Doug Kellogg

D.C. Government Bet on Itself & Lost

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Posted by Doug Kellogg on Friday, October 16th, 2020, 4:32 PM PERMALINK

When Washington D.C.’s city council legalized sports betting in the district, they gave a virtual monopoly to the DC Lottery. Rather than having a vibrant market, and competition, that would best serve consumers, councilmembers decided government knew best.

The results have been about what you’d expect from the people who brought you the D.C. Metro – lottery commission sports betting is confusing, and only partially operational.

It took forever to get things started, and the government-ordered app for online betting is clunky and has confusing lines. Despite being the only mobile option, it is losing out to in-person options at sports arenas. Teams are allowed to have sports books in their arenas free of the city government-controlled monopoly.

In a state with modest tax rates on bets and a functioning market, like New Jersey, the majority of bets happen through mobile betting. In D.C., the government’s mobile app only earns a fraction of what one in-person sports book does.

The council was warned against this misguided, heavy-handed government approach. The lottery’s failure to deliver a consumer-friendly experience is on them.

Photo Credit: Wikimedia Commons

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Much to Lose, Nothing to Gain for New Jersey on Financial Transactions Tax

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Posted by Doug Kellogg on Thursday, October 15th, 2020, 10:16 AM PERMALINK

It would be bad news for every American investor if New Jersey imposed a financial transactions tax on stock exchange operations that are based in the state. The tax would levy a 0.25 cent tax, or potentially a 0.10 cent tax according to Politico, on a wide variety of financial transactions processed by the exchanges at data centers – like trades of stocks, options, and futures.

The proposed micro-cent transactions tax may sound small when looked at in a vacuum, but it would add up to significant costs when you consider how many transactions take place daily. The value of everyone’s 401(k) and life savings would go down with this new penalty on investing...

Read the rest of this op-ed at Save Jersey HERE.

Photo Credit: Sergei Tokmakov

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We’re Out! Exchanges Will Leave NJ if Financial Transactions Tax Passes

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Posted by Doug Kellogg on Monday, September 14th, 2020, 2:30 PM PERMALINK

A misguided tax on financial transactions aimed at data processing facilities in New Jersey has caught the eye of Governor Phil Murphy.

That development was followed by the New York Stock Exchange (NYSE) stating they would move operations out of New Jersey in response. Now, a broad coalition, including Nasdaq, Citadel Securities and Virtu Financial, has joined NYSE in promising to move operations out of New Jersey if a financial transactions tax is imposed.

This is incredibly predictable, given that New Jersey is home to computers that process trades, something that can easily be moved elsewhere. Even New York, which is home to trading floors, risks driving off exchanges if it imposes a similar stock transfer tax.

The New Jersey proposal would levy a 0.25 cent tax on a wide variety of financial transactions processed by the exchanges at data centers – like trades of stocks, options, futures.

Don’t let the low per transaction number fool you, with data centers processing tens of thousands of transactions each year, the cost will add up to an estimated $10 billion. And that is just the revenue the state expects, by adding burdensome costs and compliance, the value of every American’s investments and retirement will go down.

The exchanges will prove their point later in September as they use facilities outside of New Jersey to process transactions for one day, showing how easily they can move.

If you thought Bernie Sanders’ or Elizabeth Warren’s tax hike ideas were no longer a threat, think again. This tax, as well as New York’s so-called billionaire asset tax, are straight out of the Sanders and Warren playbook, and absolutely threaten all Americans’ retirement plans.

While New Jersey has been hit hard by COVID-19, revenues are coming back faster and higher than expected. The fact is, Governor Murphy pushes for tax hikes every year, because he refuses to address New Jersey’s out-of-control spending problem – especially huge pension liabilities that even moderate Democrats want to reform.

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NY Lawmaker Calls for 120% Tax

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Posted by Doug Kellogg on Tuesday, September 8th, 2020, 1:45 PM PERMALINK

With New York City residents fleeing, Democrats in New York are scheming up new taxes to make up for the revenue that will be lost. Some of these ideas – like a wealth tax on assets – are so aggressive even Governor Cuomo is concerned.

