Socialist Vermont Shoots Down Super-Expensive Single-Payer Health Care

Gov. Shumlin of the highly socialist state of Vermont shutdown the necessary request to the legislature for the taxes needed to fund the Green Mountain Care state health plan.  This Vermont single-payer health plan was going to require an 11.5% payroll tax on businesses and a 9.5% income tax in addition to the income tax the state already has on those making four times the poverty level income or more.  Vermont already has a top income tax rate of 8.95%, a 6% sales tax, and a 8.5% corporate income tax.  Shumlin reluctantly admitted that the state could not levy such heavy taxes without putting many businesses out-of-business and without many businesses leaving the state.  He said that given that Vermont was still feeling the effects of the Great Recession, this was a particularly bad time to implement a state-run single-payer health system.

Vermont had initially estimated an annual cost of $2.2 billion for the plan for its 627,000 citizens.  The state had received $45 million to study the implementation of a single-payer system from the Obama's Department of Health and Human Services, which hoped Vermont would pave the path to a national single-payer or totally socialized medical system.  William Hsiao of Harvard and Jonathan Gruber of MIT served as consultants.  A more careful look by Vermont accountants put the increased tax revenue needed at $2.6 billion.  Vermont's total tax revenues now are $2.85 billion, so total state tax revenues would have to almost be doubled.  Projected revenues had to be scaled back by $75 million a year due to the lingering effects of the recession.  The state realized it would get $150 million less in federal cost coverage than they expected to set up the system and that they would get another $150 million less in Medicaid assistance from the federal government than they had earlier thought they would.  Setting up the plan was estimated to cost an additional $500 million.

As I have pointed out many times, it is a fiction that the business paid payroll tax is not paid by employees.  All payroll costs are a cost of employment for employees.  They are all compensation for the labor of all employees.  The greater the payroll tax, whether it is Workman's Compensation, unemployment tax, Medicare, Social Security, a withholding tax, an ObamaCare tax, or a Green Mountain Care tax, the lower the compensation that can be offered an employee.  If an employee's addition to the company revenue is not enough to cover all of these tax costs, all of his take-home pay, and other operational costs incurred to provide him with a job, then the employee is not hired or is let go by any rational employer.  This Green Mountain Care plan in Vermont was going to require a 21% increased cost of employment for a company's most value employees minus whatever the employer might be currently paying into health care plans minus whatever wage decreases ensued.  Employees closer to the poverty level would cost somewhere between 11.5% to 21% more depending upon the progressive explicit tax on their income.

As Gov. Shumlin noted, it was particularly difficult to impose these costs given the failure to recover from the effects of the Great Recession.  What is more, any knowledgeable observer has learned that the cost estimates for new government programs are almost always too low.  They are usually much too low.

Of course, while acknowledging that there was no way to practically implement a single-payer health system in Vermont at this time, Shumlin, as a good Progressive Elitist, continued to maintain that it was the Ideal.  Progressive Elitists never actually consider the costs of their programs to be too high and they never ask what the costs displace in other options individuals might have for their time, effort, property, and money.  Their choices and dreams always take precedent over those of others and they are willing to use force to make sure that every individual accedes to that precedence.

All this for a health care system that is sure to deteriorate into another shabby equivalent of the Veteran's Administration System of an unavailable, highly rationed, low-quality, wait-forever, bureaucratic, vindictive, and dishonest morass that treats its patients like peons.  Of course, individuals who do not retain their individual rights are just that -- peons, serfs, begging servants and dependents of the state.

There must be a few individuals in Vermont who are much relieved by the failure of this Great Socialist Dream.  Indeed, Gov. Shumlin nearly lost his re-election bid to Republican Scott Milne, who ran against the Shumlin-backed Green Mountain Care.  Would Milne have won the election if the newer costs and tax estimates had been made available before the election?  Only 2,095 votes separated the two candidates for Governor.

Is New York State Really a Great Job Creator?

New York state government is spending its taxpayer's money advertising 10 areas near state universities into which a new company or an out-of-state company can move and pay no taxes for 10 years, provided the government likes your business and is given significant controls over your business.  Mostly New York's Democrat Socialist Party controlled government likes certain high technology companies, such as biotechnology companies.

They do not like the vast majority of businesses, at least not enough to give them any tax breaks.  Indeed, most businesses have to be taxed heavily so that the few anointed companies can be lured into the high tax trap of New York and so such advertising can be carried out in Maryland and Oklahoma and many another state.  Even more expensive is the huge welfare state apparatus of New York state.  The only way to fund that redistribution of income is to tax both businesses and better paid persons heavily.

Among the claims in the ad, New York state government claims it has created 400,000 jobs.  They neglect to say over what time period and whether these are net jobs or these are all new jobs with any lost jobs ignored.  The high tax and heavily regulated state of New York is undoubtedly very good at killing jobs, so it is perilous to ignore the jobs destroyed.  According to the Bureau of Labor Statistics, the non-farm seasonally adjusted establishment job tally of private sector jobs increased in New York state from March 2013 to March 2014 by 103,500.  So maybe the 400,000 jobs were net jobs since the depth of the never-ending Great Socialist Recession.  They were not recently created net jobs.  I have ignored any added government jobs since such jobs would only create greater burdens for any private sector company moving to New York.

