Cheryl Mills, Corruption, Infrastructure and Sweatshops

If there were a generic Republican who was running for President and we learned that this person had not only assisted foreign companies in setting up sweatshops in third world countries but also that this person's top advisor was doing the same while they were on the government dime many people would have an issue with that. Some people have argued and really believe that sweatshop labor is just what third world countries need to bootstrap themselves into prosperity. Other people argue that no one ever got rich providing slave labor for corporations. In my view the second view is closer to being correct. The business model simply doesn't allow for that. So it's a fair question as to why Clinton lawyer, advisor and former government employee Cheryl Mills has been helping a low wage textile firm to set up shop in Haiti while simultaneously using the company's expertise to pursue her own low wage business dreams in Africa and the Caribbean. 

As chief of staff and counselor to Hillary Clinton at the State Department, Cheryl D. Mills worked ceaselessly to help a South Korean garment maker open a factory in Haiti, the centerpiece of United States government efforts to jump-start the island nation’s economy after the 2010 earthquake. Ms. Mills took the lead on smoothing the way for the company, Sae-A Trading, which secured millions of dollars in incentives to make its Haiti investment more attractive, despite criticism of its labor record elsewhere. When she presided over the project’s unveiling in September 2010, she introduced Sae-A’s chairman, Woong-ki Kim, as the most important person at the ceremony, which included Mrs. Clinton and the Haitian prime minister. Mr. Kim would later become important to Ms. Mills in a far more personal way — as a financial backer of a company she started after leaving the State Department in 2013. The company, BlackIvy Group, is pursuing infrastructure projects in Tanzania and Ghana, the only African nations in the “Partnership for Growth,” an Obama administration initiative that Mrs. Clinton helped introduce that promotes investment in developing countries. 

Since teaming up through BlackIvy, Ms. Mills and Mr. Kim have maintained close business ties, appearing together last year for the opening of a new Sae-A factory in Costa Rica where they cut the ribbon alongside Costa Rica’s president, Luis Guillermo Solís. In Africa, representatives of the United States Agency for International Development have consulted with BlackIvy and Sae-A about efforts to expand the textile trade in Ghana, where BlackIvy says the country’s 23-cents-an-hour minimum wage “compares favorably” to higher wages in China, Bangladesh and Vietnam. 

Federal officials are barred from using their positions to negotiate future employment or exchange services for something of value, and no evidence has emerged to suggest that occurred with BlackIvy. Both Ms. Mills and Mr. Kim deny that his investment was influenced by the substantial assistance she provided his company while serving as Mrs. Clinton’s right hand at the State Department. 

BlackIvy’s rationale did not sway labor advocates like Scott Nova, the executive director of the Worker Rights Consortium, who had criticized the Haiti project as a misguided American relief effort that glossed over Sae-A’s labor-relations history. “When you urge garment manufacturers producing in countries like Bangladesh, where wages are far too low for workers to adequately support their families, to move production to countries with even lower wages, it undercuts the efforts of apparel workers across the Global South to persuade governments, employers and major apparel brands to lift wages to a decent level,” Mr. Nova said. FULL STORY

If this sort of thing were going on in China or Russia or anywhere in the Middle East then we'd point and laugh and talk about those funny foreigners and their funny accents and their cultures of corruption or crony capitalism or so on and so forth. But it's happening right here, right now. And this is not a partisan problem. Both parties do this, have done it and will continue to do it. The only party difference may be which industries are favored. But that's not really a difference is it. I don't mind if government workers are well paid. I do mind if they are using government contacts to set themselves up for lucrative private business in the future. I do mind if they are using government power to assist private industry with the unspoken expectation that they'll get a little something something as soon as possible. I do mind if US government agencies are helping to outsource labor to cheaper markets.There is nothing illegal with what Mills has done but frankly that's the problem. Government policy should be based on what's best for the people of the United States, not what is best for a well connected cabal of wealthy lawyers, financiers, bureaucrats, corporations and lobbyists. The fact this group's membership may be more diverse than previous years is hardly something that should make any difference to the rest of us. I don't see that government assisted searching for sweatshop labor to make Mills and her friends richer does all that much for me. Black faces in high places means nothing if we have the same patterns of exploitation. This sort of both sides do it malarkey is exactly why the "tear the temple down" feeling is spreading in different ways on both the left and right. 

