Month: June 2015

Education vs. Oil – Incentives Curbed

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Did Texas Gov. Greg Abbott choose education over energy?  A Saturday veto seems to suggest that could be the case. As The Dallas Morning News is reporting, Abbott vetoed a bill on Saturday that would have consolidated the property tax dispute process for certain companies. That bill, H.B. 2826, would have amended subsidies available under Chapter 313 of the Tax Code, many of which benefit energy companies, both traditional and renewable. According to The Dallas Morning News, Gov. Abbott felt the bill was too expensive; advocates of the bill argued that the veto would discourage capital investment in the state.   The article does not cite Abbott’s concern for education; however, Texas, without the benefit of a state income tax, relies heavily on ad valorem – or property – taxes to fund public education. Bonus: To learn more about wind energy in Texas, see a primer by StateImpact Texas.

Texas Wants to Be Bitcoin

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On Tuesday, Talking Points Memo published a good primer on Texas’ new gold bullion depository.  The enrolled version of the bill, already signed into law by Gov. Greg Abbott, may be read here. The article is notable for several things, not least of which is the fact that it contains the terms “fiscal Armageddon,” “guns,” “hyperinflation,” and “repatriation” in just a few short paragraphs (and not used ironically). According to the TPM post, one of rationales for creating a state-level gold depository was to create a “metal-backed money supply intended to challenge the paper currency issued by the Federal Reserve – or “Yankee dollars”” – sounds a bit like….Bitcoin. Interestingly, last August, the Federal Reserve Bank of St. Louis published a short paper on why the gold standard isn’t all it’s cracked up to be.  Why is this so?  According to the paper, advocates of the gold standard heavily tout its guarantee of price stability; however, the St. Louis Fed argues, gold simply cannot provide the guarantee: “Price stability evidently depends less on whether money …

News of the Obvious – Austin Homes Cost a Lot!

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In a trapeze act of meta-blogging, Texas Monthly today posted a short article about an article in Forbes magazine.  And I’m writing about that article. According to the analysis in the Texas Monthly entry, two of the most overvalued real property markets in the nation are in Texas.  They are – drum roll – Houston and Austin. The money quote from the Forbes article, which the Texas Monthly piece specifically quotes is: “Texas did not experience a flood of investors snapping up distressed properties and pushing up prices–there weren’t super-undervalued properties available to buy. Its price escalation has come largely from the demand that accompanies a strong economy. It’s just been a bit faster than underlying fundamentals.” So, the market for houses in Texas is overheated. Just not in a bad way.  So, if you’re in the market for a house in Austin – or Texas, even – happy hunting.  Because Forbes says so. And Texas Monthly says that Forbes says so.  And because I say that Texas Monthly says that Forbes said so.

Like Craft Beer? Thank Jimmy Carter

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The Federal Reserve has an opinion on everything.  Even beer. And that’s ok. In a research paper, published in the fourth quarter of 2014, the Federal Reserve Bank of Richmond seeks to explain the rise and continued viability of craft breweries. According to the article, 2014 saw 615 new craft breweries; in five years, the number of American craft breweries had doubled.  Impressively: “Craft beer’s share of production has more than doubled since 2010, when it was just 5 percent. In 2014, craft beer sales volume increased nearly 18 percent, according to the BA, versus just 0.5 percent for the overall beer industry. The retail dollar value of craft beer grew 22 percent in 2014, while the total U.S. beer market increased only 1.5 percent in value.” But as the authors ask – how?  The 20th century saw American beer production as an exercise in consolidation; craft beer’s phenomenal growth defies that trend. The article cites two factors for the slowing or outright reversal in the dominance of beer production by just a few massive brewers – …

Share Buybacks – Troubling Signs or Tax Benefit?

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Most economic news in the US over the last year has been enormously positive.  Even with the disappointing economic results of the first quarter of 2015 (contraction), most indicators for the second quarter are positive.  Notably, according to the Federal Reserve Bank of Dallas, Texas saw annualized job growth of one percent in the first quarter, though this was less than the 1.9% of the entire U.S., and trailing far behind the 7.7% job growth seen in Austin. There are, however, worrying trends.  One of them is the seeming increase in share buybacks by corporations.  What is a share buyback? Simply, it’s a transaction in which a corporation purchases its own shares from shareholders – shares that had previously been issued to shareholders. Why would a corporation buy back its own shares?  Also, if a corporation has enough money to buy back its own shares, isn’t that a good sign about the cash of the corporation and its health? It depends on the reason the company is buying back its own shares as well as any …

New York – It’s Texas.

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Texas is not the only state wrestling with property taxes, it seems. New York state has its own troubles.  According to the Democrat & Chronicle, New York state will not see the addition of a property tax circuit-breaker provision to its tax laws this year. The circuit breaker plan would aim to reduce property tax burdens on those deemed least able to afford them and would provide relief not only to distressed homeowners, but also to renters. According to the Democrat & Chronicle: [Governor] “Cuomo’s $1.7 billion tax break plan would have extended a tax credit to homeowners and renters based on their income and how much they pay in property taxes or rent. It would have applied to those making less than $250,000 a year, with the credit maxing out at $2,000.” The Texas legislative session, which just wrapped up this week, was also a wash for property taxes.  Rejecting Sen. Kirk Watson’s proposal to increase the homestead exemption to $25,000, both houses ultimately approved an increase in the homestead exemption by $10,000.  The increase itself makes the …

More American Than America – FIFA and Tax Evasion

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It’s never the crime that gets ya; it’s the cover up. See Exhibit A. Or sometimes, it’s the taxes. Last week’s shattering news that 14 officials of FIFA, international soccer’s governing body, had been arrested on multiple counts of corruption and related charges shocked the world, yet it could not be said that anyone was necessarily surprised. Well…maybe.  While the fact of the corruption surprised no one, the surprise that charges were actually brought was exceeded perhaps only by the manner in which the crimes were blown open: tax evasion. According to The New York Times, the investigation into wrongdoing at FIFA received a huge boost from a fairly mundane investigation into tax evasion.  Chuck Blazer, a FIFA official who owned multiple residences and jet set around the world, landed on the IRS’ radar when, for all his wealth and accommodations, he failed to file personal income tax returns. Sound familiar? You can probably safely bet that he failed to make payments on income (an entirely separate penalty; taxpayers have separate obligation to file and to pay – …