Missouri’s legislature has approved nearly $2 billion in tax incentives for Boeing after a House vote today, and the plan awaits Governor Nixon’s (D) signature. We’ve written on this issue extensively, following it from...
The Tax Policy Blog
This morning's Wall Street Journal reports California's tax authorities are sending a clear message to residents moving to lower-tax Nevada—you can run, but you can't hide.
As wealthy residents continue fleeing the state's notorious tax burden, California's Franchise Tax Board is tightening the screws on expatriates with audits to assure ex-residents are paying taxes on all income and capital gains earned while inside the state's borders. From the article:
California software entrepreneur David Duffield arrived in this Lake Tahoe resort a decade ago with big plans. He spent $50 million on a lakeshore estate and started a Nevada property-development business. What's more, by taking a big chunk of his wealth to Nevada, Mr. Duffield expected to save millions on taxes.
Then California accused him of shuffling assets to evade taxes, sticking him with a $19 million tax bill -- one of the state's largest ever. The 65-year-old billionaire founder of PeopleSoft Inc. denies the charge and vows further appeals.
Scores of wealthy Californians "go Nevadan" each year, relocating to a neighboring state famous for its low taxes. Among the transplants are Pierre Omidyar, founder of eBay Inc., and Andreas Bechtolsheim, a co-founder of Sun Microsystems Corp. But as Mr. Duffield's experience shows, what looks appealing on paper can prove far messier in real life.
Nevada transplants account for more than 20% of all tax disputes made public earlier this year by California tax authorities. Complex cases can take a decade or longer to sort out.
Brady Anderson, a native Californian who played center field for the Baltimore Orioles in the early 1990s, was dunned with a $322,410 California tax bill after claiming Nevada residency in 1993 and '94. The tax authorities "looked at where Brady was, every single day, and they subpoenaed credit-card receipts," recalled his accountant, Joseph Geier.
Mr. Anderson settled earlier this year, paying much but not all of the contested amount, Mr. Geier said. The defense focused on 1994, a year when he bought a sizable Nevada home. He didn't fare as well for 1993, when his residency claim was based on a rented Nevada apartment used in the off-season.
"If you come here from California, you can expect to be audited," said Peggy Taylor, a former PeopleSoft executive who prevailed in her own tax dispute after leaving the San Francisco area and moving to Incline Village in the late '90s. "Audits are winnable, but it's grueling."
The Indiana Lottery has been dealing with an expensive argument over a lottery ticket which could cost the state’s taxpayers a considerable amount of money.
Tom H. Smith, of Indianapolis, Indiana, bought an instant-win, scratch-off lottery ticket in 1996, which awarded him a $5 prize.
Smith didn't redeem his ticket until several months later when, he was told, it was too late to collect the prize. Smith appealed to the Indiana State Lottery Commission, insisting that he had no way of knowing when the game ended.
When his claim was rejected, he sued the agency for damages. His suit eventually became a class-action suit that brought in other ticket holders.
Hoosier Lottery Executive Director Esther Schneider told CNN the agency has spent almost $500,000 in legal fees on the case since 1997. A proposed settlement will create a $600,000 fund to resolve this and other disputes with lottery claimants, she added.
"This was probably mishandled from the beginning," Schneider said. "In nine years there weren't any any [sic] attempts made to come to a reasonable settlement ... [because] the previous administration's policy was not to settle."
This is the perfect example of why the lottery is not an appropriate activity for state government. The above description of the lawsuit reads more like a description of a consumer suing a large corporation than a citizen suing his state government.
Many people forget that a lottery is, after all, run by the government as a form of implicit taxation. Many states, however, allow their lottery agencies greater leeway and autonomy than they allow other state agencies so that the lottery can function like a business and raise as much revenue for state coffers as possible. In some states that means paying lottery executives exorbitant salaries and bonuses—half a million dollars for the Tennessee Lottery’s CEO.
Indiana would be better off relying on explicit taxation—such as sales, income, or property taxes—to raise revenue, and leaving the gambling lawsuits to private companies.
Today is the final day of a 6 percent general sales tax in New Jersey, and while a 1 percentage point tax increase on small items may not sound like much, 1 percent of a car’s final sale price can be significant, which is why car dealers in New Jersey are scrambling to reach deals before Saturday. But when is a car deal final appears to be the question many dealers are facing as confusion reigns over changing tax laws in the Garden State. From the Star-Ledger:
With just days before the state sales tax goes up, confused car dealers are calling their accountants and reaching for the antacid.