Customer Service: Speak English and keep your opinions to yourself

Recently, while driving home, I heard about these two stories on a local radio show. I thought that in different ways they were both interesting. I think the underlying connection between them is customer service. What makes good customer service? What makes you want to be a return customer to a business? Also if you feel that you are mistreated then what is the appropriate response? Do you shrug it off, pay your bill and simply shop elsewhere? Is a quiet word to the manager or a terse letter to the regional vice-president enough to satisfy your need for justice? Some people want to have it out verbally with the offending party right then and there to let them know that no one gets anything over on Mr. or Miss so-n-so. And a small minority of people aren't averse to laying hands on people should they find it necessary. Other people avoid or are downright incapable of direct confrontation. These people tend to go home or pull out their smart phone and start ranting on social media about their horrible experiences. In the first story a Kansas woman and her thirteen year old daughter were shopping for dresses for a school formal. I don't remember having such things at that point in school but it's been a while since I was thirteen. The mother picked out a dress that she thought her daughter might like. As children will do the daughter tried on the dress to please her mother though she told the mother that this dress wasn't her style. The saleswoman apparently thought that the dress was not particularly flattering to the young lady and suggested that the youngster needed to purchase and wear Spanx. I didn't know what Spanx was but apparently Spanx is underwear, primarily though not exclusively for women, designed to slim figures. I don't know if the mother was more upset by the saleswoman's tone or by what she said but either way she was angry enough to write a facebook post criticizing the saleswoman and defending her daughter's weight and shape. Of course every parent thinks their child is beautiful. That's human nature. But I'm not sure the mother's zeal to defend her daughter was best served by putting her daughter's pic in the public sphere. I suppose there are some saleswomen or salesmen who just want to move product and don't care what you look like in their clothing. But I've also bought clothes from people who were honest enough to tell me what looked good and what didn't. If I were buying an expensive suit or shoes or whatever I'd like to know ahead of time if something clashes, accentuates negatives or simply doesn't work. But that's just me. There are polite and yet direct ways to let me know that.

In the second story the reality tv personality/author Bethenny Frankel had her Jules Winnfield English MF do you speak it??!!! moment. Frankel was shopping at a K-Mart and apparently was peeved that not only were there not enough registers open but also that at least some of the workers (unclear if she's referring to floor clerks or those operating the registers) either did not or would not speak English. Today's world being what it is Frankel put this on twitter. People reliably surfaced to call her racist. 

Wow @Kmart has 2 registers open w 5 other employees standing around & two speak no English whatsoever. Shoes are sapatos right?

— Bethenny Frankel (@Bethenny) January 23, 2016

Not even attempting kids' snow boots in spanish.

— Bethenny Frankel (@Bethenny) January 23, 2016

No excuse for being at a retailer & not able to be directed to what u need. 0 to do w race. I'll explain but can't understand it for you.

