Archives for April 2014

New Mexico’s ranking in terms of economic and business competitiveness slipped in 2014, according to the annual Rich States, Poor States study by the American Legislative Exchange Council.
New Mexico’s ranking slipped to 37th place from 34th in 2013, according to the study, which ranks states in 15 areas, including top personal income rate and the number of public employees. The state’s ranking was the lowest in the seven-state region. Utah had the top spot in the U.S., the study said.
New Mexico scored well in the study in some areas and low in others. For instance, the state ranked first [the best possible score] in terms of inheritance taxes [none], and fifth in property tax burden. But the state drew a rank of 50 for not being a right-to-work state, was 49th in sales tax burden and 43rd for the number of public employees per 10,000 residents.
In 2008, the first year ALEC published the study, New Mexico ranked 27th in terms of economic competitiveness.
New York placed last on the list for 2014.
Here’s how New Mexico and surrounding states ranked:

• Utah: 1
• Arizona:  7
• Nevada:   8
• Texas:   13
• Oklahoma: 21
• Colorado: 22
• New Mexico : 37

By: Dennis Domrzalski (Albuquerque Business First)
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Click here to view Rich States, Poor States source article.

Commercial property managers and real estate practitioners have a lot to consider when it comes to balancing building safety and gun-rights advocacy.

Throughout the country, states are looking for ways to energize their economies and become more competitive. Each state confronts this task with a set of policy decisions unique to their own situation, but not all state policies lead to economic prosperity.
Using years of economic data and empirical evidence from each state, the authors identify which policies can lead a state to economic prosperity. Rich States, Poor States not only identifies these policies but also makes sound research-based conclusions about which states are poised to achieve greater economic prosperity and those that are stuck on the path to a lackluster economy.
The 2014 economic outlook ranking is a forward-looking measure of how each state can expect to perform economically based on 15 policy areas that have proven, over time, to be the best determinants of economic success.
Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index is an annual economic competitiveness study authored by economist Dr. Arthur Laffer, Stephen Moore, chief economist at the Heritage Foundation, and Jonathan Williams, Director of the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council.
2014 Rich States, Poor States – Economic Outlook Rankings Map

Historical Rich States, Poor States
6th Edition | 5th Edition | 4th Edition
What Others Are Saying:
“The evidence is clear: Economic prosperity is attainable for those states that exercise discretion and discipline in spending and taxation. Pro-growth tax and fiscal policies—like those championed by ALEC and throughout Rich States, Poor States—set a clear path to a renewed national economic recovery.”       -Governor Rick Perry, Texas
“I am pleased to see Rich States, Poor States in its 6th edition. This edition, like its predecessors, reviews fiscal policies that contribute to economic growth compared to policies that detract from such growth. It has become a go-to source for state policymakers” -Governor Matthew Mead, Wyoming
“As Justice Brandeis noted, one of the happy aspects of the federal system is that a state may serve as a laboratory and try novel policy experiments. In 2012, the ‘Texas Experiment’ of light taxation and regulation produced more jobs than any state, and an economy growing at twice the national state average. Anyone interested in bringing similar success to their state should read this book.” -U.S. Senator Ted Cruz, Texas
“I want to thank the authors of Rich States, Poor States and ALEC for providing policymakers and the public with this valuable resource. There is no question that states like Utah are reaping the benefits of sound fiscal policy. It is clear that limited regulation, low taxes, low debt, and balanced budgets create the best environment for business, investment, and jobs.” -Senate President Wayne Niedershauser, Utah
“It is important for policymakers to have a publication that helps and encourages economic growth and competition between states to encourage economic prosperity. Publications like this one help educate legislators and governors with the tools to understand which policies work and which policies waste taxpayer dollars. The end goal for politicians should be the promotion of liberty, free markets, low taxation, and smaller government.” -U.S. Senator Rand Paul, Kentucky
“Most state legislatures across the country are focused on reducing spending, lowering taxes, and growing their economies. Rich States, Poor States continues to generate in-depth policy information that is critical to making decisions that will move states in a more economically sustainable direction. This publication is an important tool for policymakers, and I find it essential in understanding what makes each state competitive in a global economy.”  -Speaker Thom Tillis, North Carolina
By: Arthur B. Laffer, Stephen Moore and Jonathan Williams (American Legislative Exchange Council)
Click here to view source article and download PDF.

