31 January, 2017

Don't Increase The Amount Of Tax Taxpayers Pay, Increase The Number Of People Who Pay Tax

Our current taxation system is an artifact of a time when people had jobs, which meant they had employers who could deduct income tax from their paychecks.

This system doesn’t work anymore. Many people no longer have employers. They have gigs. They have 1099s, not w-2s and w-4s. “Self-employment” is the new unemployment.

With no payroll person to deduct taxes from their pay, there are a lot of people who are essentially on the honor system. Many people are dishonorable.

I’m calling upon our legislature to collect more taxes by changing the way taxes are collected, not by raising taxes on the few honorable people who pay and from the shrinking numbers of people who have a job where a payroll person deducts taxes from their paychecks.

There are two ways the West Virginia legislature can collect more taxes. The first way is to increase taxes on the few who pay them. The second way is to collect taxes at point-of-purchase where everybody will have to pay the tax when they buy food, services, cars, clothing, gasoline or anything else.

Did you ever wonder how a drug dealer pays taxes? He probably doesn’t. It’s a cash business and even if he wanted to pay taxes he really can’t report income without incriminating himself.

Does it make you mad that drug dealers, prostitutes and others in cash businesses benefit from the things government provides but they don’t help pay for it like you do?

The legislature can right that injustice by dropping the income tax that only a few pay and imposing a sales or consumption tax that everybody pays.

West Virginia legislature, don’t increase taxes on the few who pay them, impose a tax that tax evaders can’t evade. Don’t increase the amount of tax each person pays, increase the number of people who pay tax.

18 January, 2017

The Higginbotham Plan And An Update On Three States' Current And Proposed Free College Plans

"Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.”Howard Aiken, physicist and computer pioneer

As my regular readers know, our politicians can identify West Virginia’s largest barrier to prosperity – our low inventory of college graduates - but they can’t seem to follow the bread crumbs to the remedy which is, of course, an expanded and much more robust Promise Scholarship. The current Promise Scholarship is the right kind of medicine in a dosage insufficient to cure the sick West Virginia economy.

It’s not too late for West Virginia to make its workforce magnetic to outside investment but we’ll have some work to do to distinguish ourselves from other states. Here’s an update on Tennessee, New York and Rhode Island followed by The Higginbotham Plan to make West Virginia’s workforce irresistible to companies who need to open factories, research facilities or offices.

“Tennessee Promise is a “last-dollar” program that covers costs not covered by the Pell Grant, Hope Scholarship or other state education assistance funds. It provides up to 2 years of free community college or technical school to Tennessee high school graduates. “Tennessee Promise” costs the state about $34 million annually and is funded largely by their state lottery.

New York
On Jan 3, 2017, Governor Cuomo proposed a plan that would allow 940,000 New York students from families making up to $125,000 to attend SUNY and CUNY colleges. When fully implemented, the plan will cost $163 million annually.

Rhode Island
Sometimes billed as a “college completion plan”, the free college plan proposed a few days ago by Governor Raimondo would pay tuition and fees in the junior and senior years for students who already completed two years at a state school but it would also cover the first two years for students entering community college. The Raimondo plan will cost about $30 million annually when fully implemented.

Critics of free college plans sometimes ask me why I’m not promoting debt forgiveness. The simple reason is that forgiving the debt of people who already have college degrees doesn’t produce more college graduates. Free college plans are not welfare. They are workforce development plans and economic development plans. The goal of providing free college is to increase the inventory of college graduates. Debt forgiveness doesn’t do that unless we use it to lure college grads from other states which brings me to another idea I’d like West Virginia to steal. West Virginia should offer to buy out the college debts of college grads with STEM degrees who establish verifiable residency in West Virginia. Steal this idea, West Virginia. We need to increase our inventory of college grads.

The Higginbotham Plan - please steal this plan, West Virginia

Here is the Higginbotham Plan to make West Virginia’s workforce irresistible to out-of-state companies:

1.    Make the Promise Scholarship a STEM scholarship. Companies won’t come here because of our English majors, political science majors and communications majors, but they will come here to gain access to our mathematicians, software engineers, chemists and other STEM grads if we produce them in large numbers.
2.    Require Promise Scholarship recipients to sign a contract with West Virginia obligating them to stay in West Virginia for, say, 5 years after graduation. Currently, too many of West Virginia’s college grads are leaving with their degrees and making some other state’s workforce magnetic to outside investment. If they give us five years, they’ll marry, have children, build houses, make friends and most will never leave. Maybe along the way they’ll invent things and, who knows, maybe some of start the next Apple or the next Google.
3.    Greatly expand the Promise Scholarship to fund tens of thousands of students’ college careers instead of the current 3,000 to 3,500.
4.    Double the per-student annual scholarship award from its current $4,750 to around $9,000 or $10,000.
5.    Buy the college debt of STEM grads who want to come to West Virginia and are willing to sign a contract requiring them to become part of West Virginia’s workforce for at least five years.
6.    Pay for the above with a severance tax, an excise tax or the proceeds from the state lottery or some combination of the aforementioned.

