Corporate Taxes Are The Exception

According to the IRS in 2008 there were 6,349,720 for profit corporations in the United States. These come in several types.

Pass Through Corporations

Some don't pay income taxes at all and are pass through entities:

S corporations: 4,292,433 (of which 4,049,944 are active)
Form 1120 RIC filers: 13,081 (mutual funds with pass through taxation)
Form 1120-REIT filers: 1,650 (real estate investment trust with pass through taxation)

The active S corporations have, in the aggregate, 6,930,746 shareholders (an average of 1.71 shareholders each). Of the active S corporations, 2,493,706 S corporations (61.6%) have net income; this income is allocated to 4,200,809 shareholders in those corporations (an average of 1.68 shareholders each).

While subchapter S of the Internal Revenue Code allows up to 100 shareholders as of 2004, (and really more, due to the nature of the counting rules) to be shareholders in S corporations, in practice, this is very rare and there is little grass roots pressure to increase the limitation. As of the 2007 tax year, when there were 3,989,893 active S corporations:

2,411,642 had 1 shareholder (60.4%)
1,163,717 had 2 shareholders (29.2%) (thus, 89.6% had 1 or 2 shareholders)
200,183 had 3 shareholders (5.0%) (thus, 94.6% had 1-3 shareholders)
188,531 had 4-10 shareholders (4.7%) (thus 99.4% had 1-10 shareholders)
14,481 had 11-20 shareholders (0.4%)
4,575 had 21-30 shareholders and (0.1%)
3,764 had 31 or more shareholders (0.1%)

Most of the S corporations with 31 or more shareholders are either in the business of accomodations and food service (802) (about 0.4% of S corporations of that type) or "Management of Companies" (1,076) (about 4% of S corporations of that type).

Excluding single owner S corporations, the average number of shareholders per S corporation would be about 2.8 per corporation, which is still fewer partners than any type of entity taxed as a partnership under subchapter K.

In the five year period, total number of active C corporations is down about 15% and the total number of S corporations is up by about 20%.

C Corporations

Others are taxed under the C corporation regime, in some cases with significant modifications:

Ordinary C corporations: 1,995,828 (of which 1,762,483 are active)
Form 1120-F filers: 30,549 (foreign corporations that do business in the U.S.)
Form 1120-PC filers: 7,482 (property and casualty insurance companies)
Form 1120-L filers: 736 (life insurance companies)
Other Corporations: 7961 (mostly from U.S. territories and possessions)

In addition to the 30,549 foreign corporations that must file Form 1120-F, there are 66,797 domestic C corporations that are 50% or more foreign owned. S corporation status is not available for corporations with foreign shareholders.

Of the latter group, there are 1,782,478 active corporations (mostly ordinary C corporations and another 19,997 from other types). Inactive corporations had no taxable income or expenses, but are required to file tax returns in any case.

Of this group of active corporations, 935,939 corporations (52.5% of active corporations that are subject to corporate income taxes) had no net income (i.e. they either broke even or experienced a tax loss), while 846,540 had net income.

Of the 846,540 with net income, 544,331 owed corporate income taxes before credits, and 533,386 owed corporate income taxes net of credits. Thus, just 29.9% of corporations that are subject to corporate income taxes actually owed any corporate income taxes in 2008. Another 17.6% of corporations that are subject to corporate income taxes had net income but owed no corporate incomes taxes for one reason or another (e.g. loss carryforwards and tax credits).

Of the corporations owing any corporate income tax, 360,457 paid less than $6,000 of corporate income tax (all of which is subject to the 15% corporate income tax bracket). These corporations accounted for about 0.3% of all corporate income taxes owed, and for 67.6% of all corporations that owed any corporate income tax.

Another 77,640 corporations owed more than $6,000 but less than $15,000 of corporate income tax, and almost all of that income would have been taxed in the 15% or 25% corporate income tax brackets (which end at $13,750 of tax owed). These corporations account for 0.3% of all corporate taxes owed, and for 14.6% of corporations that owed any corporate income tax.

Thus, 82.2% of corporations that owed any corporate income taxes owed just 0.6% of corporate income taxes owed. (Note that this doesn't necessarily mean that the corporate income tax has no tax revenue effect in these cases, it simply means that it created an incentive to convert most corporate income into taxable compensation in many cases.)

Another 60,055 corporations (11.3% of corporations that owe corporate income taxes) that owed less than $100,000 of corporate income taxes (and thus owed some corporate income taxes in the 34% corporate income tax bracket but received some benefit of the lower 15% and 25% marginal tax rates for corporations before they were fully phased out at $133,900 of taxes due), owed 1.1% of all corporate income taxes.

Thus, 93.5% of corporations that owed any corporate income taxes owed less than 2% of all corporate income taxes.

The 370 corporations owing more than $100 million in corporate income taxes in 2008 owed 64.8% of all of the corporate income taxes owed by all corporations in that year. The next 1,642 corporations (those owing $10 million to $100 million in corporate income taxes in 2008) owed 21.3% of all of the corporate income taxes owed by all corporations in that year. Thus, the 2,012 corporations with the biggest tax bills owed 86.1% of all corporate income taxes. All of this corporate income is taxed at a flat corporate income tax rate of 35% (bubble rates eliminate the benefit of graduated tax rates at lower incomes for these corporations).

In between, there were 37,221 corporations that owed $100,000 or more of corporate income taxes but less than $10,000,0000 of income taxes, overwhelmingly taxed at an average rate of 34% to 35%. The 34% rate is fully phased in at $113,900 of tax owed and the 35% rate is fully phased in at $6.417 million of tax owed. The owe 12.7% of all corporate income taxes.

Thus, 39,232 corporations owe 98.8% of all corporate income taxes, despite being just 0.6% of all corporations required to file an IRS Form 1120, while 91.7% of all corporations required to file an IRS Form 1120 of some kind owe no corporate level federal income taxes. The 1.2% of corporate income taxes paid by the remaining 7.7% of corporations is mostly paid in the 15% or 25% corporate income tax brackets, which can provide tax deferral or reduction to shareholders in the 35% individual income tax bracket that would apply to a pass through entity. In addition, C corporation dividends are not subject to FICA or self-employment taxation, and qualified dividends and long term capital gains from these entities are subject to tax rates of 15% or less.

Entities Taxed As Partnerships

In 2003, there were also about 19 million sole proprietorships and there were "2.5 million businesses in the United States taxed as partnerships with 15.6 million partners, an average of about six partners each":

About 402,000 are limited partnerships (i.e. those with both general and limited partners), with an average of 17 partners each, disproprtionately in the finance and insurance area, and to a lesser extent in the real estate, rental and leasing industries. About 725,000 are general partnerships (i.e. those in which all partners have unlimited liability), with an average of 3.7 partners each. About 1,270,000 are limited liability companies, with an average of 3.9 partners each. About 150,000 are some other form of entity taxes as a partnership (one suspects that limited liability partnerships and limited partner assocations would be in this category, for example), with an average of six partners each.

None of these entities taxed as partnerships owe entity level federal income taxes.

Updated partnership data is available from the IRS. In 2008 there were 1,898,178 LLCs taxed as partnerships (about half in real estate, rental and leasing; 948,862 LLCs with 3,533,512 partners), up about 50% from five years earlier, with 7,524,174 partners (an average of 3.96 each). Some of the largest LLCs, measured by numbers of owners per LLC on average, are in finance and insurance, with 147,327 LLCs and 1,055,783 partners (9.2 each on average). Outside these two industries, the average LLC has 3.6 partners.

In 2008, there were 669,601 general partnerships with 2,623,041
partners (3.9 partners each on average), a drop of about 7% over five years, and 411,698 limited partnerships with 7,054,319 partners (17.1 partners each on average), an increase of about 2% over five years.

Of the general partnerships, 238,586 general partnerships with 925,616 partners were in the real estate, rental and leasing industry, while 74,185 general partnerships with 467,033 partners were in the finance and insurance industry. These industries accounted for about 35% of general partnerships and 53% of general partners. Outside these industries, the average general partnership has about 3.5 partners.

The limited partnerships were concentrated in real estate, rental and leasing (246,760 limited partnerships and 2,048,474 partners) and finance and insurance (77,622 limited partnerships with 2,017,856 partners); the two industries account for almost four-fifths of limited partnerships and almost three-fifths of the partners in limited partnerships. Also notable is the industry of transporation and warehousing that has 1,510 limited partnerships with 1,107,494 partners (an average of 733 partners each).

In the 2008 tax year, there were 3.3 million partnership tax returns filed (up more than 30% over five years), a number that is more comparable to the active corporation numbers than the total corporation numbers because inactive partnerships are not required to file income tax returns, while inactive corporations are required to file income tax returns.

Non-Profits

The IRS identifies 1,855,067 non-profit entities that owed no corporate income taxes in 2008, the vast majority of which are organized under Internal Revenue Code Section 501(c), with the vast majority of those being organized under 501(c)(3). There were 901,000 exempt organization tax returns filed in 2008.

Other Entity Types

There were also 3,075,000 estates and trusts that filed tax returns in 2008. There were 30,683,000 employment tax returns filed in 2008, which would include many sole proprietors with employees but would exclude many business entities without employees.

Managerial Variety

For all the myriad choices of entity, there are basically three kinds of ownership structures that are dominant in the United States today.

One is an active closely held business with just a handful of owners who operate largely by consensus.

A second is an essentially passive investment portfolio of either physical assets or financial investments with a medium sized group of investors who are expected (or required) to be largely passive and to defer to a handful of active managers whose shared incentives they rely upon to assure sound management of their investments.