One Assembly member is bulldozing through any concerns and pushing a confiscatory 120% tax to punish wealthier residents who try to escape their tax schemes. Calling this highway robbery would be an insult to highway robbers.

Assemblyman Ron Kim, representing part of Queens, stated:

“90% of NY: Tax the damn rich

"Cuomo: Well, I think it’s unconstitutional and what if they leave us and won’t finance my political future?

"Me: Then let’s raise their rates to 120% to confiscate their wealth & put them in debt before they leave us.”

The message this sends is clear: leave now, before it is too late.

The wealth tax Kim is looking to enforce with his plan to take all of your money is a likely-unconstitutional tax on New Yorkers and companies with $1 billion in assets. Touted by Alexandria Ocasio-Cortez, it applies the capital gains tax to any assets, not just profit on the sale of an asset.

Desperate to avoid reality, Kim would rather throw a hissy fit and threaten more radical unconstitutional attacks on New Yorkers like total wealth confiscation.

Kim is not alone. Across the country, California Assemblyman Rob Bonta has proposed a tax on net worth. The tax would somehow even apply to people who left the state for 10 years. Absurdly, if a wealthy person moved to California they would still pay the tax on their wealth earned in their previous state of residence.

In New York, things are only going to get worse. The state was driving taxpaying residents out in droves well before the coronavirus crisis hit.

With the crisis making matters even worse, many wealthy New Yorkers have relocated to second homes outside of New York City, and often out of state, and many more have followed as fleets of moving trucks have been lining up to whisk them away.

A state legislature that has become dominated by the ultra-progressive left following upset victories in 2018, is poised to become more socialist this cycle. That is not hyperbole, multiple candidates endorsed by the Democratic Socialists of America (DSA) won primaries in heavy Democrat districts.

This means wild attacks on productive New Yorkers won’t stop with tweets.

In states like New York and California, radicals like Kim and Bonta will keep trying to tax people to fund their friends, costly green energy schemes, and ludicrously expensive ideas like government-controlled healthcare.

Any taxpayers in these states who don’t feel like being test dummies for unhinged socialist tax schemes should call the moving company stat.

Photo Credit: wikipedia.org

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NJ Budget “Plan”: Another $1 Billion in Taxes and $4 Billion in Debt

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Posted by Doug Kellogg on Tuesday, August 25th, 2020, 4:58 PM PERMALINK

It’s taxation as usual in New Jersey. Governor Murphy delivered a revised budget address on Tuesday, with the legislature having passed a stopgap budget earlier in the year. The plan pushes for  around $1 billion in tax hikes, through many familiar proposals with some added coronavirus spin.

Before this second version of an annual budget was even released, the state enacted a massive, nearly $10 billion bonding plan with the stated purpose of covering coronavirus-related shortfalls. This plan carries a near-guaranteed property tax surcharge that will be added to the bills of taxpayers to pay back the debt.  

On top of that, the state legislature recently passed a new tax on health insurance plans. A financial transactions tax that will impact all investors is among other proposals that could also threaten New Jersey taxpayers.

On the heels of these new burdens and threats comes Murphy’s updated tax hike wishlist.

Once again, he wants a millionaire’s tax on earnings from $1 million to $5 million annually – a policy that promises to drive out high earners and employers, many of whom already have one foot out the door because of coronavirus.

Stop if you’ve heard this one before, a temporary surcharge on large businesses would become permanent under Murphy’s plan.  

Murphy is also seeking a tax hike on cigarettes, a desperate move to grab at a dwindling revenue source. He continues his attempts to price low and middle-income New Jerseyans out of their Second Amendment rights with fee hikes on gun ownership, like a $48 increase in the handgun permit fee and $95 increase in the firearms I.D. card fee.

