Insider Report
Headlines (Scroll down for complete stories):
1. House Panel Rips Obama Over Drilling Permits
2. Tax Code Called 'Shockingly Complicated'
3. Paychecks Stretch Furthest in Houston
4. Obama's Cap on Savings Would 'Penalize Success'
5. Healthcare Costs Vary Greatly Among States
6. California Weighs Penny-Per-Ounce Tax on Sodas
1. House Panel Rips Obama Over Drilling Permits
The House Natural Resources Committee has issued a statement lambasting the Obama administration for dragging its feet in issuing permits for oil and gas drilling on federal lands.
According to the committee's statement, it takes the Bureau of Land Management an average of 307 days to process a permit to drill, nearly twice as long as the 154 days it took in 2005.
In Colorado, it takes just 27 days to approve a permit on state and private lands, and in North Dakota, just 10 days.
To put the federal delay into perspective, the committee claimed that in 307 days, a person can drive from Washington, D.C., to Los Angeles 154 times, watch the movie "Die Hard" 3,349 times, or hike the entire Appalachian Trail — twice.
"President Obama has touted that U.S. oil and natural gas production is at its highest levels in years, but he's only telling half the story," according to the committee's statement.
"The recent increase in U.S. oil and gas production can all be attributed to state and private lands — not federal."
Natural Resources Committee Chairman Doc Hastings, R-Wash., said: "The Obama administration's federal energy policies are costing American jobs, impeding economic growth and recovery, and robbing the U.S. Treasury of much needed revenue to help us balance our budget.
"We've seen how energy production on state lands can create new jobs … [and] ease the pain of high gasoline prices. So why is the Obama administration refusing to take the same steps as the states to develop these resources?"
The statement was issued following an April 17 oversight hearing. One witness at the hearing, Utah Lt. Gov. Gregory S. Bell, noted that "state and federal permits require similar regulatory and engineering reviews, so it is hard to understand why a federal permit should take four times as long to be issued."
Bell concluded: "The status quo of federal overreach is simply unacceptable."
Texas Land Commissioner Jerry E. Patterson also appeared as a witness and said: "The states lead the way in leasing, permitting, drilling and most important, the production of oil and gas. This administration should look to the states and follow their lead if we are to become energy independent. Sadly, federal policies hamper the development of vitally needed energy."
Back in February, President Obama said in his State of the Union address that his administration has been actively working to speed up the permitting process: "That's why my administration will keep cutting red tape and speeding up new oil and gas permits."
The committee responded at the time: "Facts are stubborn things, and that statement simply is not true."
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2. Tax Code Called 'Shockingly Complicated'
The U.S. tax code has become so complex that the paperwork burden generated by the Treasury Department — almost all of it from the Internal Revenue Service — now totals a mind-boggling 6.7 billion hours.
That is the equivalent of about 3.35 million employees working 40-hour weeks year-round with just two weeks off, according to a new report from the National Taxpayers Union — released, fittingly enough, on April 15. That's double the number of elementary school teachers and 10 times the number of mail carriers.
Those 6.7 billion hours, when calculated with the average employer cost for civilian workers, add up to $206 billion. Another $34 billion is spent on tax software, tax preparers, postage, and other out-of-pocket costs, bringing the total cost to about $240 billion a year.
That figure doesn't even include the hours taxpayers spend on state and local taxes or responding to IRS audits.
"A review of past years' tax documents compared to today's forms and instructions reveals just how shockingly complicated taxes have become," observes David Keating, senior counselor for the 362,000-member National Taxpayers Union, a nonprofit, nonpartisan organization founded in 1969.
Other eye-opening facts uncovered in the report include:
- The most recently published tax code had 3.95 million words — 112,000 more than in 2010.
- In addition, there are 20 volumes of regulations containing 10.4 million words.
- Since 2001, there have been about 4,680 changes to the tax code, an average of more than one a day.
- In 1935, the instruction booklet for Form 1040 contained just two pages. In 2012, it had 214 pages.
- The IRS now lists more than 2,000 publications, forms, and instructions for download from its website, up from 1,770 as recently as 2009.