Finally, I am calling upon economic development organizations like the West Virginia Chamber of Commerce, Vision Shared, West Virginia Manufacturers Association, Charleston Area Alliance and Create West Virginia and Generation West Virginia to steal my plan and, in unity, take it to the West Virginia legislature. You can call it the Matt Ballard Plan, the Natalie Roper Plan, the Cory Dennison Plan, the Steve Roberts Plan or the Sarah Halstead Plan if you want. I don’t care if I get credit for it.

I’m calling upon organizations like Vision Shared, Create West Virginia and the West Virginia Chamber to quit submitting competing, contradictory legislative agendas to the West Virginia legislature.

Joseph Higginbotham neither reads nor publishes comments from unidentifiable, pseudonymous or anonymous commenters. No Ring of Gyges for you.

Mayor Danny Jones, Hoppy Kercheval, Dotsy Klei, Dave Allen, Dave Gilpin, Tom  Roten, Jack Patty, Kruser, Matt Ballard, Natalie Roper, Sarah Halstead, Rebecca Kimmons, Michael Basile, Ted Boettner, Jake Jarvis, Booth Goodwin, Mitch Carmichael, Tim Armstead, Jim  Justice, Rebecca McPhail, Keith Burdette, Kevin DiGregorio, Bray Cary, Max Garland, Phil Kabler, Rob Byers,

12 January, 2017

Only The Legislature Can Destroy West Virginia's Greatest Barrier To Prosperity

Yesterday on Hoppy Kercheval's show, Governor Tomblin did what so many other politicians have done on Hoppy's show, on Mayor Danny Jones’ show and on Bray Cary’s show. He correctly identified West Virginia’s greatest barrier to prosperity – our poorly educated workforce – but failed to say what WV must do to increase our inventory of college grads, especially those with degrees in the STEM disciplines. All of our elected leaders can name the problem so why do they pretend not to know the solution? Consultants, economists, authors and, most importantly, employers, have been telling West Virginia for decades that companies will not invest in and create jobs in West Virginia until we can deliver the 21st century workforce they need.

George Orwell said, “We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.

It’s obvious that the employers who keep sending their plants, their projects and their jobs to better-educated states aren’t going to change their minds about West Virginia until West Virginia gives them the minds they need to run their businesses. It’s obvious that our elected leaders know this even if they won’t say so on radio or TV. It’s obvious that since it’s the legislature that has the power to pass the laws and allocate the money to solve West Virginia’s problems, it’s the legislature’s job to use their powers of purse and policy to buy West Virginia the college-educated workforce that will make West Virginia magnetic to outside money. Only the legislature can do this. We elected them to use their powers to solve West Virginia’s problems and now we must demand that they do the job they campaigned to do.

As Ted Boettner from the West Virginia Center on Policy and Budget has observed, the revenue from the old franchise tax would have paid for free in-state college for every West Virginia high school graduate who wants to go to college but instead of using the money to remove West Virginia’s greatest barrier to prosperity, our legislature repealed that tax.

It should also be obvious that our state’s so-called “business” and “economic development” organizations need to help our legislators focus on producing a college-educated workforce that makes West Virginia irresistible to outside investment. They can do this by harmonizing their legislative agendas. Stop confusing our legislators with competing agendas. They are prone to chase shiny objects anyway. Remove all shiny objects from their view and help them to think only about how to increase West Virginia’s supply of college-educated workers.

It should be obvious that, while the Promise Scholarship is the right medicine for a sick West Virginia economy, it is being administered in too small a dosage to cure the patient. West Virginia must radically expand the Promise Scholarship to produce tens of thousands of new college grads each year.

It should also be obvious that it makes no sense to buy a better workforce only to let that workforce leave the state so Promise Scholarship recipients must agree to remain in WV for, say, five years after graduation.