— Bethenny Frankel (@Bethenny) January 23, 2016

I don't know much about Frankel and am not interested in learning more. She could be the worst bigot out there. She could be a nice person. Don't know. Don't care. But just wanting to speak English in a non-niche business in the United States of America is not in my view enough to mark you as a racist. If you and the person to whom you're speaking do not share a common language communication becomes more difficult. It is not necessarily racist to get upset about this though obviously, racist or xenophobic people by definition probably have a much lower threshold of tolerance for this sort of thing. Although Michigan is not a super diverse state in comparison to say, New York or California, there are still a fair number of people for whom English is not the first language. At least once a month or so I can hear Arabic, Chaldean, Spanish, or Korean being spoken in businesses that serve the wider public. I am really not bothered by this. It would only bother me if the owner or clerks refused or were unable to speak English to me. If I moved to another country it would be presumptuous of me to expect people there to speak English to me. I'd have to learn their language. Similarly, for its stores in the US, K-Mart should hire people who can speak English if they are going to be interacting with the public in any way. Maybe at some future point everyone in the US will be speaking Mandarin, Cantonese or Spanish. I doubt it though. You could make an argument that it's unfair that English has become the common business language or (heh-heh) lingua franca of the world. Perhaps. But it's not going to change anytime soon in this country that English is the common language. If you made the choice to come here then you should also do your best to learn the language. There are times when the ability to communicate clearly could be of critical importance. It's not just about K-mart and reality stars.

Why we need Government: North Carolina and Duke Energy Ash Spill

I'm not a huge fan of overly expansive government. I think that, especially on matters of conscience, privacy and police powers, the federal and state governments have over the course of the last fifty or sixty years, become far too intrusive, too powerful, and dangerously unresponsive to the individual citizens they purport to represent. I still believe that. However government does have some fundamental core duties. One of these is broadly what I'll call public safety. Public safety is often thought to comprise the cop on the street or a military member guarding the nation. That's correct but public safety goes beyond that. Public safety also encompasses the ability to enjoy clean air and water. It involves the ability to eat food anywhere in this country without worrying that you have an excellent chance of consuming deadly molds, bacteria, viruses, fecal material, or other items unfit for human consumption. It means you can purchase goods and services and get what you pay for without always having to bring along your violent ex-con cousin to guarantee that the seller doesn't pull a fast one.

So far so good right? However there is a conservative and occasionally libertarian streak in politics which is fundamentally opposed to the very idea of government interfering with individuals business. When such people actually gain control over the government the results are often no different than if the drug dealer paid off the chief of police. The people on the streets suffer. This truism was recently affirmed in North Carolina, home to my maternal kin. Read the article excerpted below:

RALEIGH, N.C. — Last June, state employees in charge of stopping water pollution were given updated marching orders on behalf of North Carolina’s new Republican governor and conservative lawmakers.

“The General Assembly doesn’t like you,” an official in the Department of Environment and Natural Resources told supervisors called to a drab meeting room here. “They cut your budget, but you didn’t get the message. And they cut your budget again, and you still didn’t get the message.” From now on, regulators were told, they must focus on customer service, meaning issuing environmental permits for businesses as quickly as possible.  Big changes are coming, the official said, according to three people in the meeting, two of whom took notes. “If you don’t like change, you’ll be gone.”

But when the nation’s largest utility, Duke Energy, spilled 39,000 tons of coal ash into the Dan River in early February, those big changes were suddenly playing out in a different light.  Federal prosecutors have begun a criminal investigation into the spill and the relations between Duke and regulators at the environmental agency. The spill, which coated the river bottom 70 miles downstream and threatened drinking water and aquatic life, drew attention to a deal that the environmental department’s new leadership reached with Duke last year over pollution from coal ash ponds. It included a minimal fine but no order that Duke remove the ash — the waste from burning coal to generate electricity — from its leaky, unlined ponds. 

Environmental groups said the arrangement protected a powerful utility rather than the environment or the public. Critics say the accident, the third-largest coal ash spill on record, is inextricably linked to the state’s new environmental politics and reflects an enforcement agency led by a secretary who suggested that oil was a renewable resource and an assistant secretary who, as a state lawmaker, drew a bull’s-eye on a window in his office framing the environmental agency’s headquarters. 
“They’re terrified,” said John Dorney, a retired supervisor who keeps in touch with many current employees. “Now these people have to take a deep breath and say, ‘I know what the rules require, but what does the political process want me to do?’ ”

LINK

This is what happens when government is captured by private actors. Government's beneficial roles are diminished, limited or as Grover Norquist approvingly said ,"made small enough to drown in a bathtub". I like "small government" when we're talking about nosy NSA operatives or SWAT teams in Iowa that invade people's homes for non-violent crimes or bossy child protective services mandarins that seize children first and ask questions later. But when you're talking about things like clean air and water I'm not so sure that small government is the answer.