Dealers are well aware the sales tax increases to 7 percent from 6 percent on Saturday, but does the new rate apply to customers who have driven their cars off the lots, or merely confirmed a purchase? How do computer systems need to be adjusted to reflect the change?
And it's not just the sales tax with which dealers must grapple. Also kicking in Saturday is a 0.4 percent add-on for cars that cost more than $45,000 or get less than 19 miles per gallon. The New Jersey Coalition of Automotive Retailers said the charge will apply to nearly half the cars sold in the state.
The budget compromise reached last week in Trenton gave retailers only a week to digest the new laws, and so far their collective message is: Huh? With New Jersey auto dealers responsible for collecting hundreds of millions of dollars each year in sales taxes, the pressure is on to quickly learn the finer points of the new legislation.
"Confusion will reign," said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers. "Trying to get it right in just three or four days is unreasonable."
Appleton said his organization is fielding dozens of calls a day from dealers, their controllers and technical support about the whens, hows and whos of the new taxes and charges. (Full Story)
If a tax hike is known to the public to be implemented at a certain point in the future, it merely changes the relative prices between goods across time. This encourages more consumption today and less consumption tomorrow. The magnitude of the losses in economic well-being that results from this distortion between goods across time depends upon the discount rates of consumers (how much they value the present compared to the future), as well as the size of the tax and the amount of available information regarding the tax hike provided to the consumers in advance.
For more on the issue of tax complexity, check out our section on the topic.
Signaling his intention to pursue hearings on fundamental tax reform, Senator Charles Grassley is putting pressure on the Department of Treasury to come forward with a timeline to release their tax reform agenda. In a hearing with Eric Solomon, who has been nominated to fill the long-vacant position of assistant secretary for tax policy, Grassley wanted answers. From Reuters:
“Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, pressed Solomon to tell the panel when Treasury would forward its recommendation to President George W. Bush. The Treasury is working from the recommendations of a bipartisan panel that proposed a series of steps aimed at making the U.S. tax system simpler and fairer, including eliminating many deductions and reducing tax rates.
Solomon said he would need to fully brief new Treasury Secretary Henry Paulson on tax system overhaul proposals before he could say when Treasury's recommendations would be completed.” [Full Story]
While Mr. Solomon probably didn’t provide Senator Grassley with the definite answers he was looking for, it is encouraging that senior tax-writers are still so interested in the prospect of reviving tax reform. As previous Tax Foundation research has pointed out, the recent large inflows of tax receipts are significantly reducing the budget deficit and this could provide lawmakers with a golden opportunity to consider fundamental tax reform.
We've posted a new commentary about a rising trend among state and local legislatures: proposed "obesity taxes" on carbonated soft drinks, aimed at slimming down the public's waistline. The latest soda tax proposal comes City Councilman Bob Fitzgerald of the Denver suburb of Aurora, Colorado:
Soda Obesity Taxes: Taxing Ourselves to Health
Can we tax our way to a trim waistline?
Aurora, Colorado City Councilman Bob Fitzgerald thinks so. Comparing Coca-Cola to cigarettes, alcohol and other unhealthy vices, Fitzgerald unveiled a plan last month to pin a new soda “sin tax” on Aurora taxpayers.
“It’s a reminder and a constant reminder,” he told reporters, “that we need to, as a nation and as a city, develop healthy habits.”
That’s a noble sentiment. Surely we’d all be better off spending more time on the StairMaster and less in line at Taco Bell. But is Fitzgerald’s plan to use the tax code to lighten-up taxpayers’ wallets really a smart way to fight obesity?
For several reasons, it isn’t...
Someday we’ll compile a list of all the euphemisms for “tax.” When we do, the contribution of Rep. Tom Davis (R-VA) will be “dedicated funding source.”
That’s what he calls his new tax proposal designed to pump money into Washington DC's subway. The bill is H.R. 4396, and if he can get it through, the federal government will pump $1.5 billion into the watery tunnels of DC’s Metro. See the Congressional Budget Office's report.
If Davis's project were just normal pork, taxpayers all over the country would pay for the local project – a huge slab of pork even by the recent obscene standards -- and locals would pay nothing. But this is no normal pork project – this one requires a local match.
As a result, Davis is essentially trying to pay Virginia and Maryland and the District to raise $1.5 billion in new local taxes that he will “dedicate” to Metro.
