Readers are probably wondering by now, “where are all our Mike Dater cartoons?” We regret to report that Mike has been on temporary medical leave. We expect him to return before long. In the meantime, we offer the item above. Originally published 17 years ago today, it seems, unfortunately, more on-point than ever.
We used to love mocking what we called the Award-Winnning Local Daily. What shall we call it, now that it’s no longer printed here in Our Fair City?
These days, poking fun at the AWLD would just be cruel. Let’s just call it the Portsmouth Herald—while we still can.
Economists love to talk about The Invisible Hand of the Market. They rarely mention that it’s insatiable, too. The Invisible Hand’s greedy fingers have been wrapped around the Herald’s operating budget since Lord Kenneth of Fleet bought it about 1960. The Inevitable Result: erosion of local news coverage.
Now, in the latest cost-cutting measure, the Herald’s press on New Hampshire Avenue has shut down for good. The bean-counters have determined that it will be more profitable to print the daily in Auburn, Mass., southwest of Worcester, and the Sunday paper in Providence, Rhode Island. That’s eighty or ninety miles away for a crow. For a box truck, it’s probably two hours on a good day. Deadlines will be that much earlier; meaning some of the news—such as it is—will be arriving one day later.
On March 22nd, the paper carried the news of its own diminishment, in a piece written by Executive Editor Howard Altschiller. It was a fine send-off, considering the grim topic and the constraints imposed by his position.
Altschiller included, deadpan, the Gannett chain’s logic, as explained in the bloodless language of the company’s 10-K filing with the Security and Exchange Commission:
“For the years ended December 31, 2022 and 2021, as part of our synergy and ongoing cost reduction programs, we ceased operations of 11 and 21 printing operations respectively….”
“By clustering our production resources, utilizing excess capacity for commercial work, or outsourcing where cost-beneficial, we are able to reduce the operating costs of our publications while increasing the quality of our small and mid-size market publications that would typically not otherwise have access to high quality production facilities. We believe we are able to reduce future capital expenditure needs by having fewer overall pressrooms and buildings. We also believe our superior production quality is critical to maintaining and enhancing our position as the leading provider of local news coverage in the markets we serve.”
See? It’s all for the best, says management.
Altschiller, a consummate professional, manages to refrain from throwing in any wisecracks—that’s admirable discipline at a difficult time.
Then he brings in a ringer:
“John Tabor, Seacoast Media Group’s former longtime publisher, who convinced then owners Dow Jones to purchase the new press for roughly $8 million in 2004, said he was ‘stunned’ when he heard about the press closure.
“‘As the newspaper business shrinks, it’s print or be printed, and we’d always managed to be the printer and it was very lucrative for us,’ Tabor said. ‘We were a publisher’s printer and through the years had published dailies from Laconia, Conway, Nashua, the Union Leader, Lowell Sun and hundreds of smaller weekly and niche publications. It was a good business to be in, and we did quite well, and that’s why I was stunned (by the closure announcement). The press was high quality and the people were high quality.’”
To his credit, throughout the piece Altschiller liberally quotes from some of those 34 workers. Sharan Moore, on the job for 25 years, eloquently described running such a machine: “I like that smell and the feel of the press starting up…. There’s an energy. It’s like there’s a freight train taking off and you can feel it, you can feel it through your whole body and it just kind of takes over. I’m going to miss it. I’m going to miss it a lot.”
Shed A Tear For Gannett Boss Reed
By Dan Kennedy
I guess we’ll have to start referring to Mike Reed as Gannett’s $3.4 million man.
According to Gannett’s just-released proxy statement for 2022, Reed, the newspaper chain’s chair and CEO, received nearly $3.4 million in total compensation last year, down from $7.7 million the year before. That’s a decline of 56 percent, but it’s still a healthy pay package for someone who has wreaked so much destruction on the local news business. It’s also 66 times more than the median salary ($51,035) earned by Gannett employees in 2022, as Don Seiffert observes at the Boston Business Journal. Seiffert broke the news about Gannett’s latest numbers on Friday afternoon.
The main difference in Reed’s compensation package is that he received just $2 million in stock awards in 2022, down from about $6 million in 2021. His base salary was cut slightly as well, from $900,000 to $859,615, but he also received a bonus of $513,652 in 2022, which he did not get in 2021. Finally, he got a 401(k) match of $6,184 in 2022, something he didn’t get in 2021. I guess we can refer to that last as rubbing-it-in money, since Gannett suspended 401(k) matches for its employees last October. If they were restored later on, I haven’t heard about it.
Gannett’s chief financial officer and chief accounting officer, Douglas Horne, received nearly $2.2 million in 2022, up from about $1.75 million the year before. And all but one of Gannett’s nine non-executive board members continued to receive in excess of $200,000 for their part-time work—which, as I reported last August, was at least generous, and perhaps excessive, when compared to other publicly traded companies. You’d think that would especially be the case for Gannett, whose stock price opened 2022 at $5.54 a share and closed the year at $2.03. (It’s now down to $1.87.)
