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    Entries in economy (24)

    Friday
    Oct192018

    The Week in Public Finance: Most States' Tax Systems Worsen Income Inequality

    A new report ranks the most and least fair tax systems.
    BY  OCTOBER 19, 2018

    (Shutterstock)

    Some people pay more than their fair share of taxes -- and it’s not the rich.

    According to a new report by the progressive-leaning Institute on Taxation and Economic Policy (ITEP), the lowest-income households pay 50 percent more, on average, of their income in state and local taxes than the wealthiest. That leads to worsening inequality in four out of every five states.

    “While state and local taxes can’t eliminate income inequality, well-designed systems can help lessen the problem,” says Meg Wiehe, ITEP’s deputy director. “Meanwhile, it’s clear that steeply regressive systems only make it worse.”

    A regressive tax takes a proportionally larger share of income from lower- and middle-income residents than from wealthier taxpayers. When factoring incomes in, ITEP found the national average effective state and local tax rate is 11.4 percent for the poorest 20 percent, 9.9 percent for the middle 20 percent and 7.4 percent for the richest 1 percent.

    The state where tax inequality is the

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    Friday
    Oct122018

    The Week in Public Finance: How the New NAFTA Deal Impacts States

    The revised trade pact keeps the original agreement's free trade zone intact while placing some new burdens on the auto industry.
    BY  OCTOBER 12, 2018

    The assembly line at GM's Chevrolet Silverado and GMC Sierra pickup truck plant in Fort Wayne, Ind. (Shutterstock)

    After President Trump threatened for more than a year to withdraw from NAFTA, auto-manufacturing states breathed a sigh of relief when he announced a renegotiated trade agreement earlier this month with Canada and Mexico.

    A U.S. withdrawal from the 1994 pact would have resulted in the reimposition of tariffs on specific goods between the U.S., Canada and Mexico. The impact would have been felt most acutely by states such as Michigan that do a lot of business with the two countries.

    The revised trade pact, dubbed the United States Mexico Canada Agreement, keeps the free trade zone intact while placing some new burdens on the auto industry. Two new key requirements include introducing a higher minimum-wage standard and boosting the required share of auto parts and components from North America up to 75 percent from 62.5 percent.

    Industry observers have reacted positively to the deal mainly because there is one. “It’s a positive compared with the alternative,” says Moody’s Investors Service analyst Ted Hampton. “But a lot remains to be seen.”

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    Thursday
    Aug032017

    Pension Plans Had a Great Year, But Retirees Likely Won't Benefit From It

    One good investment year isn't enough to fix struggling systems' problems.
    BY  AUGUST 3, 2017
    A trader works on the floor of the New York Stock Exchange.
    A trader working on the floor of the New York Stock Exchange. (AP/Richard Drew)

    Public pension plans are reporting double-digit investment returns, and some are even finishing with record highs this year.

    The high earnings are due to a robust stock market and are welcome news after two straight years of below-average returns for most pension plans. But finance experts say the investment boost likely won’t translate into an equally impressive reduction in pension debt because of the increasing cost of pensions.

    "Government contributions tend to be insufficient to reduce unfunded liabilities -- even if the plans meet their target," says Tom Aaron, vice president and senior analyst at Moody's Investors Service.

    Pension plans rely heavily on investment earnings because annual payments from current employees and governments aren’t enough to cover yearly payouts to retirees. As it stands, roughly 80 cents on every dollar paid out to retirees comes from investment income.

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    Friday
    May122017

    The Week in Public Finance: Revenue Relief in 2018, Good GDP News and the Debt-Shy

    BY  MAY 12, 2017

    A Revenue Pick-Me-Up?

    For the past two fiscal years, tax revenue has lagged. A new analysis, though, predicts states may soon see some relief.

    A report this week by S&P Global Ratings says the climate may be right for “a revenue rebound” in fiscal 2018. A big reason, writes analyst Gabe Petek, is that investors may have held out in 2016 on cashing out stocks because they hoped a Trump presidency would give them a more favorable tax climate for their capital gains. With tax reform now looking like it’ll take longer, investors are more likely to cash out sooner. Petek says job growth and recent interest rate hikes will also benefit state income and sales tax growth in fiscal 2018.

    That's good news given that a new analysis by the Nelson A. Rockefeller Institute of Government found that state tax revenue last year grew just 1.2 percent and actually declined by one-tenth of a percent after adjusting for inflation. It’s the weakest performance since 2010 and a major drop from 4.7 percent growth in fiscal 2015.

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    Friday
    Feb242017

    The Week in Public Finance: Pensions Protest Bathroom Bills, a Billion-Dollar Showdown in Kansas and More

    BY  FEBRUARY 24, 2017

    Pension Funds Mess With Texas

    The country’s largest public pension systems and investors are pressuring Texas officials not to approve a so-called bathroom bill introduced in January. The legislation targets transgender individuals by requiring them to use the public restroom that aligns with the gender on their birth certificate.

    Pointing to North Carolina, which lost hundreds of millions in business from canceled sporting events, concerts and conventions after its bathroom bill became law last year, the group warned in a letter that Texas could meet the same fate. Already, the National Football League and the NCAA have said that the siting of future events in Texas would be jeopardized if lawmakers move forward.

    The more than 30 signatories on the letter include comptrollers, controllers and treasurers of California, Connecticut, New York, Oregon, Rhode Island and Vermont, as well as major firms such as BlackRock and T. Rowe Price. Collectively, the group represents more than $11 trillion in assets.

    The Takeaway: Threats like these aren't new. Called social divesting, stewards of major pensions have increasingly urged corporate boards in recent years to make policy changes, such as pressuring energy companies to move away from fossil fuels.

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