Governor Needs a 'Vision' Check on Marcellus Shale

Governor Corbett claimed in a recent Patriot-News story that Marcellus Shale gas drillers have paid $71 million in sales taxes over the last two years as proof that the industry is paying an adequate share of taxes. It's a big number, but isn't likely accurate for a number of reasons.

Why the Federal Reserve Matters

David Leonhardt of The New York Times has an article today where he explains bias in policy making at the Federal Reserve:

One group of Fed officials and watchers worries constantly about the prospect of rising inflation, no matter what the economy is doing. Some of them are haunted by the inflation of the 1970s and worry it may return at any time. Others spend much of their time with bank executives or big investors, who generally have more to lose from high inflation than from high unemployment. There is no equivalent group — at least not one as influential — that obsesses over unemployment. Instead, the other side of the debate tends to be dominated by moderates, like Ben Bernanke, the Fed chairman, and [former Fed governor Laurence] Meyer, who sometimes worry about inflation and sometimes about unemployment. The result is a bias that can distort the Fed’s decision-making.

Imaginative Tax Avoidance At Work

I highly recommend that you spend what's remaining of your free page views reading this New York Times article detailing tax avoidance strategies at General Electric. Here is the key quote:

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

The Minimum Wage Matters

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On Thursday, the Mid-Atlantic office of the Bureau of Labor Statistics released its latest estimate of the number of workers in Pennsylvania earning at or below the current federal minimum wage of $7.25 an hour.

In Case You Missed It: Third and State Blog for Week of March 21

This week on Third and State, we blogged about Marcellus Shale trickle down economics, the Affordable Care Act's first birthday, unions and inequality, and much more!

In case you missed it:

  • On the Marcellus Shale, Mike Wood notes that trickle down economics is not helping the local communities across Pennsylvania hosting increased natural gas drilling.
  • On health care, Chris Lilienthal highlights a "consumers' hearing" in the State Capitol Rotunda on the one-year anniversary of the Affordable Care Act's passage. The hearing presented the perspective of Pennsylvanians who have benefited from the law - a perspective that was omitted from a congressional hearing on the landmark law also held at Pennsylvania's State Capitol this week.
  • On federal tax issues, Chris blogs about an interview on WHYY's Fresh Air that explained some of the accounting gimmicks that large corporations use to shelter income overseas and avoid as much as $90 billion a year in U.S. taxes.
  • On wages and income inequality, Mark Price shares research documenting that in economies where more people are covered by unions, there is less inequality.
  • Finally, Mark has this week's Friday Funny: The Daily Show's Jon Stewart takes on new governors, mean stepdads and confusion within the administration of Maine's new governor about what exactly a mural is.

More blog posts next week. Keep us bookmarked and join the conversation!

Friday Funny: The Mean Stepdad Governors

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The Daily Show's Jon Stewart takes on a number of new governors (including our own Governor Corbett) in an amusing segment that, in true Stewart fashion, is peppered with profanity. In it, he describes each of the guv's relationship with their state as going from "cool new boyfriend to psychotic stepdad" in the weeks after they took office.

Trickle Down Economics Not Helping Marcellus Shale Communities

The counties hosting the most Marcellus Shale gas drilling are showing early signs of increased economic activity, but little in the way of increased resources.

The smart people at Penn State's Cooperative Extension (which is shortsightedly cut by 50% in the Governor's 2011-12 budget proposal) looked at state tax collections by county and noticed that certain types of taxes are performing better in areas of heavy drilling activity than in the rest of the state. Based on anecdotes of filled hotel rooms, increased restaurant usage, and checks to landowners for drilling rights, it is not surprising to see an initial uptick in royalty income and sales tax receipts in those counties.

For local governments and schools hosting the activity, there are increased demands for services like education, health care, police, and emergency responders, to name a few. The problem is that these communities receive almost no benefit due to the state's tax structure.

Consumers Tell Real Story of Affordable Care Act

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The U.S. House Committee on Energy and Commerce convened in Harrisburg today for a hearing focused on rolling back the reforms of the Affordable Care Act.

Not far from the hearing room, dozens of Pennsylvanians gathered in the Capitol Rotunda for a "consumers hearing" to highlight just how much the landmark health law has impacted the lives of everyday Pennsylvanians. Consumers were noticeably absent from the docket of speakers at the congressional hearing, which included Governor Corbett, lawmakers and the usual-suspect business lobbyists.

The consumers' message was simple: don't roll back reforms that are critical to the health and lives of working Pennsylvanians.

Where There Are Unions, There Is Less Inequality

I highly recommend you spend some time checking out the website for The State of Working America, the annual checkup on the health of the middle class produced by the Economic Policy Institute. 

One of the interesting graphics researchers put together for this year's edition was a scatter plot of union coverage and inequality in advanced economies.

Unions compress the wage distribution and, thus, reduce inequality. As a result, the more people who are covered by unions in an economy, the less inequality that economy has.

A 'Double Irish' Here, a 'Dutch Sandwich' There

St. Patrick's Day may be behind us, but plenty of U.S. corporations are still helping themselves to a "Double Irish." Or a "Dutch Sandwich," for that matter.

No, we're not talking about drinks or delicacies from these European countries. We're actually talking about complex accounting gimmicks that U.S.-based corporations use to shift foreign profits into accounts in Ireland, the Netherlands and Bermuda to avoid U.S. corporate taxes. Companies use other loopholes to shift income earned here to subsidiaries abroad. These practices cost the federal treasury as much as $90 billion a year.

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