Gannett is our largest newspaper chain, but it’s hard to say exactly how large. At one time it published more than 200 dailies and a slew of weeklies, but it’s been closing weeklies in droves over the past few years. Just last week, Sara Fischer of Axios reported that Reed was predicting the closure of more papers moving forward. Just recently a knowledgeable industry observer told me that they wouldn’t be surprised if Gannett got down to about 30 dailies, including its flagship, USA Today, and zero weeklies in the not-too-distant future.
Gannett’s annual meeting is scheduled for June 3. If the past is any indication, though, the only complaint will be that Reed hasn’t cut enough.
Dan Kennedy is a professor at Northeastern University’s School of Journalism. This article from his blog, Media Nation, is published under Creative Commons Attribution- Noncommercial- Share Alike 4.0 United States License.
The GOP ‘Billionaires Pay Zero Tax’ Is Not for Family Farmers and Ranchers
by Bob Lord
Under America’s current loophole-ridden tax law, rich people—even billionaires—can pass unlimited investment gains to their descendants without paying a dollar in income tax. These rich don’t even have to do any fancy planning. All they have to do is die, a step everyone, of course, takes eventually.
This particularly lush loophole comes from a tax law provision known as the “stepped-up basis rule,” and it works like this: Say Jeff Bezos died and left his Amazon shares, currently worth over $100 billion, to his kids. The Bezos kids would be treated under our income tax law as if they bought the shares for their value on the date of dad’s death. They could sell the shares at that value and pay no income tax.
But that doesn’t mean those kids would pay no tax at all. Dad’s estate would face an estate tax liability equal to 40 percent of the excess of the value of his estate, including the Amazon shares, over $13 million. Estate tax avoidance planners could, to be sure, help Mr. Bezos avoid much of that estate tax, possibly even all of it. But doing so likely would mean the kids couldn’t avoid income tax on his investment gains.
This can all get super-complicated. The tricks tax avoidance planners play to shelter wealth from estate tax can make it difficult to avoid income tax. Not impossible, mind you, just really difficult. But not if 41—and counting—Republican U.S. senators have their way.
Under legislation these 41 Republicans have just re-introduced, billionaires like Mr. Bezos won’t need to choose between avoiding income tax and avoiding estate tax. They’ll be able to avoid both. Entirely. And without a lot of effort. They won’t even have to hire high-priced tax avoidance planners.
The new Republican bill, formally entitled the “Death Tax Repeal Act,” completely repeals the estate tax. Those strategies billionaires use to avoid estate tax—strategies that typically expose their investment gains to income tax sometime after their deaths—would no longer be needed.
In fact, those strategies would become counterproductive. All billionaires would have to do to avoid both income and estate tax on their investment gains would be to not sell their investment assets during their lifetimes.
But wait? What if our tax-averse billionaires need some cash? Not a problem. As ProPublica has reported, billionaires have a handy, tax-skipping strategy for getting cash known as Buy-Borrow-Die.*
The sponsors of the new Billionaires Pay Zero Tax Act don’t mention, of course, their billionaire patrons in their advocacy. They refer instead to all the “family-run farms, ranches, and businesses” upon which the estate tax would “wreak havoc.” What they don’t say: Only 50 farms and businesses in the entire country likely would have been subject to estate tax in 2017, according to Center on Budget and Policy Priorities research. And the Center did that research before lawmakers in Congress doubled the exemption from estate tax in the 2018 Tax Cuts and Jobs Act.
The Billionaires Pay Zero Tax Act sponsors also don’t mention that our U.S. tax code already has provisions that protect the very few families with farms and businesses subject to estate tax. If the bill sponsors truly cared about family farms, ranches, and businesses, they could have proposed legislation to expand these protections but leave the estate tax intact.
These lawmakers might have proposed, for instance, a lengthening of the 15-year period the inheritors of family farms, ranches, and businesses currently have to pay their estate tax due. Or they might have proposed an expansion in the “special use” provisions that allow estates to value farm property according to its use as a farm, rather than at its market value. A bill taking that approach likely would have drawn bipartisan support and actually had a chance of becoming law in this Congress.
Why have Republicans purporting to be concerned about family farms, ranches, and businesses rejected this extending-protections approach and instead introduced a bill whose benefits will flow overwhelmingly to the ultra-rich?
Here’s my guess: The actual intended beneficiaries of the bill don’t happen to be family-owned farms, ranches, and businesses. But GOP lawmakers know full well that saying you don’t think billionaires should have to pay any tax at all, ever, doesn’t make for good messaging.
Saying that would be like naming your bill the “Billionaires Pay Zero Tax Act.”
Bob Lord is Senior Advisor, Tax Policy at Patriotic Millionaires and an Institute for Policy Studies associate fellow. This work, from CommonDreams.com, is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
Repeal Of Interest And Dividends Tax Disproportionately Benefits Wealthy N.H. Households
by Phil Sletten
In 2021, the Legislature enacted a phaseout plan for the Interest and Dividends Tax, which is collected from a percentage of income generated by wealth, that would eliminate the tax by 2027. This change will result in less state revenue for public services.