A third is the publicly held corporation, where, in practice, senior management appoints a board of directors that intervenes only in cases of succession crisis or managerial insanity or corporate takeovers, which is largely indifferent to shareholders whose voting rights are basicallly worthless outside a takeover event.

Closely held active businesses with more owners than you could fit around a medium sized conference table (perhaps a dozen to a few hundred), who are involved enough to make considered votes for members of a genuine shareholder representing board of directors, that in turn independently supervises a managerial group on behalf of the shareholders, are very rare in the for profit sector, despite the fact that this is the model for the typical American state corporation statute and is common in the governmental and non-profit sectors.

The typical business that operates on this basis is either a large professional services firms, such as a law firm or accounting firm in which owners are also mostly full time employees of the firm, or is a cooperative, rather than a partnership, or an ordinary corporation. The co-operative business form is discussed in a footnote below.

Choice of Entity

S corporations are attractive because they provide a clear way to reduce FICA taxation, have simpler to comply with tax rules for non-tax experts than limited liability companies, and are consistent with the economic arrangement that many small business owners want. They are a particularly attractive choice for operating businesses without appreciating assets. In contrasts, businesses that primarily own property, particularly if it is likely to appreciate, and businesses that do not qualify to be S corporations due to foreign ownership or complex financial arrangements between co-owners but want pass through taxation treatment favor limited liability companies taxed as partnerships or as disregarded entities. Most new closely held businesses are organized as S corporations or LLCs.

Limited partnerships are chosen over limited liability companies mostly as a result of tradition in certain kinds of investments and because they are the only type of entity that deprives economic owners of almost all voting rights. Limited liability partnerships are typically chosen by professional service partnerships previously organized as general partnerships, to minimize the amount of transition legal and tax work required. General partnerships are usually either chosen by default without counsel, or are between entities or individuals for whom legal liability is not a concern but the ability to fully utilize losses is a concern, since the taxation of unlimited liability general partnerships is simpler than the taxation of limited liability entities taxed as partnerships. Only about a quarter of entities now taxed as partnerships have unlimited liability.

A few state and local jurisdictions (mostly if not entirely in the Northeast) tax S corporations and/or limited liability companies at the entity level, making these choices less attractive and zeroed out C corporations more attractive.

As discussed further below, C corporations are attractive for the anonymity they offer, the fact that one only owes taxes on transactions that produce cash flow for the person taxed (something that venture capitalists often like as a feature), because special tax breaks are available for capital gains in these entities in some circumstances, in some cases for employee benefits reasons, in some cases because they afford low marginal tax rates to high income individuals, and in cases where there are foreign owners, a company is publicly held, or for some other reason no other entity choice is available. One a corporation is a C corporation and has accumulated earnings and profits that have not been distributed as dividends, the tax cost of converting to another form of entity can be great, so many older closely held companies are organized as C corporations out of inertia.

In the current tax environment there can be tax benefits to having C corporations that actually pay corporate level income taxes.

The combination of a 15% entity level corporate income tax and a 15% tax on qualified dividends or long termm capital gains is equivalent to a 28% income tax rate and is FICA free. So, a small amount of entity level taxation produces lower aggregate income taxes than pass through taxation for an individual in the top 35% federal income tax bracket, and with FICA and self-employment tax considerations can also produce lower total taxes for someone in the next lower 25% federal income tax bracket who would otherwise have been subject to the Medicaid portioon of FICA or self-employment taxes.

The combined tax burden on income taxed 25% corporate tax bracket is equivalent to a pass through tax rate of roughly 46%, which is more than the top federal income tax bracket of 35%, but it can mitigate the Medicaid portion of FICA or self-employment taxation, which is almost six percentage points, can allow owner level income earned in a state with a high individual income tax rate to be deferred until the owner moves to a state with little or no individual income taxes, and may even allow the owner to avoid individual level income taxes entirely by holding onto the stock until death when unrealized capital gains taxes are forgiven with the stock liquidated by the individual's heirs. Also, even if there will eventually be a shareholder level tax, taking a tax of 25% immediately rather than 35% immediately can free up cash flow to reinvest in the company providing a tax deferral benefit and a low cost form of business financing in a growth business.

Analysis

More than 98% of entity level federal income taxes are owed by fewer than 40,000 large C corporations (with the lion's share of those taxes coming from publicly held entities) out of more than 30 million businesses and non-profit organizations in the United States. Corporate level income taxation is the exception rather than the norm.

For the other 99.4% of corporations, the primary purpose of the corporate income tax is to create an incentive to discourage corporations from accumulating corporate level earnings that are not taxed on a pass through basis in a form that prevents them from being taxed at the shareholder level when earned. The pattern observed strongly supports that theory that the vast majority of corporations of any economic consequence act rationally to minimize combined owner-entity level federal taxation through choice of entity and management of compensation arrangements, except in cases where foreign ownership that desires to receive a return on its capital, or the need to have a large number of equity investors to finance the venture makes this effectively impossible.

About 7.7 million business entities are taxes on a pass through basis as S corporations, partnerships, RICs or REITs, and another 4.9 million economic entities are non-profits, trusts or estates that either owe no entity level tax or have the capacity to shift entity level taxation to beneficiaries in a way that would eliminate double taxation.

Of the 1.8 million C corporations, about 70% are "zeroed out" C corporations that owe no entity level corporate income tax after tax credits, and the vast majority of the tax paying C corporations with low amounts of corporate income tax owed appear to choose this form of organization because they benefit from progressive marginal tax rates for low income C corporations either as a form of partial tax deferral or as a means of reducing aggregate tax burdens. "Zeroed out" C corporations have a number of tax virtues related to employee benefits, although they are increasingly marginal, and offer anonymity to owners in years when dividends are not paid. For example, they can provide a way in which individuals who do not have a social security number can operate a business and comply with relevant legal and tax laws (including a taxpayer identification number), so long as some means (e.g. overcompensation of paid employees who can work legally, who in turn financially support the true owners) is found to compensate the owners.

The broad outlines of the data from the 2008 tax year are similar to those of the 2003 tax year about which I previously posted in 2006. There are about 13,000 publicly held corporations (including all corporations with 500 or more shareholders) and about 97,000 foreign owned corporations that do business in the United States that have no choice but to be taxed as C corporations. These businesses pay the lion's share of all corporate income taxes.

Corporate Tax Integration Proposals

Many commentators have proposed to end the double taxation present in C corporations by integrating corporate and shareholder level taxation, typically by affording a deduction for dividends paid, by exempting dividends paid from individual level taxation, by wider use of pass through taxation in a simplified form, or by giving shareholders who receive dividends a tax credit that treats corporate level income taxes as a withholding tax collected in advance from funds to be distributed ultimately as dividends (the most common approach internationally). One proposal to make up the revenue that would be lost if one of these corporate tax integration options were adopted would be to impose a small annual (or otherwise periodic) tax directly upon the fair market value of publicly traded securities like a property tax, since the corporate income tax is already largely a tax on the privilege of operating as a publicly held entity, and because it would be cheap and easy to administer. These reforms would in addition to promoting fairness also reduce the debt-equity distinction that favors debt in the current tax code, which is an important factor in creating systemic risk in the economy. It would also reduce the tax bias between public and privately owned companies that now favors privately owned companies even when this is not optimal from a non-tax perspective.

Footnote On Cooperatives

In 2002, 3,140 farmer cooperatives provided marketing, farm supplies, and services to farmers. This represents a steadily declining number of farmer cooperatives, down from about 10,000 in 1950, and 6,211 in 1981. This decrease in the number of cooperatives reflects the trend of consolidation and merger occurring in production agriculture and in many segments of the food industry.

Of cooperatives operating in 2002, 1,559 primarily marketed farm products, 1,201 primarily provided farm supplies to farmers, and 380 primarily provided other services. Many cooperatives engage in two or all three of these activities.

Cooperatives can also be classified according to organization structure. Centralized cooperatives have only farmer members. Federated cooperatives have only other farmer cooperatives as members. The membership of mixed cooperatives consists of both farmers and farmer cooperatives. In 2002, 3,060 cooperatives were centralized, 53 were federated, and 27 were mixed. Just under 2.8 million producer memberships in farmer cooperatives were reported in 2002. This number includes duplications for farmers who hold membership in more than one cooperative, a common situation.

The tax treatment of patronage refunds paid to patrons and other tax implications of farmer membership affect a great number of farmer taxpayers. The gross business volume of all farmer cooperatives in 2002 was $111.6 billion, up from $90.8 billion in 1991. Marketing represented 69.0 percent of the total, farm supplies 28.3 percent, and selected services 2.7 percent. If inter-cooperative business transactions are eliminated, net business volume was $96.8 billion, up from $76.6 billion in 1991.

Most farmer cooperatives are relatively small businesses. In 2002, 83.8 percent of all farmer cooperatives reported business volume of less than $25 million.

Looking at some balance sheet numbers, combined assets of all farmer cooperatives in 2002 totaled $47.5 billion, up from $31.3 billion in 1991. Total liabilities were $27.9 billion, compared to $17.2 billion in 1991. This leaves net worth, or member and patron equity, at $19.6 billion, a sizable increase over the $14.1 billion of 1991.

The 100 largest cooperatives (the so-called Top 100 in USDA Rural Development publications) usually operate over sizable geographic areas and make up an important segment of the farmer cooperative industry. In 2002, the Top 100 accounted for $64.0 billion in business volume, 57.3 percent of the business volume for all farmer cooperatives.13 They likewise dominated the balance sheet items with $27.2 billion in total assets (57.2 percent of the total) and $8.6 billion in member and patron equity (43.9 percent
of the total).