- Corporate tax returns can be massive. For example, the returns that GE filed in recent years contained more than 24,000 pages.
- The average fee charged by H&R Block to prepare a return was $192 last year — up from $27 in 1980.
"While the 1998 IRS Restructuring and Reform Act requires Congress to at least consider complexity before passing tax legislation, that has not provided enough incentive for lawmakers to avoid additional complexity or encourage simplification," Keating says.
"Fundamental overhaul of our tax system remains a national priority."
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3. Paychecks Stretch Furthest in Houston
Salaries may be highest in New York, San Francisco, and Washington, D.C., but when the cost of living is taken into account, paychecks stretch the furthest in Houston, Texas.
High prices in East and West Coast cities "mean the fat paychecks aren't necessarily getting the locals ahead," NewGeography.com observes.
"When cost of living is factored in, most of the places that boast the highest effective pay turn out to be in the less celebrated and less expensive middle part of the country."
Joel Kotkin, executive editor of NewGeography.com and author of the book "The Next Hundred Million: America in 2050," teamed up with Mark Schill of Praxis Strategy Group to compile a ranking of 49 large U.S. metropolitan areas according to their "2012 Adjusted Annual Wage," which considers average annual salary and cost of living.
The results, Kotkin notes, were "surprising and revealing."
The average salary in Houston in 2012 was $67,279, seventh highest among the metro areas, but it enjoys a relatively low cost of living, which includes consumer prices and services, utilities and transportation costs, and housing prices.
The ratio of the median home price to median annual household income in Houston is just 2.9. In comparison, houses in San Francisco cost 6.7 times the median local household income.
Adjusted for cost of living, the average wage in Houston is $75,256, highest in the nation.
Most of the cities in the Top 10 "are relatively buoyant economies with relatively low costs of living," said Kotkin. They include Dallas-Fort Worth (fourth with an adjusted wage of $62,867); Austin, Texas (fifth); Memphis, Tenn. (sixth); Charlotte, N.C. (seventh); and Cincinnati, Ohio (10th).
Detroit, which ranks only 16th in average annual wage, ranks third in adjusted wage due to its affordable housing.
No. 2 on the list is the San Jose, Calif., metro area due to its average wage of $107,515, highest in the nation. Its adjusted wage is $71,534, but that's high enough to outpace every other metro area except Houston.
Others in the top 10 are Atlanta (eighth) and Seattle (ninth).
Washington, D.C., has the second highest average wage, but it ranks only No. 16 in adjusted wage due to its high cost of living.
The same goes for San Francisco — No. 3 in average wage and No. 35 in adjusted wage — and New York, which is No. 4 in average wage but only 41st in adjusted wage.
Los Angeles is No. 12 in average wage, but 47th in adjusted wage due particularly to its high housing costs.
The only metro areas studied that have a lower adjusted wage than Los Angeles are Providence, R.I., at 48 and Riverside-San Bernardino, Calif., at 49.
Kotkin concludes: "Over time, it seems clear that, for the most part, the best prospects for the future lie in places that experience income and employment gains but remain relatively affordable."
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4. Obama's Cap on Savings Would 'Penalize Success'
President Obama's proposal to limit tax-preferred retirement savings would penalize success and patience in favor of "the nebulous concept of fairness," according to one analysis of the unprecedented plan.
Obama's fiscal 2014 budget has a section stating: "Individual Retirement Accounts and other tax-preferred savings vehicles are intended to help middle-class families save for retirement. But under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving."
The budget would limit an individual's total balance in tax-preferred accounts — which include IRAs, Roth IRAs, and 401(k) plans — to an amount sufficient to finance a maximum annuity of $205,000 per year in retirement, or "about $3 million for someone retiring in 2013," the budget estimates.
The first problem with the proposal is that it won't do much at all to help solve the federal government's economic problems, reports The American, the journal of the American Enterprise Institute.
Baby boomers on average reportedly have less than $100,000 saved for retirement, and many younger Americans are burdened with student debt, so the revenue produced by the plan would likely be disappointing.
The budget itself predicts that capping contributions will increase revenue by only $9 billion over 10 years, which will cover the current deficit for about three days, The American observes.