Boat sales would also see a tax increase – maybe the Governor isn’t a fan of Jersey Shore boat parades – as would limousine services. Limousine services which have been crushed by the pandemic, facing a punitive tax hike…

Even with all his debt and tax hike plans, Murphy still admonished Washington, demanding Republicans in Congress give New Jersey a no-strings-attached bailout. Yet, despite everything, New Jersey tax revenues are recovering swiftly. An earlier $7.7 billion projected budget gap is now actually $5.6 billion.

Murphy may try to use the pandemic to justify his plans, but he is increasing spending on new programs, and rushing to cover unaffordable government pensions rather than reform them.

The state remains mired in a very strict coronavirus lockdown, with thousands of businesses having shut down permanently. With people losing jobs, and thinking of moving out of state, there are many reasons an already bad idea – raising taxes – is an even worse plan than usual.

With tax hikes and more debt, Murphy’s budget proposal would keep government fat and happy while more New Jersey residents give up on paying the bill for it.

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Debt & Taxes Are Certain in New Jersey

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Posted by Doug Kellogg on Friday, July 31st, 2020, 5:25 PM PERMALINK

The Garden State has faced hardship because of coronavirus, that is unfortunate and has caused unexpected strain on the state’s finances, and those of its localities. But that is not an excuse for policies that will dig the state into a worse fiscal situation, which are apparently the only policies the Democrats running the place can come up with.

Let’s start with a tax on health insurance, that is supposed to help more people afford health insurance. You read that right, and no it does not make sense. The 2.5% tax on health insurance has passed both chambers.

Middle class New Jerseyans who were set to enjoy not paying the recently-dropped federal tax on health insurance plans will now get stuck with a state tax. Meanwhile the state still receives federal subsidies to drive down the costs of plans on its exchange.

This blatant tax hike on working people, that penalizes them for having health insurance, is just the latest mistake from Trenton.

New Jersey has also been adding massive new debt at the state and local level.

The state’s debt is $215 billion, “5 times the state’s total budget.”

Among U.S. states, New Jersey’s net tax-supported per-capita debt ranks fourth-highest, according to the latest assessments from Moody’s Investors Service, the credit rating agency.

Those numbers are about to get worse, as Governor Murphy’s $9.9 billion bonding scheme starts to go into effect. The bonds are supposed to be issued to counter coronavirus-related revenue loss.

The bonds do not require voter approval, but they will be backstopped by a statewide property tax surcharge if necessary. New Jerseyans already pay some of the highest property taxes in the nation. The state’s already overused credit card and the restraint of Democrat leaders are all that stands between them and even higher taxes.

That is, unless a lawsuit filed by Republican Gubernatorial candidate Jack Ciatarelli succeeds. The New Jersey Supreme Court has held previously that long-term debt can’t be used to balance the budget.

That’s not the end of the debt Murphy is working to add, and the state legislature has also moved legislation to allow localities to take on new debt, up to 30% of their budgets.

A lack of oversight is among the concerns with the local government debt plan:

“Sen. Declan O’Scanlon (R-Monmouth) said the bill allows local governments to borrow too much without direct state oversight, and doesn’t require local officials to exhaust all other options before turning to the bond market.

“A former sponsor of the bill, O’Scanlon said he dropped off after “the Assembly screwed it up.””

New Jersey is playing a dangerous game for its future. The state has already lost taxpayers who have fled to other states in recent years, and now it is putting both state and local budgets into greater debt. Meanwhile, absurd tax hikes like the new tax on health insurance continue to be piled on.

What taxpayer is going to stick around to pay off all this debt for New Jersey, just so families and businesses pay all the costs for coronavirus and government sacrifices little to nothing?

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New York, New Jersey Plans to Tax Wall St. Would Hurt Every Investor

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Posted by Doug Kellogg on Monday, July 27th, 2020, 5:46 PM PERMALINK

“If you can make it here, you can make it anywhere,” goes the line from Frank Sinatra’s famous song “New York, New York.”