Eighty-nine of the 100 had earnings in 2002, totaling $817.0 million. How a cooperative uses its earnings affects tax calculations of both the cooperative and its farmer patrons.

These earnings were accounted for in several ways. Cash patronage refunds totaled $194.5 million (23.8 percent). Retained patronage refunds were $394.6 million (48.3 percent). Thus $72 out of every $100 in margins realized by the Top 100 were distributed or allocated as patronage refunds. The eighty-nine cooperatives in the Top 100 for 2002 with earnings paid $74.3 million in corporate income taxes (9.1 percent). Dividends on stock amounted to $1.6 million (0.2 percent) and $152.0 million (18.6 percent) were placed in unallocated reserves.

The 11 cooperatives in the Top 100 that suffered losses in 2002 had total losses approaching $675 million. Close to $35 million was covered with tax benefits and approximately $300 million was set off against unallocated equity. The remainder is either being carried on the cooperatives’ books or being recovered from patronage equities. . . .

NON-FARM COOPERATIVES . . .

The National Cooperative Business Association reports that in the United States a network of 48,000 cooperatives directly serve 120 million people -- nearly 40 percent of the population. . . .

The largest single segment of the cooperative industry is credit
unions. The roughly 10,000 credit unions in the United States
have more than $600 billion is assets and 83 million members.

Building on their base of member savings and consumer loans and home mortgages, credit unions now offer additional services to their members including credit cards, automated teller machines, tax-deferred retirement accounts and certificates of deposit.

Created in 1916, the cooperative Farm Credit System is the nation's oldest and largest financial cooperative. It provides real estate loans, operating loans, home mortgage loans, crop insurance and various other financial services to more than 500,000 farmer, small-town resident and cooperative borrowers. It loans roughly $90 billion annually to its members.

One element of the Farm Credit System is CoBank. It has about $25 billion in outstanding loans and leases to farmer and rural utility cooperatives and water and waste disposal systems. CoBank has become an important financier of exports of U.S. farm products as it broadens its role of making credit available to enhance farm and rural income.

Since 1969, the National Rural Utilities Cooperative Finance Corporation (CFC) has been a valuable source of financing for rural electric and telephone cooperatives. With $21 billion in assets and almost $21 billion in credit outstanding, CFC supplements funding provided by USDA's Rural Utilities Service and provides business services to its borrowers. In a short period of time, the National Cooperative Bank (NCB) has become an important financial institution for America's housing, business and consumer cooperatives. Chartered by Congress in 1978 and private since 1982, NCB has originated more than $6 billion in loans to nearly 2,000 cooperatives throughout the country. NCB has become a leader in providing development funding for new, non-agricultural cooperatives and in devising methods of attracting outside capital to leverage its investments.

Nearly 1,000 rural electric cooperatives own and maintain nearly half of the electric distribution lines in the United States, cover 75 percent of the land mass, and provide electricity to 36 million people.

Roughly 270 telephone cooperatives are providing a growing portfolio of communications services to 2 million households, including wireless technology and high-speed Internet access.

More than 1,000 mutual insurance companies, with more than $80 billion in net written premiums, are owned by their policyholders.

America has about 1 million units of cooperative housing, nearly 600,000 of them in New York City. New units are being developed in many other sectors, including senior citizen communities, trailer parks, low-income complexes, and student housing near college campuses.

Millions of Americans receive basic medical care through cooperatively organized health care providers. Health maintenance organizations (HMOs) serve more than 1 million people coast-to-coast and will likely be an increasingly important part of the health care system in the years ahead. In several major cities-- Seattle, Minneapolis, Memphis, Sacramento, Salt Lake City and Detroit--companies have formed cooperative health alliances to purchase health care for their employees.

Child care cooperatives are meeting the needs of families where the parent(s) are employed and want affordable care. These centers can be organized by parents on their own, by a single employer, or by a consortium of businesses providing a single center for the group. More than 50,000 families use cooperative day care centers daily.

Some business cooperatives manufacture or otherwise procure products for their retail outlet members. For example, more than 15,000 independent grocery stores rely on cooperative grocery wholesalers for identity, brand names, and buying power they need to compete with the chains and the discounters. Members also receive training and financing. Several cooperative grocery wholesalers are multi-billion-dollar firms rivaling the largest farmer cooperatives in sales and assets.

Cooperatively owned hardware wholesalers supply virtually all of the independent hardware stores in the United States. As huge warehouse chains spread across the nation, the independents are relying more and more on TruServ, Ace Hardware, Do-it-Best, and other cooperatives for products, promotions and education to remain viable businesses.

Other business cooperatives negotiate group purchase contracts with suppliers and their members purchase the goods and services they need directly from those suppliers. A leader in this group is VHA. More than 2,200 hospitals and other health care providers purchase $20 billion annually in supplies and services under contracts negotiated by this cooperative.

Restaurant supply purchasing cooperatives save money and provide quality products for both company-owned outlets and franchisees of several fast-food chains. These firms include Unified Foodservice Purchasing Co-op (A&W, KFC, Long John Silver’s, Pizza Hut, and Taco Bell) and Restaurant Services, Inc. (Burger King). Besides their bottom-line impact, purchasing cooperatives also offer another, less tangible benefit: they help to build trust among franchisers and franchisees, particularly on pricing issues.

Cooperatives are leaders in other major industries, including media and news services (Associated Press), outdoor goods and services (Recreational Equipment Inc.), lodging (Best Western), carpeting (Carpet One), electrical distributors (IMARK), natural foods, and collegiate bookstores. . . .

[TAXATION OF COOPERATIVES]

As one form of business corporation, cooperatives calculate taxable income and use tax rates like other corporations, but with one principal difference. This difference reflects cooperatives' distinct way of distributing net margins to its patrons based on use, rather than to investors based on investment. . . .

The general principle of cooperative income taxation is that money flows through the cooperative and on to patrons, leaving no margins to be retained as profit by the cooperative. Thus margins are taxed only once. The tax is ultimately paid by the final recipient (the cooperative patron), although under some circumstances the cooperative pays tax on a temporary basis, then receives a deduction when the money is finally passed on to the
patron.

This single tax principle only applies if business income sources and distribution methods are "cooperative" in nature. Earnings from sources other than patronage and margins not distributed in the manner specified by the Code are generally not eligible for single tax treatment. The critical issue [is] in distinguishing patronage- and nonpatronage-sourced income . . . . General corporate income tax rules apply to earnings from nonpatronage sources and double taxation results.

When statutory conditions are met, cooperatives treat retained patronage refunds and per-unit retains as if the funds retained had been paid to the patron, deducted by the cooperative, taken into the patron's income as ordinary income, then invested in the cooperative. Conditions for this tax treatment include agreement by the patron to recognize the full patronage refund for tax purposes even though not received in cash or negotiable form.

Farmer cooperatives that meet several organizational and operational rules set out in Code section 521 are allowed to deduct two additional items: (1) dividends paid on capital stock and (2) distributions of nonpatronage earnings to patrons on the basis of their patronage.

Subchapter T of the Code, "Cooperatives and Their Patrons," contains most of provisions directly related to cooperative taxation and the taxation of patrons. Part I of subchapter T consists of three sections. Section 1381 describes cooperative organizations to which subchapter T applies. Subchapter T applies to all farmer cooperatives, including farmer cooperatives qualifying under section 521. A business need not be a farmer cooperative to qualify for subchapter T tax status. Any business "operating on a cooperative basis" uses subchapter T when computing its tax liability.

Farmer cooperatives file on form 990-C. Other cooperatives file form 1120. . . . Cooperatives must report such distributions to IRS (form 1096) and to the patron receiving the distribution (form 1099-PATR). Section 6044(c) provides an exemption from reporting for certain consumer cooperatives.

From here (the U.S. Department of Agriculture source is in the public domain).

How Common Is Geriatric Dementia?

[T]he incidence of all-cause dementia almost doubles with every 5 years of age and that the prevalence of dementia rises from approximately 2 percent to 3 percent in those 65 to 75 years to 35 percent in those 85 years and older.

From here.

New Long Form Passport Form Intimidating

Humor writer W. Bruce Cameron's latest column described a government form so awful, I feared that he might be simply making it up. But, alas, his summary of the DS-5513 long form passport application, proposed this February, is every bit as bad as claimed. Comments received in the 60 day comment period can be found here.

It asks for all sorts of information, that while including many of the sort of questions that a lawyer might put on an intake form for someone trying to prove their U.S. citizenship in a court case, asks for a host of details (e.g. dates of pre-natal appointments), that reasonable people who happen to have been born outside a medical facility and without having a birth certificate issued within a year of their birth are exceedingly unlikely to know, especially if they, rather than their parents, are completing the form while they are adults. Moreover, many of the details asked for provide evidence that does not directly prove or disprove citizenship, while not asking other questions that might directly establish one's citizenship.

The form does nothing to acknowledge that a typical applicant will not have complete answers to all of the questions asked and can apply with incomplete information, even though in many or most cases, citizenship could be established with only an incomplete portion of the form. It doesn't even make clear who must fill out the long form at all.

Also, while the form contains a variety of questions targeted at the issue of establishing citizenship by paternity or citizenship by birth in the United States, it doesn't seem to address citizenship by naturalization of a relative, or address the issues involved in nationality v. citizenship. Finally, it doesn't seem to have any questions calculated to address the "Superman Rule" (Generation Y readers may prefer to call it the "Roswell Rule") which grants U.S. citizenship to children of unknown paternity and unknown circumstances of birth found in the United States at a young age.

Anyway, this is one more reason I'm glad that I secured passports for my children last year, with no particular reason for doing so.

Back Door Cramdowns?