All the local representatives have signed on to this “dedicated funding source” (without calling it a tax): Rep. Benjamin Cardin (D-MD); Rep. Steny Hoyer (D-MD); Rep. James Moran (D-VA); Del. Eleanor Norton (D-DC); Rep. Christopher Van Hollen (D-MD); Rep. Frank Wolf (R-VA); and Rep. Albert Wynn (D-MD).
An excellent piece appears today in the Wall Street Journal on the politics, complexity, and bad economics of our crazy tax code. David Wessel describes his own personal problem he has had with the complexity of complying with many deductions, as well as provides a great summary of the overall problem at hand.
For years, I went to the grocery store with a blue plastic envelope full of coupons -- 50 cents off, buy-one-get-one-free -- just as my mother did. She still does. I eventually decided it wasn't worth it, though I still rejoice silently when displaying a supermarket loyalty card saves me 50 cents on a jar of tomato sauce.
I am, however, hooked on the tax breaks the government offers to shield slices of my paycheck from taxes. I have some of my wages diverted to a flexible spending account so they aren't taxed, and then use that account to cover medical bills that the insurance company doesn't pay. I divert more to cover parking at a garage near my subway stop, and my wife diverts some of her pay to get untaxed subway fare cards instead of taxable wages.
And then there are tax breaks for saving, each with its own rules and caps. I set aside money in my 401(k) plan at work. My wife sets aside money in hers. Both of us then set aside an extra $5,000 because we're over 50 and the government lets us. I put a bit more in a separate retirement plan funded with money I earn from free-lancing.
And then there's the money I set aside after taxes for my children's college education, at a big mutual-fund company, where it grows -- at least I hope it grows -- tax-free. I've also opened a couple of smaller accounts at another mutual fund to take advantage of a District of Columbia tax deduction ($3,000 per parent) for college saving.
Wessel then provides a perfect succinct summary of the problem that exists with these seemingly harmless tax provisions:
But the real driver of all this is that Congress has turned the tax code into a theme park, with a tax break for every good cause. Each one makes sense: Congress decides it's in the public interest to encourage people to use mass transit. Allowing employers to take money out of workers' checks, shield the money from taxes, and then give workers fare cards instead of pay is a reasonable, cheap approach. Workers are happy: They've saved money. Some probably think employers are giving them an extra benefit. Employers surely don't mind that.
So what's the problem? Add this tax break to the dozens of others that decorate the tax code, and we get higher tax rates than otherwise needed to bring in the same sum. We get a lot of hassle and complexity that chews up time and money. And, I suspect, the government creates tax breaks that are claimed far more often by sophisticated, upper-income taxpayers than by others. (Full Story)
The central point that Mr. Wessel makes is that for every special tax provision inserted into the code, one of three things must happen (or a combination thereof): either you must cut spending, raise marginal tax rates now on everyone, and/or raise marginal tax rates later on everyone (i.e. run a deficit now).
On Friday, the Wisconsin Supreme Court ruled that Wisconsin's ad valorem tax exemption for airlines that have hubs in Wisconsin (i.e. Midwest Express and Air Wisconsin) is not in violation of federal law. Northwest Airlines, which is subject to the ad valorem tax and a competitor of Midwest and Air Wisconsin, sued the state alleging that the hub exemption discriminated against interstate commerce since it effectively exempted only in-state airlines from ad valorem taxation.
The lower court ruled in favor of Northwest Airlines, but the Wisconsin Supreme Court reversed without reaching the merits of the Commerce Clause claim. Instead, the Court ruled that the claim was precluded by federal law governing the regulation of airlines:
"Because § 40116(e) authorizes the states to collect property taxes from air carriers, and because the hub exemption does not fall within any of the assessment or collection practices prohibited by the statute, we conclude the hub exemption is not subject to dormant Commerce Clause review."
If the majority had reached the merits of the claim, they would have been hard-pressed to uphold the hub exemption. While the Supreme Court's Commerce Clause jurisprudence has been, in the words of the Supreme Court itself, a "quagmire" (see Quill, 504 U.S. 298, 315), certain general principles have stood the test of time. One of these is the principle that a state cannot enact a generally applicable tax and then increase that tax as you increase other activities out of state. This is classic economic protectionism, and it is foreclosed by the Commerce Clause itself.
This principle is most easily seen in the Boston Stock Exchange case, where New York enacted a tax on the sale of all stocks on New York stock exchanges, but then offered a tax exemption if the transaction was conducted using a New York-based broker. The Wisconsin tax exemption is similar to the discriminatory scheme in Boston Stock Exchange. As the dissent notes in the Northwest Airlines case:
"In invalidating the tax, the Supreme Court considered the history of the New York tax statute and determined that the statute was enacted for economic
protection, that is, to help the New York Stock Exchange and encourage it to remain in New York. The Supreme Court observed that the tax was invalid because the state was using its taxing power as a means of forcing more business into the state."