Or to put it another way smaller government may still be a good thing but not if it's one that is subservient to big business. I see government as similar to a referee in some instances. As the saying goes, the best referees do their jobs and are barely noticed. A really bad referee insists on enforcing every last single rule violation, no matter how petty. A worse referee may even make up violations that don't exist, hand out technicals and expulsions like free candy and have both teams so on edge that the game itself suffers. A different but equally bad referee may be so incompetent that they don't know the rulebook and/ or may not care about the game enough to enforce it even if they did. He may sit back in blissful apathy and say "let the teams work it out". And then finally there are those referees that actively prefer one team over the other and so only call violations on one side while ignoring those of the other. If you were a coach and found out that your game referee was the brother-in-law of the rival coach, his poker buddy or a member of his church you'd probably want a different referee. But if you were the corrupt referee who had already worked for a super rich coach and knew you were going to make millions more after fixing the game for him you'd probably have a really stupid grin on your face and be very happy with life.

None of those types are any good for the larger game society. What we need is, prosaically enough, a balance. Now it's true that for me, as opposed to some other writers here that balance would be slightly more tilted to government staying out of people's business but even I wouldn't argue that government has no role to play. The North Carolina incident is the result of business control over government. We should never forget that by definition, if something is an externality to a business, as pollution certainly is, under our free-market system the business has no immediate economic interest in trying to reduce that externality. The free market is largely unable to influence the business on externalities, hence the name. What keeps the business in line is accurate information about the externality shared with an intelligent informed citizenry, the fear of being hauled into civil or criminal court, and the ability of referees regulators to throw the flag via fines and prevent the business from producing that externality or at least make the business capture the true cost of its process. 

Too many conservatives and libertarians have converted to the almost religious belief system that state and federal government never ever ever have any positive role to play in any business regulation and that we should let the free market sort everything out. This is not only wrong but very dangerous to humans and other living creatures.
Duke Energy’s coal ash pond in Eden, N.C., which dumped 39,000 tons of poisonous sludge and slurry into the Dan River on Feb. 2 — the third-largest such spill in U.S. history — has refocused national attention on the environmental damage these holding ponds can render. But the damage isn’t just confined to when the sludge leaks into busted storm-water drainage pipes that never should have been running under the ponds to begin with, like the situation in Eden. It’s quite possible the damage from coal ash ponds is ongoing even in the absence of accidental spills. 
“These coal ash ponds are unlined, and people don’t realize that,” said Dean Naujoks, the Yadkin Riverkeeper who has been monitoring the Dan River spill. “They are continuously leaching arsenic, chromium, cadmium, mercury, all kinds of toxic heavy metals, into the ground and eventually into groundwater. Duke Energy has 32 of these ponds on 14 sites around the state, and every one of them is unlined. Every one of them is a threat to groundwater.”

We see this over and over again. Government is not always the answer but neither is it always the problem. We must reach a balance between private power, which is only accountable to ownership, and government power, which theoretically represents and is accountable to everyone. North Carolina Governor Pat McCrory worked for Duke Energy for twenty-eight years. He has worked as Governor for the people of North Carolina for a little over one. I wonder which employer has influenced him more. I certainly know which employer has paid him more.

Thoughts?

Fight Over Online Sales Taxes: Marketplace Fairness Act

Occasionally I might or might not purchase items from Amazon and other online retailers. When I file my tax returns the State of Michigan insists that I give it a listing of online purchases and estimate and provide the sales tax I then owe to the state. Now it takes more than a bit of chutzpah to bogart your way into a private transaction that neither involved you nor took place in your jurisdiction and then claim that the actual parties to that transaction owe you a cut and need to let you wet your beak, or else. But that's how states tend to behave when there's money at stake.