And let’s make the Promise Scholarship a STEM scholarship. We’re already producing more English majors, communications majors and political science majors than employers need so we must spend our tax money on math, engineering, chemistry, computer science, robotics and other disciplines the 21st century economy needs.

If West Virginia’s legislators do their job and focus on solving the problem they have already named, we can make West Virginia more famous for its educated workforce than for its drug addiction.

Bray Cary, Decision Makers, Danny Jones, Hoppy Kercheval,

01 January, 2017

A Response To Dan McGinn's Washington Post / Charleston Gazette-Mail Article About West Virginia

Mr. McGinn:

Prior to your recent Washington Post / Charleston Gazette-Mail article one "community development" organization said all West Virginia needs is better media coverage and then cynically offered workshops on how to get it. Thank you for telling us the truth. But you didn't tell us the whole truth.  You did what so many of our politicians do: you told us we can’t attract outside investment without a skilled and educated workforce but you didn't tell us how to get that skilled, educated workforce. 

I’m talking about free college for every West Virginia high school grad – and so was West Virginia Center for Policy and Budget’s Ted Boettner when he told a tragically small audience that the revenue from the erstwhile franchise tax would have paid for it.

West Virginia is so far behind the places that attract employers that we need an educational moonshot. Incremental upgrades in West Virginia's workforce will not persuade hi-tech employers to open factories, offices, research centers and other facilities here. 

Due to West Virginia’s $400 million budget hole, it won’t happen during the 2017 legislative session, but here’s how West Virginians can demonstrate our willingness to help ourselves: First, our politicians can tell us that we will never get our share of the hi-tech and post-coal jobs until we radically increase the number of college grads in our workforce and that the logical way to do it is by becoming the first state in the country to offer free college to its high school grads. Think of it as an expansion of the Promise Scholarship, which doesn’t go far enough because it isn’t offered to enough students and it doesn’t completely cover the cost of attending college. The Promise Scholarship is the right medicine in too small a dosage to heal West Virginia's sick economy. West Virginia's Promise Scholarship is currently awarded to about 3,000 to 3,500 students annually at a cost of about $4,750 per student per year. That’s not nearly enough newly-minted college grads to get the attention of major employers.

Make it a STEM scholarship so we produce more “creative class” workers, not more poli-sci and English majors. I’m using the term “creative class” the way Dr. Richard Florida used it in his groundbreaking books, Rise Of The Creative Class and The Great Reset. The creative class are those workers whose skills are in such demand that employers open offices and build factories where those creatives already are.

Make recipients sign a contract with West Virginia promising to remain in West Virginia for at least 5 years after graduation.

If politicians will tell the truth about how to make West Virginia irresistible to outside investment, they may even find that West Virginia’s current handful of post-coal employers will help.

In 2008, some hi-tech Lexington, KY, employers asked Lexington Mayor Jim Newberry to create a public-private STEM scholarship plan so Lexington could grow it’s own creative class workforce. The problem? Companies like Lexmark, Cypress Semiconductor, IBM and Exstream couldn’t recruit the talent they needed to Lexington because these creative class workers didn’t want to live in the state of Kentucky. Mayor Newberry, a conservative Republican and not a big-government guy, took the idea to city council which foolishly and shortsightedly voted against it.

I think the average Lexington city council member saw the STEM scholarship plan as corporate welfare because the mayor and the hi-tech employers didn’t spend enough time educating them about Lexington’s recruitment disadvantage prior to the vote. Lexington was learning the hard way what “the creative class” is. It’s a class of worker who can live anywhere they want so they don’t have to live in places they perceive to be racist, insufficiently diverse, ignorant, opioid-addicted and indifferent to the environment.

Our political  leaders need to tell us the truth about the new job creation paradigm and educate citizens about how the economic development game has changed. Workers used to go where the jobs are. Now jobs go where the educated workers are. Creative class workers can go anywhere and they are congregating in places like Boston and Silicon Valley and Seattle and Portland and Austin. These creative class workers are magnets that attract hi-tech employers. 

“A problem named is a problem solved” said business consultant, Susan Scott in her book, Fierce Conversations. That dictum is usually accurate. Sick people are relieved to get a diagnosis because they know that if a disease has a name, doctors have seen it before and know what to do. Unfortunately, this dictum isn’t always true when it comes to matters of economic development and workforce development. It’s time for our politicians to connect the dots. A few of them have named the problem: West Virginia’s insufficient supply of educated workers. Now they must name the logical treatment: we have to pay what it takes to grow and retain our own creative class workforce made up of West Virginians who already love our state and would like to stay.