However, in the state budget currently being constructed by the House Finance Committee, this tax would be repealed entirely in 2025. Repealing this revenue source reduces state tax liability much more for New Hampshire’s wealthiest and highest-income households, on average, than for most Granite Staters, who will likely see minimal or no impact on their taxes.
The New Hampshire Department of Revenue Administration data indicates that, for tax year 2020, more than half of the Interest and Dividends Tax revenue was paid by Granite State households with more than $200,000 in interest, dividend, and distribution income, which excludes income from wages, salaries, capital gains, or other income sources.
Households with more than $200,000 in these forms of income pay about $10,000 or more to the state through the Interest and Dividends Tax. To be liable to pay $10,000 in this tax to the state, a taxpayer would have to own an estimated $4,048,000 (assuming a 5 percent annual return) to $13,403,974 (assuming a 1.51 percent annual return, the average S&P 500 stock dividend yield in 2020) in wealth.
In either scenario, a tax filer has to have millions of dollars in assets that generate income.
The approximately 87 percent of Granite Staters who do not live in households paying this tax may have never heard of it, and their households’ incomes are much more likely to be impacted by other taxes.
For example, for a single-family home assessed at $200,000 in Manchester, a homeowner would have paid an estimated $4,900 in property taxes in 2020, regardless of their income or investment assets. A homeowner with millions of dollars in assets that generate enough to pay $10,000 through the Interest and Dividends Tax will have that amount paid reduced to $0 over time, while property taxes would likely be unaffected, or continue the general trajectory from the last decade of property tax growth outpacing inflation in New Hampshire, for a homeowner whether or not they have millions in investments.
The Interest and Dividends Tax was enacted 100 years ago, in 1923, and had a tax rate of 5 percent from 1977 to 2022. The tax rate applies after certain exemptions: For individuals, the first $2,400 of Interest and Dividends Tax income is exempt, with additional exemptions for older filers, people who are blind, and those who have a disability making them unable to work. Joint filers do not need to file for this tax until they collect at least $4,800 in interest, dividend, or distribution income.
Starting in 2023, the tax rate began dropping by 1 percent annually. The delayed phaseout means much of the revenue losses from repealing this tax will not appear until the next state budget, which is currently being discussed in the Legislature.
The negative impact on revenues will increase yearly with each rate reduction until it has been eliminated entirely by 2027, and the full impact would take effect two years earlier under the House Finance Committee’s proposal.
The governor’s revenue projections estimate that the Interest and Dividends Tax will bring in $135 million this fiscal year, which is approximately the average of the last three years. In the aggregate, revenues will fall by about $67.8 million below that annual average in the next two fiscal years due to the planned tax rate reductions.
This projected loss during the next budget biennium is more than the state contributed to the Community College System of New Hampshire this year. Assuming a relatively consistent tax base, the eventual annual loss of $135 million from the tax’s repeal is equivalent to the current revenue used to fund the Department of Corrections or the equivalent of the combined budgets for the Department of Fish and Game, the Department of Labor, and the Department of Employment Security, as well as the state veterans home.
Last fiscal year, which saw a boost from Interest and Dividends Tax revenues likely related to stock market performance, the Interest and Dividends Tax accounted for about 7.9 percent of General Fund revenues, which are the most flexible funds policymakers have available to finance services in the state budget.
Economic modeling from the Institute on Taxation and Economic Policy indicates that more than half of the dollars from Interest and Dividends Tax elimination would benefit the top 1 percent of households by income. National-level analysis from the Congressional Budget Office and Moody’s Analytics suggests that tax reductions for higher-income households, including permanent reductions to dividends and capital gains taxes, are less effective at stimulating economic growth than aid targeted at households with low and moderate incomes. Stimulus provided to individuals and families with low and moderate incomes enters the local economy more quickly than higher-income households, as households with limited resources more readily spend this aid to afford basic necessities.
By eliminating this tax completely in a future budget, policymakers are setting the stage for difficult choices, as the phaseout of the Interest and Dividends Tax will have substantial effects on resources available for services.
With an elevated risk of a recession in the coming years and a potential rise in the need for services, public resources must be carefully raised and deployed to help ensure sufficient funding for programs serving Granite Staters, and to support a more resilient, equitable, and inclusive economy.
Phil Sletten is the research director at the New Hampshire Fiscal Policy Institute, a nonprofit, independent policy research organization based in Concord and focused on the state budget, New Hampshire’s economy, and policies affecting Granite Staters, particularly those with low and moderate incomes. Learn more at nhfpi.org. This work was published at NewHampshireBulletin.com, and is being republished here under Creative Commons license CC BY-NC-ND 4.0.
“If the American dream is to come true and to abide with us, it will, at bottom, depend on the people themselves. If we are to achieve a richer and fuller life for all, they have got to know what such an achievement implies. In a modern industrial State, an economic base is essential for all. We point with pride to our “national income,” but the nation is only an aggregate of individual men and women, and when we turn from the single figure of total income to the incomes of individuals, we find there was a very marked injustice in its distribution. There is no reason why wealth, which is a social product, should not be more equitably controlled and distributed in the interests of society.”
– James Truslow Adams, The Epic of America, as quoted by Robert C. Hauhart, Seeking the American Dream.