For folks in New York and New Jersey, “anywhere” is starting to look pretty good as legislators push for misguided tax hikes, bonding schemes, and more, to keep big-spending budgets afloat.

One might recall that New York passed a budget back in early April, one that avoided the variety of significant tax increase proposals that were floating around Albany. Yet, after departing the capitol for a while, legislators returned for an emergency session focused on police reform. Much to the chagrin of beleaguered New York taxpayers, legislators have stuck around.

New York, with a currently projected $13 billion hole, is seeing left-wing interests push hard for “billionaire taxes” – to the point of having gangs of people with dummy pitchforks roam around nice Long Island neighborhoods demanding people pay their “fair share.”

The $5.5 billion tax proposed is an entirely new tax on New Yorkers and companies with $1 billion or more in assets. It’s a capital gains tax, but on unrealized gains. The state’s 8.8% tax rate on capital gains would be applied to any growth in value.

It is potentially also unconstitutional, as New York's Empire Center explains.

For some reason, Alexandria Ocasio-Cortez has become one of the faces of this effort, probably a bad sign that this is coming to Congress if Joe Biden is elected president.

CNBC explains: “If Bloomberg LP,  the financial-information giant owned by Mike Bloomberg, gained $5 billion in value in 2020, he would pay about $440 million in taxes. If assets lose value, the billionaires can use the loss — or “carry it forward” — indefinitely to reduce taxes in future years.”

One of the groups peddling this tax, Americans for Tax Fairness, is behind the viral social media claim that ‘America’s billionaires got $434 billion richer during the pandemic’.

This happens to be completely false. A MarketWatch examination found, “Cumulatively, the top 50 billionaires lost $232 billion between the market’s peak and this Tuesday. If the remaining billionaires on the Forbes list lost wealth at the same roughly 12.5% rate that the top 50 experienced, that’s another $200 billion–plus wiped out.”

But why let facts get in the way of fantasy?

Assemblyman Phil Steck certainly isn’t. He’s sponsoring another tax hike, proposing to restore and expand the stock transfer tax at an estimated cost of $13 billion annually to taxpayers. The tax will work against this aim of course, as higher costs will disincentivize trading, reducing revenue.

The fake out here is a pretense this is also about hunting fat cats. When the reality is this would hit every individual investor, anyone with a 401(k), day traders, and on. The value of everyone’s portfolio would go down.

Steck’s bill calls for a tax of 1.25 cents on a sale of stock worth $5 or less a share to as much as 5 cents for stocks worth more than $20 per share.” (Incredibly, some of this money would eventually go to the Metropolitan Transit Authority, essentially throwing the money into an endless pit never to be seen again.)

With the tax being based on the per-share value of the stock, it is quite regressive. Any working stiff who has some shares of Apple or Microsoft who trades them will pay a high transfer tax for that sale.

This doesn’t concern Steck, who seems to not realize many investors do not pay fees on trades anymore, and the growth of passive investing means many do not pay high management fees that would dwarf any transfer tax concern.

Further, Steck wants his tax to hit new transactions that the old model would not have included. Finally, he eerily cites the Wayfair internet sales tax decision as allowing this tax to apply even though New Jersey hosts the computers that process trades.

The danger of course is that the exchanges will leave. The original stock transfer tax was neutralized in the 1980s because the exchanges threatened to leave, and now it would be easier than ever to do so.

Back to New Jersey, they are also doing their level best to drive out any remaining wealthy individuals, families, and businesses - including proposing a financial transactions tax like New York's. New Jersey's bill (A4402), sponsored by Assemblyman McKeon, would institute a 0.25 cent per transaction tax.

If both of these states added similar taxes on financial transactions, one based on hosting the exchanges, the other, infrastructure to process trades, what then? We’d see the downsides steepen. For New York, where the state comptroller reports 17% of state revenues come from Wall Street, the downside risk is huge.