The general rule under the United States bankruptcy code is that when loans are secured by collateral in a reorganization (rather than a liquidation), that the loan is broken up into two parts for bankruptcy purposes - one equal to the value of the collateral which is entitled to receive value in the bankruptcy equal to at least the value of the collateral (often by being given a loan with a principal amount equal to the value of the collateral and otherwise the same interest rate, amortization period and other terms as the original loan), and with the othe part equal to the remainder of the loan that receives the pennies on the dollar or no payout that other general unsecured creditors (like ordinary corporate bond holders and credit card copmanies) receive. The reduction of the loan to the value of the collateral is called a cramdown. Mostly, cramdowns apply to business property bought with secured credit and vacation properties with mortgages.

Residential mortgages and most car loans aren't eligible for cramdown treatment in bankrupty. The debtor must either reaffirm the loan in full, even if the collateral is worth less than the loan, or surrender the property.

There is a gray area in the case of residential mortgages that is turning out to be quite relevant. Often, a house in bankruptcy in an areas where there has been a housing price bubble collapse will have two mortgages. The first mortgage will clearly not be eligible for a cramdown. But, what about the second mortgage? If the value of the house is less than the amount of the first mortgage, is the second mortgage really a mortgage at all? Or, is the second mortgage really just an unsecured debt like a credit card because its claim against the collateral is contingent and only a remote future possibility?

A recent newspaper article in the Mercury News reviews this legal battle. According to the article, "bankruptcy lawyers say the provision has been used effectively on hundreds, if not thousands, of cases in the Bay Area during the past two years." The California Mortgage Bankers Association is unhappy about this trend, but sees few options on the legislative front in a divided Congress. On the other hand, "there are no complaints from investors in first mortgages, like the pension and retirement funds represented by the Association of Mortgage Investors."

Income tax deductability and funding from mortgage backed securities made splitting low down payment mortgages into a a conventional first mortgage with an 80% loan to value ratio, and a second mortgage with a higher interest rate that covered the balance except for a small down payment, attractive compared to a single larger first mortgage with title insurance. Second mortgages used to extract cash from a house that had appreciated in value during the housing bubble were also popular.

The issue has a special tenor in California where residential mortgages are generally non-recourse. There, the only way that a lender can collect is out of the collateral, so a bankruptcy proceeding that wipes out a second mortgage lien wipes out any remedy for the lender.

There are two narratives that explain the trend to deny the cramdown to residential mortgages.

One is that it protects lenders from being penalized by artificially low appraisals in bankruptcy court. If the property is really worth less than the loan, a rational bankruptcy debtor would give up the property and escape the mortgage debt in bankruptcy, so a cramdown should only take place if the appraisal undervalues the property providing an undeserved benefit to the debtor. Similarly, an appraisal based only on current comparables fails to capture appreciation in real estate that may be available in a short time during a temporary real estate price slump. These concerns don't seem to have been well supported, however, by the experience in Chapter 12 farm bankuptcies, where cramdowns are allowed.

The other narrative is that home owners aren't rational. They attach sentimental, and dignity related and moving cost related value to their home that no lender could realize if the home were foreclosured upon or surrendered. In this narrative, denying residential home owners a right to cramdown mortgage loans is a way of giving residential mortgage owners more than their fair share in a bankruptcy every time a debtor keeps a home that has a fair market value of less than the face value of the loan.

It is unclear how common this situation is in Denver. Internet real estate appraisal service Zillow.com says 41% of meto Denver homeowners owe more on their mortgages than their homes are worth, and many of those homes would have second mortgages. But, Standard & Poor's/Case-Shiller, which experts believe is more accurate (Forbes actually dropped them as a source after obvious gross errors in their statistics were pointed out), concludes that housing values have declined far less than Zillow concludes, and hence far fewer homeowners are upside down. Case-Shiller consistently ranks Denver as one of the twenty major housing markets least impaired by the housing bust, while Zillow counts Denver as the second hardest hit market in the nation. Like other observers, I'm strongly inclined to give Case-Shiller more credit than Zillow for accuracy on this point. Too much other data corroborates the conclusion that Denver's real estate market has declined less than those of many other markets in places like California, Arizona, Nevada and Florida.

New Rules

The U.S. Supreme Court has approved new court rules to take effect on December 1, 2011 unless Congress acts to disapprove them.

The most notable changes are revisions to the rules concerning what a creditor in bankruptcy must include in a claim filed with a bankruptcy court, and the plain English restyling of the Federal Rules of Evidence. The other bankruptcy and appellate rule changes are relatively obscure.

There were also changes to the Federal Rules of Criminal Procedure that reflect new telecommunications and other electronic technologies used in the courts (e.g. allowing testimony by Skype rather than merely by telephone and allowing for the e-filing of many court documents).

Combined U.S. Tax Burden Lowest Since 1958

Americans are paying the smallest share of their income for taxes since 1958, a reflection of tax cuts and a weak economy. . . . The total tax burden — for all federal, state and local taxes — dropped to 23.6% of income in the first quarter, according to Bureau of Economic Analysis data. By contrast, individuals spent roughly 27% of income on taxes in the 1970s, 1980s and the 1990s — a rate that would mean $500 billion of extra taxes annually today, one-third of the estimated $1.5 trillion federal deficit this year. . . . Individuals paid taxes at an annual rate of $10,549 per person in the first quarter — about the same as individuals have paid since 1990 when adjusted for inflation. Incomes have grown; tax payments haven't.

From USA Today via the Tax Profs Blog.

The top income tax rate in 1958 was 91% (where it remained from shortly after World War II until 1964). At the time, the nation was running under the recently overhauled Internal Revenue Code of 1954, which was revised, in part, because of budget surpluses run by the federal government in 1948, 1949 and 1950 (the Korean War soaked up surpluses in the following years). There was also a gift and estate tax regime in place in 1958 which was less generous (and more complicated) than the one in place as of 2011.

In contrast, the top federal income tax rate in 2011 is 35%, and for most long term capital gains and qualified dividends the top federal income tax rate is 15%. Thus, in addition to a low aggregate tax burden by historical standards, top marginal tax rates are also low by historical standards. It is also easier given the state of transportation and telecommunications technologies to relocate to a low tax state now to minimize state and local tax burdens than it was to do so in 1958.

Trust Declining

The General Social Survey has documented a great decline in support for the proposition that you can generally trust people. In 1984, equal numbers agreed and disagreed with that statement. In 2010, there was a thirty percentage point gap, with those who felt that you couldn't trust people outnumbering those who felt that you could by about 62% to 32%. It is a long term trend, with minor bumps along the way, whose causes aren't manifestly obvious.

Indeed, it is counter to what you would expect in some respects. For example, having more education is strongly tied to having more trust in others. But, the decline in trust has taken place despite modestly rising education levels in that time period.

Feynman On Big Numbers

There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.

- Richard Feynman (from here).

Evil As An Empathy Deficit

In the book, entitled "Zero Degrees of Empathy" in Britain, and "The Science of Evil" in the United States, where it comes out in July, [Simon] Baron-Cohen seeks to pick apart and define components of empathy -- including hormones, genes, environment, nurture, and early childhood experiences.

Citing decades of scientific research, he says there are at least 10 regions of the brain which make up what he calls the "empathy circuit." When people hurt others, either systematically or fleetingly, parts of that circuit are malfunctioning.

Baron-Cohen [who is also director of the Autism Research Center at Cambridge] also sets out an "empathy spectrum" ranging from zero to six degrees of empathy, and an "empathy quotient" test, whose score puts people on various points along that spectrum.

Drawing a classic bell curve on a graph, Baron-Cohen says that thankfully, the vast majority of humans are in the middle of the bell curve spectrum, with a few particularly attuned and highly empathetic people at the top end.

Psychopaths, narcissists, and people with borderline personality disorder sit at the bottom end of the scale -- these people have "zero degrees of empathy."

But rather than labeling them as evil, Baron-Cohen says they should be seen as sick, or "disabled," and we should seek to understand why they have such an empathy deficiency and help them replace it.

Baron-Cohen shies away from saying that psychopaths can be "cured" of extreme behavior, but he argues strongly against locking them up and saying there is nothing society can do.

From here.

The connection of psychopathy with a lack of empathy that distinguishes the acts of these people from others (sometimes it is characterized as a lack of conscience to avoid confusion of the ability of people with it to predict the behavior of others), is at the heart of the understanding of the condition as explained by multiple authors. Some reviewers of the field have noted, however, that the most frightening violent psychopaths seem to have both a lack of empathy and in addition some trait that inclines a conscienceless person towards violence rather than, for example, fraudulent manipulations of people.

Accounts I've seen elsewhere have also pointed to a very early childhood, if not congenital origin for the condition. Absent brain injury or something of that sort, psychopathy seems to be present at least by the time that a child is school aged.

Practical advice on dealing with these individuals can be found in this post.

General Relativity Still Works Perfectly

[I]n 2007 the Gravity Probe B team confirmed one prediction of general relativity. According to Einstein, the Earth’s gravity warps spacetime like a bowling ball on a trampoline. This geodetic effect was measured with an error of about 1 percent. [The theoretical prediction for the geodetic effect in this experiment from general relativity was 6.61 arcseconds (1.84x10-3 degrees) per year.]

The much-smaller frame-dragging effect from the Earth’s rotation, though, remained hidden in the noisy data. Theory predicted frame-dragging should change the orientation of the spinning spheres by only 39 milliarcseconds per year, about the width of a human hair seen from 400 meters.