Plus, the revenue raised isn't new revenue. Taxes paid earlier because of the inability to put money into a tax-preferred plan would otherwise be paid later when the money is withdrawn.
While $205,000 a year may appear to be a sufficient sum today, it may not be sufficient for those who live 20 or 30 years after retirement. With an inflation rate of 6 percent, after 30 years $205,000 would be worth around $40,000 a year today, according to the article by Blake Hurst, a frequent contributor to The American.
Another problem: "The budget offers few details on how the government would enforce this cap across a worker's various accounts, but you can bet it would be complicated," The Wall Street Journal said.
"Right now the government doesn't track tax-deferred account balances. Financial firms don't have to send IRS 1099 forms to investors unless there's a distribution. So the IRS would get new power to impose new burdens on millions of taxpayers."
Hurst concludes: "There have always been income limits on contributions to the various tax-deferred accounts, but this is the first time there will be limits tied to the dollars in the account.
"The proposed limits directly penalize success in the management of money and the patience to let money grow."
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5. Healthcare Costs Vary Greatly Among States
Residents in Massachusetts — where Gov. Mitt Romney installed the forerunner to Obamacare — spend nearly twice as much per person on healthcare as residents of Utah.
In Massachusetts, "personal spending per capita" amounts to $9,128 a year, while in Utah the cost is just $5,031 a year, according to an analysis by The Wall Street Journal.
The U.S. average is $6,815.
States in the Northeast tend to have the highest costs, due to several factors including a higher cost of living and greater proportions of elderly. Sparsely populated states like North Dakota and Alaska also have high costs due largely to the expense of delivering healthcare, the Journal observes.
Utah has low costs due to the state's relatively young and healthy population and its low rate of obesity, which is linked to a number of health problems.
States also differ widely in some particular areas of healthcare delivery.
Alaska has the highest per capita expenditures for hospital care, $3,879 a year, compared to $1,830 in Utah.
Connecticut residents spend the most on "prescription drugs and other nondurable medical products," $1,269 a year, while Colorado residents spend just $690.
In Mississippi, dental services cost the average resident $223 a year, while in Washington the figure is $507.
The average outlay for nursing home care varies greatly, from a high of $898 a year in Connecticut to just $172 in Alaska.
But among all Americans, residents of the District of Columbia spend the most on healthcare, $10,349 a year.
Yet the District has one of the highest death rates in the nation, 982 per 100,000 population in 2012, according to the Census Bureau. In Hawaii, the death rate was just 623.
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6. California Weighs Penny-Per-Ounce Tax on Sodas
The California Senate Governance and Finance Committee has passed a bill that would tax sweetened beverages like soda and energy drinks a penny per ounce in an effort to combat obesity.
The legislation exempts drinks that contain fewer than 25 calories, and the money raised by the tax would go to the state's Children's Health Promotion Fund and other programs that seek to reduce the incidence of childhood obesity.
"This is the first time this state committee has passed a bill that would place a tax on sugary drinks and the first step toward stemming the epidemic of childhood obesity," the bill's lead sponsor, Democrat Bill Monning, said in a release.
"By taxing these products we will be able to implement programs that will assist in preventing disease among children and begin to address a public health crisis whose rising health costs affect all Californians."
The bill now goes for review by the Senate Health Committee, the New York Daily News reports.
The Center for Consumer Freedom, an industry-backed group, staunchly opposes the bill. J. Justin Wilson, a senior research analyst at the center, told the Los Angeles Times: "Taxes shouldn't be a tool for social engineering or an instrument to penalize Californians for doing nothing wrong."
Last year, voters in two California cities, Richmond and El Monte, rejected ballot initiatives that would have levied taxes on sugary drinks.
And a new Harris Interactive/HealthDay poll of more than 2,100 adults found that respondents were opposed to government taxes on sugary drinks and candy by a more than 2-to-1 margin.
"This is a strong vote against the 'nanny state,'" said Humphrey Taylor, chairman of The Harris Poll.
Two thirds of respondents agreed with the statement: "It should not be the role of government to influence what we eat and drink to make healthier choices."
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