For obvious reasons I won't discuss my answers to my state's nosy little questionnaire. But in general some higher sales tax states and "brick and mortar" retailers aren't pleased with the explosion in online sales. Apparently some of my fellow true blue Americans don't see the point of paying taxes to their state for transactions in which that the state had no role. Even excessively honest people tend to get amnesia about the $1500 or so they spent online last year without paying sales tax. Retailers who aren't primarily online get annoyed with people using their stores as a showroom or to price check for items they intend to purchase online. Some consumers visit a bookstore or electronics shop with no intention of purchasing anything therein. All they're doing is getting a hands on experience before ordering elsewhere. This makes some retailers rather peeved, as you might imagine. They have less money to kick up to their mob captain, state.

Some people have come up with a solution. That is a solution from their point of view, not necessarily mine. This solution will of course require you to pay more taxes. It's only fair right? I mean why should some states go without what they view as their tax revenue just because some consumers have decided it's better to order things online on occasion.

Legislation that would empower states to tax online purchases cleared a key hurdle in the Senate on Monday after winning an enthusiastic endorsement from President Obama. 

Senators advanced the bill in 74-20 procedural vote on Monday evening, just one vote short of the backing it received in a test vote last month. Twenty-six Republicans joined Democrats in moving forward with the bill..

Major retailers are putting all their lobbying muscle behind the legislation, arguing it would close an unfair loophole that benefits online merchants over brick-and-mortar stores. The National Retail Federation, which represents chains such as Macy’s, and the Retail Industry Leaders Association (RILA), which counts Target and others among its membership, announced it would score lawmakers’ votes. But signs of trouble for the bill also emerged as Wall Street groups urged the Senate to slow down and eBay began marshalling its users in a massive campaign to kill it.

The Securities Industry and Financial Markets Association and the Financial Services Roundtable said the measure could pave the way for financial transaction taxes on the state level, an idea that Wall Street and its supporters fiercely oppose.  “It’s important for Congress to explore all the possible outcomes and costs of the proposal, especially the impact on consumers,” Scott Talbott, the senior vice president of public policy for the Roundtable, said in a statement...The Marketplace Fairness Act would empower states to tax out-of-state online retailers, but would exempt small businesses that earn less than $1 million annually. 

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do. The proposal has the support of a host of governors, including Republicans Chris Christie of New Jersey, Rick Snyder of Michigan and Bob McDonnell of Virginia. Passage of the bill could bring billions of dollars in new revenue to state governments. The bill has split the tech industry, pitting eBay against the retail giant Amazon. 

In email to eBay users, eBay CEO John Donahoe argued that the bill would “penalize small online businesses,” urging the site’s millions of users to contact their members of Congress and voice opposition.The company is lobbying for Congress to increase the small-business exemption from $1 million to $10 million.  Donahoe also took a shot at Amazon, a key supporter of the legislation. “Amazon, for example, has fought harder than any other company to require all businesses to collect sales taxes online, while also seeking special tax benefits as it expands its warehouses throughout the country. It’s bad tax policy,” Donahoe wrote....

LINK
So as you can see some of this is a case of the elephants fighting and the grass getting trampled. I don't think that Wall Street cares about whether I pay the proper use tax on books or cd's I order online. But Wall Street is very concerned about states attempting to put financial transaction taxes on services that take place in cyberspace. For example California, which has a political class much friendlier to higher taxes than some other jurisdictions, might decide that every transaction which takes place between consumers in California and bankers or financial service companies based in say New York, is now subject to a California tax.

This sort of backdoor tax was disallowed in a 1992 Supreme Court ruling in which North Dakota attempted to tax Quill Corporation, a business which had no sales force, retail outlet or other physical location in the state. Amazingly North Dakota tried to argue that Quill's floppy disks and sales flyers were physically located in the state and therefore so was Quill. The Court rejected this line of reasoning but evidently said that Congress could change the law if it wanted to do so. And now it looks like Congress wants to do so.