The dissent gets it right. The Commerce Clause allows states to use their tax system to compete for business, but not by burdening out-of-state businesses more heavily than in-state businesses. Therefore, while the Wisconsin hub exemption would be properly struck down under such a rule (since its impact is to effectively impose the ad valorem tax only on airlines based out of state) the credit at issue in Cuno would not, since it is available to anyone who invests in Ohio, not just those who invest in Ohio plus those who engage in further activities. The Ohio credit did not impose a higher tax on a business if it chose to invest out of state; the Wisconsin ad valorem exemption does.
Thus, the Commerce Clause would not have precluded Wisconsin from offering a general property tax exemption to any airline that places new property in Wisconsin (thus becoming subject to the ad valorem tax), but it does preclude Wisconsin from crafting an exemption that effectively punishes out of state activity by applying the tax only to those who do not have a hub in the state.
There is no word yet on whether Northwest Airlines will appeal the case. It should be interesting to see whether the U.S. Supreme Court agrees to hear the case if it is appealed.
Our answer is a resounding "no," as detailed in a new analysis released this morning.
With gas prices on the rise, temporary gas tax holidays offer lawmakers a way to give the appearance of "doing something" about gas prices. However, temporary tax changes are almost always a poor way to provide tax relief, compared with more permanent and broad-based tax reductions. From the piece:
While gas tax holidays are popular with lawmakers, they are generally poor economic policy. Tax holidays appear to provide a simple way to offer tax relief to consumers during times of high prices at the pump. However, not all forms of tax relief are created equal.
Some types of tax relief—including gas tax holidays—introduce costly economic distortions into the economy in the process of lowering tax burdens because they favor some industries and products over others. In contrast, broadly based and permanent tax relief does not favor particular industries or buying behavior, providing tax relief without harming the overall efficiency of the economy.1 There is a growing body of research that suggests tax holidays are a costly and inefficient way to offer tax relief to consumers compared with more broadly based and permanent types of tax relief.
As economist John Hood remarked in a different context, temporary gas tax holidays aren't primarily designed to cut tax burdens. They're designed to create announcements of tax cuts.
Clearly, that benefits lawmakers who are under pressure from a public upset over prices at the pump. However, from a policy standpoint it is a poor response compared with the many other types of tax relief that are available.
As the US economy marches forward, tax receipts from corporations are beating all expectations. From the Los Angeles Times:
“Corporate tax receipts this year will probably cross the $300-billion threshold for the first time, boosting efforts to trim the U.S. budget deficit, the Congressional Budget Office said.
The budget agency, in its monthly review released Friday, estimated that corporate receipts would exceed $330 billion in fiscal 2006, up 18% from 2005. That is double the increase that the agency estimated at the beginning of the government's fiscal year, which ends Sept. 30.” [Full Story]
This spring, Tax Foundation economists released several studies that analyzed how this increase in corporate tax receipts may influence the upcoming policy debate on US competitiveness. We pointed out that the surge in corporate income tax collections offers lawmakers a real opportunity to reform the system. Furthermore, we provided a basic framework for policymakers that are considering fundamental tax reform.
To view our collected research on corporate tax policy, click here.
New Jersey scored second worst (49th) on the Tax Foundation’s 2006 State Business Tax Climate Index (SBTCI), but the state is now taking dead-aim on New York to take over the dubious position of having the worst business tax climate in the country.
Lawmakers in the Garden State finally reached an agreement last week to end the state’s budget stalemate and end the partial shut down of the state government. While it may be viewed as a victory for lawmakers eager to restart government services, the bill is undoubtedly a loss for New Jersey businesses and taxpayers.
As part of the bill New Jersey’s sales tax rate will increase to 7 percent from 6 percent. Additionally, a corporate income tax surcharge of 3.5 percent will be implemented and other tax increases are included in the bill as well. The sales tax base was expanded to include many services, which is one positive development from an otherwise disastrous bill for the people of New Jersey.
New Jersey benefits economically from its proximity to New York City, but unless lawmakers dedicate themselves to fixing the business tax climate in the state, even the bright lights of the big city will not be able to save New Jersey’s economy from its ruinous business tax climate.