After NASA pulled the plug in 2008, private funding arranged by an executive at Capital One Financial and the royal family of Saudi Arabia bought some extra time to clean up the data. . . . The results of this painstaking analysis, scheduled for publication in an upcoming Physical Review Letters, reconfirm the geodetic effect with an error of about 0.2 percent [about 12 milliarcseconds]. Gravity Probe B puts the frame-dragging effect at 37 milliarcseconds with an error of about 19 percent [about 6 milliarcseconds], far from the original goal of 1 percent precision.

From Science News.

An experiment with the LAGEOS satellites whose results were published in Nature in 2004 had already confirmed the frame dragging effect with an error of 10 percent, but the independent replication of this result still has value. The team that achieved that result hope to improve their precision to 1% with a satellite launched this year.

Suffice it to say that the results are accurate enough, and the track record of general relativity's predictions in this domain (weak field, low speed), are good enough that nobody is betting that these predictions will be disproved. The experimental results are within 0.4 sigma of the theoretical prediction, well within the range of what would be expected from experimental error and not a result of cherry picking given that the result has been experimentally tested only twice.

The dark energy effects which have been observed to date can be incorporated completely into the equations of general relativity simply by setting the appropriate value for the cosmological constant, although there are alternative explanations as well. The uncertainty in this constant is currently about 3.3%.

The gravitational constant "G" remains one of the least accurately determined fundamental constants of physics, primarily because it is hard to precisely measure the gravitational effects of masses amenable to laboratory measurement since the gravitational impact of laboratory sized masses is so weak. It is 6.67428 x 10^-11 Newtons (meters/kilogram)^2
with a relative standard uncertainty 1 part in ten thousand. This latest estimate from 2007 is an improvement by a factor of roughly one hundred over an error factor of about 1.3% as of 1798.

Gravitational time dilation effects have been measured directly with atomic clocks in Colorado within the last year and have been precisely as predicted by General Relativity.

Some of the missing pieces of an experimental confirmation of all aspects of general relativity include the direct observation of gravitational waves, although there are strong indirect indications that they exist as predicted.

More seriously, there is not a consensus explanation for "cosmological inflation" (i.e. much faster than cosmological constant rate expansion of the universe during the time from 10^−36 seconds after the Big Bang to sometime between 10^−33 and 10^−32 seconds after the Big Bang). Still, a glitch this tiny, for that short of a time period, 14 billion or so years ago, isn't exactly a glaring flaw. The Big Bang theory still provides a simple, consistent explanation from that time forward, and there are all sorts of uncertainties, some of which may never be possible to resolve, about the extremely early cosmology of the universe.

Also, there is some reason to believe that singularities aren't as singular as they appear in classical general relativity equations at a quantum level.

The only observations from astronomy that do not fit the equations of general relativity, which was proposed in 1916 by Albert Einstein, and the directly observed distributions of matter, within the realm of experimental accuracy, are those attributed to dark matter, most commonly via a cold dark matter paradigm.

The main problem with this theory is that a dark matter particle that would be a fit for the model has never been observed directly. Indeed, experimental results about the potential mass of such a particle so far this year are contradictory. DAMA and COGENT experiments seem to show annual variation in the frequency of events attributed to a dark matter particle proposal in the mass range of about 7 GeV/c^2, something seemingly ruled out by other dark matter detection experiments, one of which used the same material in its detector as COGENT.

Another problem is that a naive cold dark matter model do not fit the observed data, because that model produces the wrong dark matter distribution to predict the effects expected (cuspy halos), an insufficient number of dwarf galaxies, and incorrect amounts of angular momentum in galaxies. Efforts to determine the amount of ordinary matter in the universe also make estimates of the right amount of dark matter error prone. There was a major underestimate of the amount of ordinary matter in elliptical galaxies that was just discovered in the last year, and there is still little clarity regarding the aggregate mass of neutrinos in the universe, because the average mass of an individual neutrino isn't very precisely established. Various efforts have been made to solve these problems, but no one consensus resolution has solved all of them yet.

According to one person I've heard explain why gravitational effects of dark matter can't be observed at the solar system level: “The density of the solar system is much bigger than the density of our galaxy, and dark matter gives 1-5 times the density of our galaxy. Utterly irrelevant in the solar system[.]”

Alternatives to dark matter such as Modified Newtonian Gravity aka MOND (TeVeS in a relativistic variant) have been proposed and work at the galactic scale, but still need some dark matter of some kind to explain how galactic clusters behave (possibly simply massive neutrinos, however), and have not provided a good explanation for the behavior of the "bullet cluster" collision. But, efforts to validate this hypothesis have shown that a simple equation with just a couple of constants (that calls for gravity to fall off at 1/r rather than 1/r^2 below a critical value for gravitational field strength) can accurately predict all dark matter driven phenomena at the galactic scale in all types of galaxies (including some whose behavior was predicted before it was measured), so any dark matter theory that works must accurately reproduce this relationship at this scale.

The bullet cluster observation also places the tighest limits to date on the cross-section of interaction of dark matter, which in inextricably intertwined in experimental practice in most cases with dark matter particle mass. This isn't wonderful for the cold dark matter model because it "rules out most of the [cross-section of interaction constant] range invoked to explain inconsistencies between the standard collisionless cold dark matter model and observations."

One of the main effects of the experimental confirmation provided by Gravity B and other general relativity testing experiments has been to tightly constrain the extent to which any quantum gravity theory that does not reduce exactly to general relativity can deviate from it.

Denver's Election Results

In Tuesday's non-partisan election, Denver voters re-elected their incumbent auditor, chose two city council members for "at large" seats, and elected eight of eleven city council people from single member districts (five in uncontested elections). Turnout was 38% of the ballots distributed, with ballots going out to all active registered voters in the City, slightly below the norm in the last couple of municipal elections, but not horrible either.

There will be runoffs between the top two finishers in the first round in City Council Districts 1, 5 and 8, and in the races for Mayor and Clerk and Recorder. All of the races with runoffs happen, not coincidentally, to be open seats. As my own city council district race was uncontested, the ballot that I will receive and return by June 7 will have only four names for two offices on it, and I've given those names at least some consideratioon already in the first round.

The Case For Non-Instant Runoffs

Proponents of a system once called the "single transferable vote" and now called "instant runoff voting" would favor a system where you get to vote a first and second and perhaps higher order choice, allowing the election to be decided all in one go, even when no candidate receives a majority.

The case for considering the preferences of voters who didn't vote for the plurality candidate when no candidate receives a majority is a good one. Denver voters, for example, have not infrequently backed a runner up in a runoff election, suggesting that a combination of more information and the preferences of candidates who supported someone who was not one of the two finalists don't, as a reliable general rule, strongly favor the plurality winnner in this kind of non-partisan race.

I prefer the system used by Denver, Louisiana and France, where there is a runoff election, because it allows me as a voter to have more time to research viable candidates and consider my options before making a decision in the second round, even when the candidate that I favored in the first round is not eliminated. Any decision that causes decisions upon which there is not a clear popular preference to be made based on more information and deliberation than would otherwise be devoted to the decision is probably a good thing.

I also have little confidence that my fellow citizens would make second choice decisions that are as good if they didn't have this extra time. I've written wills and trusts for people for a decade and a half, and most of my clients, even when they are well educated, find it a strain to think about "what if" hypotheticals beyond the situation that would exist if they died today. Most people are better at making decisions in a "what now" context than in a "what if" context. Frequently, I have to spend a long time talking people through the ideas by telling little stories at length "what if you and your partner and your children all died in a car crash today, the people you've mentioned who are still alive are . . . . who would you want to inherit from you now?"

There is also more of an incentive to do good media coverage of a runoff election between two candidates proven to be viable and reasonably close in electoral strength which may reveal new critical data than there is in the waning days of a nine or more way race.

In an election with many candidates there is a tendency to engage in satisficing decision making, i.e. researching until you find an acceptable choice rather than trying to research carefully enough to find the best choice. If most people make their decisions that way, and no one candidate receives a majority of the vote, the likelihood that the first round winner was not the optimal choice is pretty good. So, the chances that additional information before the runoff election is held will improve the quality of the decision making process is pretty good.

This is particularly true in a case like City Council District 8, which was entirely a write in election due to the death of incumbent Carla Madison shoertly before the election. The very short schedule for that race meant that there was very little time for the thirty-nine candidates in the race to run full fledged campaigns that could have afforded the general public the information they needed to make an optimizing decision. About 28% of voters in that district didn't cast a vote for the office at all, and each of the candidates that made the runoff from the 5,361 write in votes cast captured only about 1/7th of the votes cast. Eleven candidates received at least one hundred votes (including the two candidates making it to the runoff), and five candidates received more than three hundred votes (the number of signatures needed to petition onto the ballot in ordinary circumstances).

The Benefits Of Ballot Access

It is also a good moment to observe the benefits that accrue to being on the ballot, even in an election like this one, where voters could complete their ballot at their leisure "open book" at their kitchen table, rather than without access to pertinent information in a voting booth under time pressures, a relatively ideal environment for write in candidates.

The practical ability of voters to cast a write in vote if they are determiend to do so is illustrated by the fact that in City Council District 8 almost four-fifths of voters managed to cast a valid write in ballot. Also, no city council race in the city, with or without names on the ballot had an undervote of less than 5% and the average undervote was considerably higher. Thus, no more than 18% of voters were discouraged by the all write in character of the race from casting a vote, and the average undervote percentage in contested city council races was closer to 10%, suggesting that perhaps only one in seven voters was discouraged by the write in character of the District 8 vote from casting a vote.