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Georgia Sports Betting Proposal Tilts Field Against Taxpayers, Caps State’s Competitiveness

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Posted by Doug Kellogg on Thursday, June 25th, 2020, 11:07 AM PERMALINK

A proposal, attached to House Bill 903, to legalize sports betting in Georgia came alive late last week. With baseball, basketball, and hockey slowly moving towards playing again, the timing seems great.

Unfortunately, the current language would blindside taxpayers with one of the highest tax rates in the nation, at 20% of adjusted gross income. Not only that, it would give sports leagues power over what data sports books could use.

If they remain, these provisions promise to handicap Georgia sports betting business. Tax rates on bets approaching 20% and up are so high that they drive down betting activity, and actually reduce tax revenue.

They defeat the entire goal of the politicians seeking the high rates. And that analysis focuses on European countries. With sports betting in the U.S., many states have yet to legalize, and others have come in with very low tax rates, like Iowa’s 6.75% rate. The competitive situation could turn out even worse for states like Illinois and Tennessee, who have adopted high rates (and Georgia if the state follows their misguided lead).

In fact, Illinois has been getting crushed by neighboring Indiana. The Hoosier State has a 9.5% tax rate, and digital sports betting. Illinois’ own governor seems to not realize his state does not have live digital betting yet.

High tax rates also keep people betting with illegal offshore sports books. This is bad for consumer protection, and general security, as we don't know where all that money goes. There is an estimated $150 billion sports betting black market.

Georgia’s legislation includes language on data that would allow sports leagues to determine at a whim that independent sports book operators would have to use their “official” stream.

This is damaging because the government is giving away regulatory power to private, protected sports leagues. Then the leagues get to use that power to tell people who they can do business with. It’s bizarre some state legislators think this is a good idea.

There is some recourse, as operators can argue terms for league data use are not "commercially reasonable." That may be better than government stating what is "commercially reasonable", but risks creating endless legal disputes that cost money, which only makes it more difficult to run a sports betting business in the state.

Meanwhile, there is a functioning competitive market for sports statistics data that would determine what is "commercially reasonable" for free.

It has been well established that sports statistical information is public. In National Basketball Ass’n v. Motorola,Inc. a court of appeals held that sports statistics are not copyrightable, and that compiling and distributing statistics was legal.

It is also completely unnecessary for the leagues’ success, as they have been signing agreements for using their official data all over the place. The major sports leagues have deals with Genius Sports or Sportradar – companies that compile and distribute statistical data, for example, the NBA’s deal for overseas statistics distribution is worth $250 million.

Hopefully Georgia lawmakers take steps to address these issues, and better prepare their state to compete in the growing sports betting marketplace. Otherwise, when Alabama and Florida join the fray, Georgia could blow whatever lead they gain by acting first.

Photo Credit: Wikimedia Commons

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You Better (Universally) Recognize

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Posted by Doug Kellogg on Thursday, May 28th, 2020, 6:09 PM PERMALINK

The coronavirus crisis has led to a lot of changes for occupational licensing.

Suddenly, states have recognized out-of-state licenses for health care workers like nurses and doctors, in order to bring in needed help for the frontlines. For similar reasons, a number of states have relaxed requirements for people trained in health care fields to get their initial license.

The pandemic shined a spotlight on licensing hurdles that were getting in the way of workers fighting coronavirus.

Of course, in normal times, that is the point of occupational licensing. Often driven by political favoritism, these rules restrict work by placing barriers between people and jobs. Barriers that can be very arbitrary, and costly – which has a pernicious effect on low-income workers and people starting off a career.  

Now that it has been made clear how damaging licensing rules are for workers and movement between states, it is the perfect time for lawmakers to remove these burdens.

One great way to do that is universal recognition, meaning if someone has earned and maintained license in good standing in “state A”, that license is recognized in “state B”, and they can work in their new state without starting from scratch to earn a new license for the same profession.

If doctors and nurses who require extensive training can go from one state to another, cosmetologists, barbers, landscapers, and alike surely can as well.