I think this is a bad idea and also unfair. If you're a business who is only physically located in one state why in the world should you have to figure out the tax policies of 49 other states, and various counties, cities, townships and territories. That's expensive. Additionally this new online tax proposal would seem to discriminate between online purchasers and physical purchasers. There are states who do not have sales taxes or have different sales taxes than my state. That's their right. If I happen to drive across the border to purchase goods or services that's my business and my right to do so. My money doesn't automatically belong to my state or the businesses that reside within. If I order something online from a state with no sales tax like New Hampshire my state wants to be able to track that transaction and get its cut. But if I drive to New Hampshire and purchase something my state is just out of luck? Does that makes sense? Or is Michigan also going to try to put GPS on my car to track down any such trips? 

If the states feel that their tax structure is no longer feasible because of a change in consumer behavior then they are free to do things more efficiently OR raise other taxes on businesses or individuals within their state. I don't think states should be able to compel other businesses or other states to adopt their tax policy on "their" citizens. I think all this law would do, if passed, would be to squeeze out smaller businesses. It's not coincidental that Amazon is in support. Amazon just happens to be selling new tax policy software and has already negotiated tax exemptions for itself. Or maybe I'm just being selfish. Maybe I'm just opposed to paying my "fair" sales taxes on goods I hypothetically order online...

What's your take?

Obamacare, Tax Incentives and Patriotism

Now that Obamacare (PPACA) is being implemented we can see what the response to some of the law's incentives have been. Because the PPACA requires employers of a certain size to provide health care coverage to any full time worker, employers have an additional incentive to limit full time workers to only those who are absolutely necessary. If you happen not to be absolutely necessary or your employer's business model does not provide for a large number of full time workers, then your employer might decide to limit your hours so that you don't get full time work.

Employers from community colleges to Darden Group (Red Lobster, Olive Garden, Longhorn Steakhouse) to Applebee's have indicated that workers' hours could be limited to avoid health care liability. Stryker, a medical device manufacturer, is not very happy about the new 2.3% medical device excise tax, paid regardless of a company's profits, and has announced that it is reducing staffing levels by 5%. Stryker had other problems already of course, but no one who makes medical devices is pleased with the new tax. Papa John's founder John Schnatter, said that while he was happy that everyone would be getting health care, nothing was for free and he couldn't predict what the independently owned and operated franchises might do.

One study claims that increased costs under Obamacare for small businesses will be negligible thanks to statutory exclusions and tax credits. The problem is that the real world data doesn't line up with the study. Only 170,000 small employers, not 1,000,000 or more, claimed a tax credit. Per the GAO report, this is far fewer employers than originally estimated. It may well turn out that the employers know their business needs and costs better than the federal government does. And if it doesn't make financial sense for them to purchase health insurance they won't do so. It may be cheaper for a company to pay a penalty or reduce staffing rather than to provide health care insurance.

Fewer small employers claimed the Small Employer Health Insurance Tax Credit in tax year 2010 than were estimated to be eligible. While 170,300 small employers claimed it, estimates of the eligible pool by government agencies and small business advocacy groups ranged from 1.4 million to 4 million. The cost of credits claimed was $468 million. Most claims were limited to partial rather than full percentage credits (35 percent for small businesses) because of the average wage or full-time equivalent (FTE) requirements. 28,100 employers claimed the full credit percentage. In addition, 30 percent of claims had the base premium limited by the state premium average.

One factor limiting the credit’s use is that most very small employers, 83 percent by one estimate, do not offer health insurance. According to employer representatives, tax preparers, and insurance brokers that GAO met with, the credit was not large enough to incentivize employers to begin offering insurance. 

In addition, since there is a good chance that taxes will increase in whatever deal the President and Congress work out, some people are making moves now to reduce their tax burden by all available legal means. This could backfire on these people because taking a smaller gain now with a lower tax rate might not net them as much as a larger future gain with a higher tax rate but each individual must make the financial decision that is right for them. If you think the future gains won't offset the higher taxes then recording income now while taxes are low could be the smart move.