In the Mayoral race, every candidate who appeared on the ballot received at least 0.46% of the vote (519 votes). Marcus Giavanni, the most successful of the three write in candidates for Mayor, who mounted an active campaign with at least as many signs up around town as some of the other candidates whose names appeared on the ballot, nonetheless garnered just 21 votes. The cutoff to make the second round in the Mayoral race based on the unofficial results was 30,314 votes (27% of the total). The third place candidate in the Mayoral race, after conferring with campaign legal counsel, has announced that he will not challenge the unofficial vote count. None of the races in the first round were close enough to trigger an automatic recount.

In the Council Member At Large race, in which the one of the five candidates appearing on the ballot with the least votes received 8,437 votes (6% of the total cast in a race where each voter could vote for up to two candidates), none of the three write in candidates received more than 121 votes. The cutoff to win a seat, according to the unofficial results, was 31,603 votes (22% of the total number of votes cast in a race where each voter may vote up to two times).

Unless no one is who appears on the ballot is running for an office, it is almost impossible to win a write in campaign, in an ordinary electoral environment where the barriers to ballot access for credible candidates who have their acts together is not overwhelming. But, this isn't necessarily deeply troubling from a democratic perspective, because the practical reality is that the candidates who did not receive access to the ballot probably had a very dim chance of winning office even if they had been granted access to the ballot. No write in candidate outside Council District 8, which had no candidate on the ballot, received more than 121 write in votes in an election where three hundred signatures on a petition are required to gain access to the ballot - a requirement that is less than 1% of the votes that were actually required to win or advance to a second round in a citywide race this year.

No candidate outside Council District 8 in a city council race received more than 70 write in votes, less than 1% of the votes received by the winner in that city council district, an otherwise uncontested incumbent.

An Expensive Mayoral Race

Campaign spending in this election was considerable.

Romer, through last Thursday, spent about $1.4 million on his successful campaign, which turns out to be about $43 a vote. Hancock spent about $711,489, which equals about $23 per vote.

Theresa Spahn spent $108,288 but got only 3,332 votes, roughly $32.50 a vote. Councilman Doug Linkhart had spent $152,199 through last Thursday on his campaign that received a total of 10,557 votes, about $14.41 per vote. Viewed this way, the biggest winner was probably Thomas Wolf, who dubbed himself the "free candidate" because he accepted no money and spent only $250. He got 2,106 votes, about 12 cents a vote.

Running the election, of course, also wasn't free, although the city of Denver, as is typical in mail in elections in Colorado, didn't provide postage to voters, which cost voters who didn't hand deliver their ballots 61 cents each, a barrier that probably had a measurable effect on turnout.

Will The Oil Age Be A Brief Historical Blip?

You don't have to be a die hard Peak Oil purist to agree with the gist of the implications of the graph above, posted at an NPR blog and based on an original presentation slide by Stephen Mayfield.

As noted by Wikipedia on Peak Oil:

Optimistic estimations of peak production forecast the global decline will begin by 2020 or later, and assume major investments in alternatives will occur before a crisis, without requiring major changes in the lifestyle of heavily oil-consuming nations. . . . Pessimistic predictions of future oil production operate on the thesis that either the peak has already occurred, that oil production is on the cusp of the peak, or that it will occur shortly. The International Energy Agency (IEA) says production of conventional crude oil peaked in 2006.

Peak oil production in the United States hit in 1970, but was pretty much irrelevant because oil trades in a world market. The U.S. has been a net oil importer since the early 1990s.

The United States isn't the only country in the world that has hit a localized peak in oil production as the illustration below from Wikipedia illustrates:

Some localized peak oil predictions are right around the corner: Iraq: 2018, Kuwait: 2013, and Saudi Arabia: 2014. In my grandchildren's world, most of the Middle Eastern oil powers will have greatly diminished oil wealth.

Whether peak oil is almost upon us or is, very optimistically (e.g. in the opinion of the most optimistic oil industry experts), a century out, in the big picture, the message is basically the same viewed through a long historical lens (and one could reasonably extend the chart above all the way back to 8,000 BCE when agriculture was begun for an even longer run historical perspective).

Most of the optimistic predictions assume that much of the new high cost oil production will come from "unconventional sources such as heavy crude oil, oil sands, and oil shale" that are made more attractive at higher oil prices. Even the optimists aren't predicting a sustained return to an era of oil prices of less than $40 per barrel (in 2008 dollars), and often half that, seen from roughly 1877 to 1972 and again from about 1986 to 2003. Instead, they predict a continued flow of increasingly expensive oil for a very long time. The current price for barrel of oil is about $100 which translates into gasoline prices of a bit under $4 a gallon at the pump in Colorado.

We learned how to make oil powered machines and oil based materials, we drilled and extracted vast amounts of easily available petroleum, and we very rapidly have burned through much of this non-renewable resource and continue to do so without seriously reducing our consumption of it. This use pattern has lasted about a century, and maybe it can last another, but it isn't sustainable.

For an oil economy to be sustainable, it needs to use biofuels or oil obtained from converting coal to a petroleum-like liquid fuel (such as the fuel produced in the Fischer–Tropsch process used by Germany and Japan during World War II). Rentech, Inc. has a proto-type plant in Commerce City, Colorado that produces about 10 barrels of fuels per day using the process from natural gas, and half a dozen other operations produce liquid fuels from natural gas or biomass using the process as well. There are a few small operations in the U.S., including one in Pennsylvania, that do small scale conversions from "waste coal" but only one Sasol plant in South Africa (which is coal rich, but oil poor) currently makes petroleum-like fuels from a combination of coal and natural gas on a large scale commercial basis using the technique.

You can extract more petroleum from deep wells, oil shale and the like, but this approach inevitably is still going to produce diminishing oil reserve growth and higher extraction costs. These options can bend the peak oil curve forward a little, but once the cost of extraction exceeds the cost of producing biofuels or converting coal or using other alternatives to oil (like fuel cell and battery powered vehicles), the technological capacity to extract more petroleum becomes irrelevant. The bottom line is that they aren't making any more new oil, so sooner or later, we're going to run out if we keep consuming it at a high rate as a core basis of our technological culture. Moreover, there is no more oil anywhere else in the solar system, since no place but Earth has ever had the biomass that broke down to produce petroleum.

The good news is that this imposes a natural limit on the amount of global warming inducing pollutants that combustion of petroleum can produce. And, petroleum consumption is the harder fossil fuel to refrain from using without being forced by resource constraints to do so, because it has fewer good substitutes. Our demand for coal is currently almost exclusively for electricity production, and that has easier substitutes that require innovation only by large, sophisticated electrical utilities, not by average people whose electricity consumption experience is unchanged by the fuel used to produce it.

The bad news is that to the extent that our standard of living is a product of cheap energy from petroleum, the future could bring real hardship as this one time economic boost is no longer available. Economists have attempted to estimate that impact, but given the uncertainties of technological developments and the inseparability of oil from our current economy's functioning, the efforts are speculative at best.

An economy based on cheap oil may be as transient as the brief period in the history of the Americas and of Australia when there was a brief burst of abundance arising from megafauna hunting until those fauna went extinct.

Pew Offers Up New Political Typology

For the fifth time in 24 years, the Pew Research Center has done cluster analysis of survey data (broken down on nine ideological dimensions) to break the U.S. political spectrum into subtypes that capture some of the main intrapolitical party factions in political ideology and identity. The analysis differs substantial from their previous breakdown in 2005.

Both studies classify about 10% of the population as "bystanders" who are politically apathetic, identify three Democratic leaning clusters, three Republican leaning clusters, and two other moderate clusters.

In 2005, the Democrats were divided into Liberals (secular and anti-war), Disadvantaged Democrats (social welfare loyalists), and Conservative Democrats (latter day New Dealers). The Republicans were broken into Enterprisers (Staunch conservatives), Social Conservative (religious, critical of business), and Pro-Government Conservatives (struggling social conservatives). The politically involved moderates were classified as Upbeats (positive outlook and moderate) and Disaffected (working class and discouraged).

In 2011, Pew finds two Republican clusters: Staunch Conservatives (highly engaged tea party supporters), and Main Street Republicans (conservative on most issues); three Democratic clusters: Solid Liberals (across the board liberal positions), Hard Pressed Democrats (religious, financially struggling), New Coalition Democrats (upbeat, majority-minority); and three politically active moderate clusters: Libertarians (free market, small gov't seculars), Disaffected (downscale, cynical), and post-moderns (moderate, but liberal on social issues). But, as it discusses in its analysis, the two Republican clusters are very similar to each other, and two of the three political active moderate clusters have weak but clear partisan leanings.

The realignment partially reflects a Republican loss of seven percentage points of population share in favor mostly of moderates, presumably into the Libertarian and Disaffected categories.

According to Pew:

[A] growing number of Americans are choosing not to identify with either political party, and the center of the political spectrum is increasingly diverse. Rather than being moderate, many of these independents hold extremely strong ideological positions on issues such as the role of government, immigration, the environment and social issues. But they combine these views in ways that defy liberal or conservative orthodoxy. . . .

The most visible shift in the political landscape since Pew Research’s previous political typology in early 2005 is the emergence of a single bloc of across-the-board conservatives. The long-standing divide between economic, pro-business conservatives and social conservatives has blurred. . . .

On the left, Solid Liberals express diametrically opposing views from the Staunch Conservatives on virtually every issue. While Solid Liberals are predominantly white, minorities make up greater shares of New Coalition Democrats – who include nearly equal numbers of whites, African Americans and Hispanics – and Hard-Pressed Democrats, who are about a third African American. Unlike Solid Liberals, both of these last two groups are highly religious and socially conservative. New Coalition Democrats are distinguished by their upbeat attitudes in the face of economic struggles. . . .

Libertarians and Post-Moderns are largely white, well-educated and affluent. They also share a relatively secular outlook on some social issues, including homosexuality and abortion. But Republican-oriented Libertarians are far more critical of government, less supportive of environmental regulations, and more supportive of business than are Post-Moderns, most of whom lean Democratic.