New York claimed that the 400,000 jobs were the second largest number of jobs created in any state in the US.  In 2010, New York state was the third most populous state, so just to stay even on jobs, it would likely have to produce at least the third most jobs.  Actually, New York state has a population growth estimated from 1 April 2010 to 1 July 2013 of 1.4%, which lags the population growth of 2.4% of the nation as a whole.  What is more, a larger fraction of its population is over 65 years old and a smaller fraction is under 18 years old.  There seems to be no rush of people into New York state owing to good jobs, despite the huge sums of bailout money that the federal government has dumped into New York City and its financial institutions.  That bailout in the form of quantitative easing continues to this day.

Let us examine the growth in the number of non-farm private sector jobs relative to the other states:

There were 26 states in which a higher percentage private sector job increase occurred compared to the 1.45% increase in New York.  This is not such a remarkable achievement by New York as it is represented to be in its ubiquitous ad.  The New New York is not so very different.  It is North Dakota that is the jobs creation giant, albeit in percentage terms only.  Six states have had private sector job growth rates more than twice that of New York state.  In fact, we can see that in this recent period, the claim that New York created the second most jobs in number is clearly wrong.  The population of the state of Texas is greater than that of New York and its job increase of 2.99% clearly means it added many more jobs than did New York.  The population of Florida is about the same as that of New York, so its job increase of 3.49% also means more jobs were created in Florida than in New York.  So, in this time period, at least two states added more jobs than New York did.

The New York state government is running an ad which is very misleading.  There may be some convoluted manner in which it is not a literal lie, but it is surely a serious attempt to mislead the People.

The employment increases in the table above allow us to make a few interesting comments about some other states and the possible presidential prospects for their governors.  Note that Gov. Rick Perry's state of Texas is still tearing up the racetrack in creating jobs with a 2.99% increase between March 2013 and March 2014.  On the other hand, Gov. Chris Christy of New Jersey heads a state government where the private sector job increase is essentially zero at 0.07%, the next to the worst record of any state.  Gov. Scott Walker of Wisconsin has a state with a 1.24% increase, a 32nd ranking counting DC, but at least greater than the population growth in that time.  Gov. Bobby Jindal of Louisiana has a state that is not doing great in the business of job creation either at 1.08% increase and a rank of 35.  On the Democrat Socialist Party side, Gov. Martin O'Malley of Maryland earns his moniker of O'Folley with 40 straight tax increases, a job increase of only 0.52%, and a ranking of 45.  Maryland's population since April 2010 is estimated to have grown by 0.90% a year, so Maryland is not keeping up with the population growth with its meager 0.52% increase in jobs.  I marvel at the ability of some governors to seek higher office when they have not demonstrated that their states can create private sector jobs.

The People should be paying attention to this.  I will acknowledge that some of these states were basket cases and it will take several good governors to allow private industry to turn the states around.  Their state governments have bollixed up the state economies for a very long time in many cases.  The damage done can take a long time to correct and the healing process can take time.  Yet, when good government policies are established, some great results often occur quickly.  The engine of growth is in the private sector, but governments have to stop stuffing the gas tank with sand and sugar.

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.

Fraud in Unemployment Claims by State

Fraud is rampant in virtually every federal and state welfare program.  The extent to which the government has been able to determine what it is in unemployment insurance benefits is revealed in the map below:

This may be just the tip of the iceberg, with most of the fraud undiscovered.  Apparently, the highest discovered fraud was in Louisiana, though Arizona, New Mexico, Colorado, Nebraska, South Dakota, Wisconsin, Indiana, Ohio, Pennsylvania, Maine, Virginia, Tennessee, South Carolina, Alabama, and Mississippi are all made more than 14% fraudulent payments.  In Louisiana's case, the fraudulent payments were a colossal 38.67% of all payments.  Taking advantage of government programs and taxpayers has long been developed into a fine art in Louisiana.

There are many people who have no compunction about stealing money from the businesses whose only crime is to take the many risks of being in business to produce needed goods and services and of hiring people to work for them.  What is more, as a businessman, I am sure that Congress and virtually every state legislature believes I am guilty of a crime because I actually take the many risks of hiring people.  They penalize me with many taxes and most of them do not even depend upon whether my business is making a profit or whether I am able to pay myself for my many hours of work.  Quite a few of which I am required by innumerable laws and regulations to donate to local, state, and the federal government totally without recompense.  That is what you do to criminals -- you punish them.  It makes one wonder why anyone is fool enough to own a business.

Perhaps all businessmen should quite hiring others and only provide themselves with a job.  That sure would go a long way toward reforming government!  Can you imagine the howl if every taxpayer was required to file his own payroll taxes to the state and the federal government?  There would be no unemployment taxes to provide unemployment benefits.  Everyone would have to generate their own W-2 forms and send them to the governments.  Everyone would be required to provide their own Workmen's Compensation Insurance.  Everyone would have more complex personal income tax filings.  Everyone would have to pay taxes on any business facility and equipment they used to generate their income.  Everyone would have to run equipment depreciation schedules and do the personal property tax filings.  Oh, what a plaintive howl there would be!  Government would become much smaller very quickly and many taxes now hidden from the employee dominated public would become known and hated.