Arizona and Missouri have passed universal recognition already, and North Carolina and Ohio currently have similar bills pending.

These states are great examples of the negative impact of licensing, and how to act to address that problem.

According to an Institute for Justice study, the cost of licensing to Ohio amounts to 67,000 jobs and over $209 million lost. Meanwhile over $6 billion in resources have been misallocated.

On North Carolina, IJ reports, “It takes just 39 days of training to earn a license as an emergency medical technician in North Carolina, but substantially more to become a licensed manicurist (70 days), massage therapist (117), skin care specialist (140), cosmetologist (350) or barber (722). Occupations like these, where training required does not line up with public safety concerns, make possible targets for reform.”

Ohio embarked on a path of reform in 2018, passing a landmark sunset review process for licenses that requires licensing boards to recommend which licenses should be eliminated, and which should be retained. The burden of proof is on the boards, as they must prove a license is critical to public safety to keep it. Licenses that the legislature does not vote to keep eventually sunset.

The Buckeye State also passed licensing reciprocity for military spouses, Senate Bill 7, signed into law by Gov. DeWine this year.

Now, House Bill 432 sponsored by Rep. Jena Powell, and its Senate companion sponsored by Sen. Kristina Roegner and Sen. Rob McColley, offer the chance for full universal recognition.

North Carolina’s universal recognition legislation is Senate Bill 773, sponsored by Sen. Chuck Edwards, Sen. Andy Wells, and Sen. Norman Sanderson.

The state’s think tank, the John Locke Foundation, writes, “Let’s not forget that occupational licensing reform has long been a bipartisan issue. In recent years “red” and “blue” states alike have made significant licensing reforms. In fact, one of the strongest cases for reforming occupational licensing was made in a 2016 white paper by the Obama/Biden administration.”

Both the Trump and Obama administration have recommended licensing reform to the states.

North Carolina is not stopping there, more licensing reform proposals are also on the table, including a sunset review process similar to Ohio’s.

This is the kind of comprehensive approach that will make Ohio and North Carolina more friendly to workers, especially people starting out new careers, and moving in from other states.

It shouldn’t take a pandemic to show how restrictive occupational licensing is, but since it has, taxpayers should urgently support reform that gets these arbitrary government barriers to work out of the way.

Photo Credit: Flickr - Joshua Rothaas

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Oklahoma Gets it Right On Citizen Privacy Protections

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Posted by Doug Kellogg on Monday, May 18th, 2020, 6:25 PM PERMALINK

Last week, the Oklahoma legislature overwhelmingly passed protections for free speech and citizen privacy, as the Personal Privacy Protection Act sailed through the Senate, having passed the House earlier in the year. UPDATE: Governor Stitt signed the bill this week.

This is a critical step to protect Oklahomans who contribute to causes they believe in. We continue to see efforts to undermine the right to free speech with aggressive state laws that expose private citizens’ personal information, with the effect of chilling speech.

These aggressive laws go far beyond the usual political campaign regulation, undermining the ability of citizens to effectively engage with their legislators and even give to educational groups.

Whether it is the rise of Antifa, Democrat Presidential candidate Joaquin Castro publishing the personal and business information of contributors to the Trump campaign, or story after story of union intimidation, it is clear that if people’s personal information is revealed, hyper-political interests will abuse that information.

Oklahomans who contribute to non-profit educational groups, advocacy organizations, and alike, should have their privacy protected. They should applaud their legislators for getting protections over the finish line during a difficult time, especially the bill's sponsors, Rep. Terry O'Donnell, Sen. Kim David, Rep. Lewis Moore, Rep. Mark Lepak, Rep. Jay Steagall, Sen. Micheal Bergstrom.

Oklahoma joins West Virginia, Mississippi, Arizona, and most recently Utah, as states who have enacted these vital measures. Tennessee has a chance to join Oklahoma by passing HB 2665/SB 2886 if and when they return to session, as does Louisiana with HB 303.

Photo Credit: Flickr - jim hutchison

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