Disaffecteds, the other main group of independents, are financially stressed and cynical about politics. Most lean to the Republican Party, though they differ from the core Republican groups in their support for increased government aid to the poor. . . .

[T]he nature of the partisan divide has changed substantially over time.
More than in the recent past, attitudes about government separate Democrats from Republicans . . . In 2005, at the height of the Iraq war and shortly after an election in which national security was a dominant issue, opinions about assertiveness in foreign affairs almost completely distinguished Democrats from Republicans. Partisan divisions over national security remain, but in an era when the public’s focus is more inward-looking, they are less pronounced. . . .

• More Staunch Conservatives regularly watch Fox News than regularly watch CNN, MSNBC and the nightly network news broadcasts combined.
• There are few points on which all the typology groups can agree, but cynicism about politicians is one. Majorities across all eight groups, as well as Bystanders, say elected officials lose touch with the people pretty quickly.

Two of the main issues dividing the Republican clusters are the feeling that businesses make too much in profits and support for environmental regulation, also common in Main Street Republican, both common in Main Street Republicans but not Staunch Conservatives, while they are united on religion, immigration and the view that the social welfare net is too expensive. The Democratic party has more ideological diversity between its clusters.

Particularly notable is the disappearance of the once prominent "pro-government conservative" faction from the Republican clusters. Indeed, both of the Republican clusters and two of the three political active moderate clusters, and at least one of the Democratic clusters are pretty down beat on government in general.

The desirability of environmental regulation has become an intraparty divide for both major American political parties (and amongst different moderate clusters), rather than an interparty divide.

First Bank of Cherry Creek Has Friendly Employees

I've done business with a number of banks over the years. One of them is First Bank of Cherry Creek. They don't always have the best interest rates or easiest loan underwriting terms. Alpine Bank, in Western Colorado, is the hands down winner in Colorado for beautiful branch bank office architecture (and when I lived in Grand Junction, Colorado they also had awesome donuts on Saturday morning). But, one place that First Bank really excels is courtesy and customer service. Time and time again, even when I come to them cranky, the people who work there are friendly, stay cool, take the time to listen to my questions and concerns, and address them.

For example, yesterday, the ATM machine ate my First Bank ATM card. I had even taken a detour on the way to where I was going there to go to the ATM machine so that I could do my business before I started work. A day that starts like this is like the beginning of some mediocre independent film comedy. Needless to say, I was pretty cranky, and I was also more than a bit worried that some case of personalized identity theft had struck me - something I've seen more than enough of second hand representing clients trying to sort out resulting bad check prosecutions, inaccurate credit reports, and muddled bank balances.

But, when I got to my office, I had a letter on my desk from the previous day explaining that there had been a security breach at the bank, which I hadn't realized applied to me, and when I called a customer service representative (I spoke to "Rhonda," a real human being from Colorado!) for clarification, she calmly explained to me that indeed, someone had gotten my ATM card number making it necessary to replace it, reviewed my account to make sure that there wasn't anything else amiss, told me when to expect a new card (it arrived later the same day) and explained why I couldn't have received a replacement any sooner given the steps that the bank had to take first and the fact that the breach took place on a weekend. I wasn't exactly happy afterwards, but I was a lot less grumpy than I'd been when the ATM machine ate my ATM card, and I was comfortable that a criminal, rather than bad management at the bank, was responsible for my inconvenience.

In an ideal world, the letter I'd received telling me what was going on could have been more clear, and the ATM machine could have been more specific about the reason it was eating my card, rather than giving me an ominous "please contact your bank" message with no other explanation. But, a chance to speak to a human being who was nice and actually able to answer my questions and was able to explain what was going on made the difference between a mild "shit happens" annoyance and a fury that could easily have led me to change banks. Given how routine it is for customer service line service to be almost as bad as the events that inspired you to call in the first place, this is a real achievement. At least half the time, to get the help you need, even if you can get it, you need to ask for a manager. But, not this time.

I often tag instances of bad business management (the Burger King next door to its Cherry Creek branch office has earned at least couple of those for its parking nazi tactics, nasty bathrooms and notoriously slow front counter service), but excellence deserves recognition now and then as well.

Full disclosure: I am a First Bank of Cherry Creek customer, but receive no special deals and wasn't asked to prepare or compensated in any way for this blog post.

Canadian election produces sea change in partisan landscape

Election results from the 2011 election in Canada for its 308 seat federal parliament dramatically changed the partisan landscape there.

Voters in ridings previously held by the Bloc Québécois defected en masse to the New Democratic Party, while about half the seats previously held by the Liberal party were split between the Conservative Party and the NDP.

The Conservative Party led by Stephen Harper increased its number of seats from 143 to 167, giving its a majority (which required 155 seats) with a certain amount of cushion against intraparty dissent. In the most recent parliament, the Conservative party has led parliament with a minority government in the absence of a firm multi-party coalition after both the 2006 and 2008 elections, and has been forced to seek support from other parties for legislation on a case by case basis. It won 39.6% of the popular vote. It picked up 26 seats from Liberal MPs, 2 from NDP MPs and one from an independent MP. The Conservative Party is dominant in the Prairie provinces of Alberta (27/28 seats), Saskatchewan (13/14 seats) and Manitoba (11/14 seats) where it commanded popular vote majorities. It also won 73/106 seats in Ontario, 21/36 seats in British Columbia, and 8/10 seats in New Brunswick, as well as the only seat for the Yukon and the only seat for Nunavut.

The modern Conservative Party in Canada is the product of a merger of the Canadian Alliance (formerly the Reform Party), which was stronger in the West, and Progressive Conservative party, which was stronger in the East, in 2003. While the Conservative Party is the farthest political party to the political right in Canada, and favors favours lower taxes, smaller government, more decentralization of federal government powers to the provinces, a tougher stand on "law and order" issues, and a more active role in foreign military operations than the other parties, it is still considerably more socially liberal than the American Republican party, for example, supporting civil unions for same sex couples, even though it does not support gay marriage. It might be compared to New England's Republicans in the American political spectrum.

The New Democrat party led by Jack Layton, a party of the left that previously held just 36 seats in parliament, became the leading opposition party with 102 seats and 30.6% of the popular vote. The NDP surrender two seats to the Conservative Party, while picking up six seats from the Conservative Party and one from an independent MP. Before the election, the center of mass in the NDP was in Ontario, now it is Francophone with a majority of its MPs hailing from Quebec. The NDP is a social-democratic successor to the Labour party in Canada and roughly corresponds in its political views to that of the progressive caucus of the Democratic Party in the United States.

The Liberal party led by Michael Ignatieff (who was defeated in his riding and resigned as party leader), a center-left party that has either governed (for 69 years of the 20th century) or been the leading opposition party in Canada for as long as anyone can remember went from holding 77 seats as the second largest political party to just 34, garnering 18.9% of the popular vote. Twenty-three of the seats it lost were picked up by the Conservative Party, while 17 were picked up by the New Democrats. Politically, the Liberal party roughly corresponds to the Democratic Party in the United States without its progressive caucus. Generally speaking, the Liberals are stronger relative to the NDP in the Maritimes, while the NDP is stronger relative to the Liverals in the West, and the two are evenly matched in Ontario.

The New Democrats and Liberals put forward a candidate in every seat, and the Conservative put forward a candidate in all but one of the ridings.

The nationalist Bloc Québécois under the leadership of Gilles Duceppe (who was defeated in his riding and resigned as party leader) was crushed, going from holding 49 seats following the 2008 election to holding just 4 seats (it contested 75 seats) and winning 6.0% of the popular vote (and less than a quarter of the popular vote in Quebec). At least 44 of the seats lost by the Bloc were picked up by the New Democrats. Quebec is now represented in Canada's federal parliament by 58 NDP representatives, 7 Liberals, 6 Conservatives, and 4 Bloc members (who no longer hold official party status). Historically, the Bloc has been a big tent on the liberal-conservative spectrum within the general boundaries of mainstream political stances in Canada. It isn't clear from where I stand if the mass defection of Bloc voters to the NDP is a one time blip over some recent political misstep, or a long run death knell for the federal wing of the Quebec nationalist movement.

The Green Party, whose party leader is Elizabeth May, which held no seats after the 2008 election (or in any prior one) won one seat in parliament (Elizabeth May in the riding of Saanich-Gulf Islands, in British Columbia) and garnered 3.9% of the popular vote (a decline from 6.8% in 2008). The Green Party contested all but four of the seats. The seat won by the Green Party was previously held by a Conservative Party MP. It's agenda is similar to that of the American Green Party.

Independents and unaffiliated candiates held two seats after the 2008 election, but won none in 2011. Sixty-one independent and unaffiliated candidates and thirteen minor parties also sought seats in the Canadian federal parliament without success. None of the minor parties won more than 0.1% of the popular vote.

Canada is to the left politically of the United States. About sixty percent of Canadians vote for political parties to the left of the Canadian Conservative Party, despite is majority victory due to the partisan divisions on the Canadian left, and it is itself to the left of the American Republican party. The median MP in the Canadian parliament is roughly comparable in politics to a Blue Dog Democrat.

Note that while parties of the left and center-left won a majority of the popular vote, that the conservative party was able to win a majority of the seats in parliament, because the political left split the vote among multiple candidates while the political right did not to nearly the same extent. This was particularly a factor in Ontario where the NDP and Liberal Party received almost equal shares of the popular vote, and combined received a majority of the popular vote, but received only about a quarter of the total number of MP seats contested in the election.