The debate over a new level of protection for investors in their dealings with brokers may finally be nearing a resolution. And some investor advocates worry about the direction it seems to be taking.
The debate centers on whether brokers should be required to act in the best interest of their clients when giving personalized investment advice, including recommendations about securities, to retail investors.
The “best interest” standard is known as a fiduciary duty. Financial advisers registered with the Securities and Exchange Commission already are held to this standard. But brokers for the most part are held to a different standard, of “suitability,” which requires them to reasonably believe that any investment recommendation they give is suitable for an investor’s objectives, means and age.
The Dodd-Frank Act, signed into law in 2010, directed the SEC to study the matter, and permits the regulator to establish a fiduciary standard for brokers. In late February, SEC Chairman Mary Jo White said the commission would make a decision by year-end.
Meanwhile, the Labor Department is working on a separate proposal that could establish a fiduciary standard for brokers who give advice on retirement investing. It hopes to offer a proposal by August.
Dangerous Confusion
Advocates of a fiduciary standard for brokers argue that investors don’t understand the current rules. That leaves the door open to abuses bybrokers intent on selling products that pay them a commission, whether those investments are the best option for the buyer or not, these advocates say.

The problem with the suitability standard is that “you can satisfy a suitable recommendation by recommending the worst of what’s suitable,” she says. “If a variable annuity is suitable, you can recommend a variable annuity offered by a shaky insurer with sky-high fees and poor investment choices.”
But applying the fiduciary standard to broker-dealers as it is now applied to investment advisers would add to brokers’ compliance and liability costs, with no certainty of additional protection for investors, says Gary Sanders, vice president of securities and state government relations for the National Association of Insurance and Financial Advisors in Falls Church, Va.
In fact, he says, such a universal fiduciary standard could end up hurting many investors. Lower- and middle-income investors often turn to brokers who are compensated through product commissions, he says, because such clients are less attractive to financial advisers who are compensated based on a percentage of assets under management. Higher costs could prompt some brokers to drop commission-based accounts in favor of more-lucrative accounts that charge a percentage of assets under management, leaving many lower- and middle-income investors without anyone to turn to for investment advice, Mr. Sanders says.
Critics also say a universal fiduciary standard would narrow the range of products brokers could offer, by limiting their ability to recommend investments that earn them a commission.
Plea for Flexibility
At the least, some in the brokerage industry say, any fiduciary standard for brokers should be more flexible than the one investment advisers now operate under.
“The SEC needs to be sensitive that not every relationship is the same and they need to preserve customer choice” by not constricting the range of products brokers can offer, as a standard like the one that now applies to registered investment advisers would, says Ira Hammerman, executive vice president and general counsel of the Securities Industry and Financial Markets Association, the major lobbying group for large broker-dealers.
He says he is also concerned that the Labor Department will act to treat brokers as fiduciaries when they give retirement advice. He says that could jeopardize the sale of commission-based products as retirement investments while permitting fee-based advising. “It becomes very expensive for rank-and-file retail investors,” he says.
But Tim Hauser, deputy assistant secretary for the Labor Department’s Employee Benefits Security Administration, says the department is working on a package of exemptions that would permit advisers to receive many of the forms of compensation they now receive, while also offering protections to make sure conflicts of interest don’t bias the advice they offer.
Some fiduciary-standard advocates are worried that regulators are heading for a middle ground that these advocates fear will fall far short of what’s needed. Those concerns were fueled in March of last year when the SEC issued a public request for data and analysis on the issue. The request set out assumptions and parameters for comment, including the assumption that a fiduciary duty would permit a broker-dealer to continue to receive commissions and compensation for principal trades. Another assumption: The offering of only proprietary products or a limited range of products wouldn’t in and of itself be considered a violation of the fiduciary standard.
The request also said a broker-dealer at least would need “to disclose material conflicts of interest, if any, presented by its compensation structure.”
Not Happy
The SEC said those assumptions and parameters don’t suggest the ultimate direction of any proposed action. Yet critics worry that a fiduciary duty following those parameters wouldn’t offer adequate protection for investors. And some say it would be more confusing for investors than existing standards.
“The concern is that the argument of the [brokerage] industry has been generally accepted,” says Knut Rostad, president of the Institute for the Fiduciary Standard. “If that’s the case, then to proceed, we will have the worst of all possible worlds. We will have a situation where every single broker and adviser will be able to say they’re a fiduciary, when the rule making would essentially be a commercial sales standard with a little bit of extra disclosure requirements.”
Ms. Roper of the Consumer Federation of America says, “If this is what an SEC rule would look like, it would weaken protection for investors and they should not move forward.”
SEC Commissioner Daniel Gallagher fueled worries when he said in March that the commission is concerned that new rules could have the unintended consequence of limiting investor choice, because broker-dealers could scale back full-service brokerage accounts for retail investors. But he also said the topic was “very much an open issue.”
“I haven’t given up hope,” says Ms. Roper.
By: Daisy Maxey (The Wall Street Journal)
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