Business owners and investors are rapidly maneuvering to shield themselves from the prospect of higher taxes next year, a strategy that is sending ripples across Wall Street and broad areas of the economy.Take Steve Wynn, the casino magnate, who has been a vocal critic of higher tax rates. He and his fellow shareholders in Wynn Resorts, the company announced, will collect a special dividend of $750 million on Tuesday, a payout timed to take advantage of current rates. Experts estimated that taking the payout this year instead of next could save Mr. Wynn, who owns a sizable stake in the company, more than $20 million. 

For the wealthy like Mr. Wynn, the overriding goal is to record as much of their future income this year as they can. This includes moves as diverse as sales of businesses, one-time dividends and the sale of stocks that have been big winners.“In my 30 years in practice, I’ve never seen such a flood of desire and action to transfer a business and cash out,” said Kenneth K. Bezozo, a partner in New York with the law firm Haynes and Boone. “We’re seeing a watershed event.”Whether small business owners or individuals saving for retirement, investors are being urged by their advisers to reconsider their holdings.

Along the way, many are shedding the very investments that have been the most popular over the last year, contributing to recent sell-offs in formerly high-flying shares like Apple and Amazon. Investors typically take profits in their own portfolio at year-end, but the selling appears to be more targeted this year. Stocks with large dividends, for instance, are seen as less attractive because of the perceived likelihood of a sharp increase in the tax rate on dividends.

These moves were thoroughly predictable. Some people who opposed the PPACA pointed these things out before hand but they were often ignored. These decisions seem to have incited some derision and anger among people who supported the PPACA and higher marginal tax rates. Some have argued that paying (higher) taxes is patriotic. Certainly the late NY Mafia Boss Frank Costello thought so. But regardless of your patriotism and love for your country, business is business. Nobody in their right mind sits down to do their taxes and then decides to pay more than what is owed to the Federal government. If the Federal government passes a law that says if you do x, y, and z then you owe this amount, it should not be surprised or upset if people do their best to avoid doing x, y, and z. The government might get less than what it expected to get in revenue because, ceteris paribus, people suddenly find incentives to change their behavior. If the behavior being taxed is not strictly speaking 100% necessary or otherwise unable to be changed, when you tax something you will generally get a little less of it.

And tax avoidance is 100% legal. It's tax evasion that will get you in trouble. If a state raises its income tax I can move. If the federal government tells me that capital gains are taxed more lightly than income, I can start buying more stocks, real estate and start or purchase a business. If a city tells me there is a toll involved in using a particular expressway, I can take another route. If the federal government tells me that I pay less in taxes by using an IRA or 401K to save for retirement, then I may well investigate doing so. If I am paying $2000/mth in rent and discover that I could pay the same amount for a mortgage and deduct local property taxes and interest from my federal taxes, you know I just might consider that move. And if the federal government tells me that hiring this person will cost more than I think the employee is worth, then I may do my best to get along without hiring that person. This is the essence of economics. People respond to incentives.

People supported the PPACA because they thought it was the just thing to do. And maybe it was. Time will tell. The costs involved and changes made may be quite small once all the dust settles. But that doesn't change the fact that it will cost. At the margins, some behaviors will change. I don't see this as especially surprising or troubling. What I do see as troubling is the outrage and bewilderment among supporters of the PPACA that people actually make decisions based in part on economic incentives. Just as there is an observer effect in physics, there is a taxing effect in economics. No one likes The Taxman.

Questions

1) Do companies have the right to investigate changing staffing and pricing in response to the PPACA? Are you surprised by these moves?

2) Are some companies and individuals blaming the PPACA for their own poor financial decisions? Are these just post-election temper tantrums?

3) Do you pay more taxes than you owe? Is it unpatriotic to limit your tax liability?