After many decades of having multiple viable political parties, the 2011 election seems to portend a shift to what might become a two party system in Canada, similar to that of the United States with a similar electoral system. The NDP and Liberal party will be under strong pressure in the wake of the 2011 to follow the lead of the parties of the right in Canada in 2003 and merge. A merged NDP and Liberal party would have easily won a majority of the seats in parliament in the 2011 election.

Deinstitutionalization Legacy Persists

According to Pete Earley, former Washington Post intelligence journalist and author of "Crazy: A Father's Search Through America's Mental Health Madness" (2006) the United States has made a little dramatic but little noticed change in the way it handles mental health issues from a medical model to a criminal justice orientation:

In 1955, about 560,000 Americans were being treated in state mental hospitals. Based on population growth since then, you would expect more than 930,000 people in such hospitals today. There are only 55,000. Nearly 300,000 are imprisoned. Another half-million are on probation.

The largest public mental-health facility in the U.S.? The Los Angeles County Jail, home to 3,000 mentally ill inmates.

A dramatic shift towards the deinstitutionalization of those with mental health conditions in the 1980s from being the developed nation with the highest institutionalization rate for mental health conditions in the world, to the lowest, afforded some more freedom, but rather than producing a reinvestment of funds previously used for a public sector mental health care into community based programs led to a massive disinvestment in public sector funded mental health care that ended up funnelling many people who had trouble functioning in the absence of that care or family support, into the criminal justice system. Now, it can be hard to find services for anyone but the most affluent, even for bureaucratically savvy middle class families.

The trend is ongoing, with Colorado having seen many of its psychiatric hospital beds taken out of service over the last few years in the face of their high cost, and declining funding support since these programs receive less federal support or budget process protections than programs that have been preserved and often lack of visible constituency.

Earley cites conditions like schizophrenia and bipolar disorder, rather than psychopathy, as driving the trend. Some criminologists, such as Bernard Harcourt, have identified the size of the total institutionalized population as an important driver of crime rates, despite the mystery that the demographics of mental health institutions are very different from those of prisons (particularly in the number of women institutionalized). Early's identification of the large number of people with mental health conditions who are on probation or in jails, rather than prisons also helps to shed light on this demographic mystery; many people who would formerly have been institutionalized in mental health institutions are now in the criminal justice system, but only through probation or jail rather than prison, while many other individuals convicted of crimes are now more likely to be incarcerated in prison than in the past as criminal sentences have grown stiffer.

The brief excerpt in the linked story doesn't shed light on the question of how the United States experience compares to our peers in the developed world. It isn't clear, for example, if Europe and Japan have deinstitutionalized (or never institutionalized) their individuals with mental health conditions to the same extent as the United States, and if so, what the consequences of doing so have been there. The mental health institutionalization rates are indeed higher in Europe compared to a rate of about 25 per 100,000 in the United States (down from a peak in the 1950s of over 600 per 100,000), although they are declining in Europe from past levels:

Among countries in the European Union, the highest rate regarding the number of beds in psychiatric hospitals per 100,000 inhabitants in 2000 was in the Netherlands, which had a rate of 188.5. Other highs were posted in Belgium (161.6), Switzerland (119.9), France (113), and Finland (102.9). The average for the 25 European Union countries in 2000 was 90.1, down from 115.5 in 1993.

Japan's mental health institutionalization rate of 282 per 100,000 is the highest in the world, something particularly notable because the overall prevalence of mental health conditions in Japan is below the developed world average.

It is also worth pointing out that even if the residential mental health institution population were similar now to what it was in 1955, that it would still only be a tiny percentage of the population that receives or needs mental health care. For example, 60% of the population experiences depression, anxiety disorders, alcohol dependence and/or marijuana dependence by age 32. About 11% of adults in Colorado have experienced significant psychological distress (other than substance abuse issues) within the last year. Schizophrenia has a prevalence rate of about 1% in the general population, in contrast, and is about 80% genetic, and the prevalence rate and genetic component of bipolar disorder are on the same order of magnitude, but is more common and less strongly genetic.

The link between mental health issues and criminal justice involvement tends to be a "mental health plus" relationship. In one recent study, for example:

Mental illness alone is not a meaningful predictor of future violent acts, but is very significant when accompanied by a history of violence and substance abuse.

There were 3,089 people deemed to have severe mental illness—schizophrenia, bipolar disorder and major depression—but no history of either violence or substance abuse. They reported very few violent acts, about 50, between interviews.

But when mental illness was combined with a history of violence and a history of substance abuse, as in about 1,600 people, the risk of future violence increased by a factor of 10.

As the same linked post notes, relying on Colorado Department of Corrections date, in Colorado, "Moderate to severe substance abuse is a problem for 82.0% of male and 82.4% of female inmates. Moderate to severe mental health problems exist for 27.8% of male and 34.2% of female inmates."

Mental health problems are also much more likely to lead to serious criminal justice system involvement for individuals who are high school dropouts or have high school diplomas or GEDs but no college degree of any kind.

Westminster Mall Slated For Major Infill Development

Following the successful examples of redevelopments the moribund Cinderella City mall in Englewood, the Villa Italia mall in Lakewood (now Belmar), and the Southglenn Mall (now "the Streets at SouthGlenn, a 70-acre outdoor shopping, entertainment and residential area"), the City of Westminster, a Denver, Colorado suburb, has acquired most of the property in the dying 108 acre Westminster Mall ("all but the Sears store, the Brunswick Zone and a small office building, all of which will remain open. The city also plans to keep the J.C. Penney store open.") near U.S. 36 and Sheridan Boulevard, which it plans to redevelop as a municipal downtown with "5 million square feet of offices, residences, restaurants and shops."

Westminster Mall opened in 1977 with 30 stores. Within 10 years, it became among the most popular malls in metro Denver, adding May D&F and Mervyn's in 1986, followed by J.C. Penney a year later. At its peak, the mall had about 300 stores, a far cry from the 15 that remain open today. The city and the current owner invested $10 million to renovate the mall in 2000-01.

These suburbs were frequently developed in the wake of the construction of the interstate highway system as bedroom community subdivisions, rather than as traditional municipalities with a central commercial and government downtown district, usually had strictly segregated residential and commercial zones, and saw little downside to sprawling parking lots that were distant from individual shops in retail district, a set of flaws that has left these communities without souls or character that left them vulnerable to New Urbanist land use approaches.

The transition has also been inspired by ongoing Red Queen hypothesis style conflicts between municipalities for a stronger tax base. 


The Gallagher Amendment, passed by voters in 1982 in Colorado and phased in over the next several years causes residential real estate to be taxed at a lower percentage of its value than non-residential real estate. Also, for a variety of reasons, many municipalities have tended to favor sales taxes over property taxes as a revenue source. This means that communities with predominantly residential real estate tax bases and little retail development must impose much higher property taxes to pay for the same municipal services as communities with substantial commercial, and in particular, retail development. The combination of higher property taxes and inferior municipal services, in turn, drives down housing values in these communities creating a vicious circle. Cities with office building developments can turn to head taxes and, at least, benefit from larger property tax bases, but the bedroom communities planned in the late 1950s, 1960s, 1970s and early 1980s have suffered in this local taxation environment.

Retail development, in contrast, through a combination of its non-residential property tax rates and the sales tax revenue that it generates typically raise far more in local taxes than the cost of the governmental services that they consume (and draw significant volumes of tax dollars from non-residents), subsidizing municipal services for residents of the municipality and making housing in those municipalities more attractive.

So, there is a strong incentive for local governments in Colorado to do everything possible in a never ending struggle to lure retail developments with robust sales from their neighbors, even if this creates excess retail capacity in the aggregate that leaves a suburban landscape littered with dead shopping malls that have failed to keep up with the competition. For example, in the case of the Westminster Mall, the City and County of Broomfield's new Flatiron Crossing Mall and thriving retail development in Boulder sucked much of the remaining life out of the older Westminister Mall.

Mixed use mall to downtown redevelopments try to mute the competition by not focusing so intensely on destination retail shops that can be picked away easily by new retail developments.  Instead, they favor of residential uses and governmental uses that are sure to stay put, and location sensitive retail options that are more likely to continue to be supported by local residents even if a new destination retail mall springs up. These developments also bet that the steady stream of traffic from residential and commercial and governmental users who are relatively wed to the location will make the area attractive to other retail uses on an ongoing basis.


These redevelopments try to boost the brand of the suburb's housing stock (and hence property values) by giving the municipality more of an identity, a more positive character and more definition.

This development joins a major new development planned for the Chatfield Reservoir area, the redevelopment of the old University Hospital complex on Colorado Boulevard, and a number of transit oriented developments along light rail lines that are heating up as the real estate industry in Denver starts to recover from the financial crisis. Insiders in the industry that I've spoken to discount these major projects as mere "dreams" until more concrete steps to implement them progress, but the planning for a wave of new real estate development in the Denver metropolitan area, much of it infill, is underway.

Last Day To Vote In Denver Municipal Election

It is too late to mail in ballots in Denver's all mail municipal election, but ballots can still be dropped off in person until 7 p.m. Click the link for the Denver City government in the sidebar for more information. After that votes will be counted (with the first release of information containing a surge of ballots received and counted before voting closed).

In the City Council at large race with two seats in contention, this round of balloting will be decisive. In all other races, the two top candidates in races where no candidate receives a majority of the votes cast for that office will return for a runoff election. Races where this could happen include the races for Mayor, Auditor, Clerk and Recorder, and individual council district city council seats. For example, the several polls conducted so far in the Mayor's race make it very unlikely that any one of the nine candidates on the ballot who are still running (and additional candidates running on a write in basis) will receive a majority of the vote in the first round.