much of my family lives and where I graduated from high school.  Oklahoma has generally been a Republican state for a couple of decades now, but it ranked only 30th among the states.  With Texas (13), Colorado (15), and Missouri (16) on its borders, it is surely losing many businesses to those nearby states with much higher rankings.  In rankings that consider the regulatory environment as well, Oklahoma does better in the ranking, but still there is a clear need for improvement here.

Speaking of the border effect, the state of Maryland is pursuing an insane high tax strategy as well.  It is ranked 44, but Delaware (8), Virginia (12), and Pennsylvania (26), and even West Virginia (37) are all on its borders and offer better business tax climates.  This is why Northrop Grumman, with large operations in Maryland, just moved its headquarters to Virginia which just improved its ranking by three positions.  Virginia was chosen as the #2 best state for business by CNBC, who picked Texas #1.  Virginia's governor says Virginia is coming after Texas and will take over the #1 spot.  Maryland is not in the race and couldn't give a fig.  Maryland's expertise is in suckling at the teats of the federal pig and living off the taxpayers from across the entire country.

Looking at the map above, it is very noticeable that New Hampshire, Delaware, Virginia, Florida, Texas, and Indiana are each states that have much better business tax climates than any of the states on their borders.  They are each sucking in businesses from the nearby states and helping their homegrown businesses to succeed in the most effective manner: by not putting burdens on them with high taxes.  States using limited time tax incentives or offering training to the employees of industries the state has picked as winners are not as effective in growing businesses and jobs as those who leave all this to the private sector.  Dell Computer had a four-year special tax break from the state of North Carolina for a facility, for instance, and has now announced that it is leaving the state when the four years are up.  This is not surprising.  North Carolina is ranked #41, so it makes sense for Dell to go back to Texas at a #13 ranking or maybe move that facility to Florida with its #5 ranking.