The city of Springdale, Arkansas appears to be taking a page from Kevin Costner’s famous line “If you build it, they will come.” But at least Ray Kinsella didn’t need a government handout that raised the local residents’ taxes to build his field of dreams. The latest attempt to try and deem baseball a public good in need of tax money comes to us courtesy of WREG-TV in Memphis.
Springdale residents are to vote Tuesday on whether they want a one-percent sales tax extended to build a 50 (m) million-dollar baseball stadium.
Three questions will be on the ballot. If all three are approved, the city will be able to pay off one bond issue, start a sell a second set of bonds and build the ballpark.
Backers say the city will be able to field a Class Double-A minor league baseball team if the stadium is built.
Officials have said they expect to get the Wichita Wranglers of the Texas League if the city provides a stadium. In Wichita, officials are making an effort to save their team. The effort includes proposed renovations to the Wranglers' 75-year-old stadium.
As history has shown over and over, the economic benefits of fighting with other cities in trying to lure sports franchises are almost always non-existent, or in many cases negative. The main question to ask when addressing the question of whether government should tax residents in order to fund any project is whether this good would be under-produced by the private sector? In other words, are there significant benefits (on net) from a minor league baseball franchise that would not be captured by ticket fees, television, etc.?
Often times in these debates, the issue is framed in a distorting manner. The proponents of government funding will typically put forth estimates of the economic activity that will be generated as a result of the team locating in such a location. Two problems exists with this type of reasoning. One is that they typically do not ask whether or not the government funding was necessary for that economic activity to occur in the first place. And second and most importantly, the proponents totally ignore the economic principle of opportunity costs. That is, is there some better government program that this one cent tax could fund? Or just as worthy of a question, would the economic benefits be greater if that one cent per dollar spent was left with the residents to decide how to spend it rather than government central-planning that is based mainly on what industries the lawmakers want to be credited with bringing to the area?
Citizens and policymakers need to realize that sports stadiums are not public goods, and that just because it may appear that a stadium will “create” jobs or generate economic activity, one must ask the question of what has been foregone in order to generate these “jobs” or this economic activity.
The New Jersey budget meltdown is finally hitting essential government services: Atlantic City's casinos...
The gambling shutdown will cost the state some $1.3 million a day in lost taxes, but Governor Jon Corzine and the Democrats who run the legislature still won't end their showdown at the spendthrift corral, also known as Trenton. The legislators are convinced that Mr. Corzine is leading them down a path to political ruin by insisting on raising the state sales tax to 7% from an already high 6%, and they're probably right...
The sales tax would cost the average New Jersey family about $275 a year -- which is a few seconds of interest income for Governor Corzine, a mega-millionaire from his days at Goldman Sachs...
The legislators may also be worried that voters could soon figure out that New Jersey is already one of the most heavily taxed states in the nation. The nearby table has the lowlights. (By the way, the 50th state in business friendliness is New York. Is it something in the Hudson River?)
(Update: Note that while the Wall Street Journal table above reports that New Jersey's state and local taxes were 4th highest in the nation, this relies on tax collections data from the Census Bureau rather than tax burdens, such as those calculated by the Tax Foundation (See here for the difference between the two.) Tax collections report how much tax governments receive, while tax burdens instead focus on how much tax taxpayers actually pay, regardless of which government receives it. According to our calculations, New Jersey's state and local tax burden ranks 17th highest nationally.)
The Wall Street Journal editorialized today about the AFL-CIO’s inability to pass its “Wal-Mart Tax” across the country in the wake of Maryland’s decision to institute such a tax. From the Wall Street Journal (subscription required):
The AFL-CIO had twisted enough arms in Maryland to enact a law requiring employers with 10,000 or more employees to spend at least 8% of their payroll on health care or pay the state the difference. That law applies to only one company, Wal-Mart.
For anyone keeping score, AFL-CIO President John Sweeney has been striking out in a surprising number of state capitals. Mr. Sweeney launched a campaign in 33 states several months ago to force Wal-Mart and other retailers either to spend more on health care or pay more in taxes. His legislation was intended as a first step in mandating employer-provided health care, and his campaign began as Maryland enacted the first "Wal-Mart tax."
Well, the early results are in, and the Sweeney tax has been a political flop. Not a single state has followed Maryland's lead.
The “Wal-Mart Tax” is bad tax policy as Chris Atkins pointed out in a fiscal fact in March. Maybe lawmakers across the country heeded his advice:
Maryland ’s Fair Share Health Care Fund Act will not have much impact on Maryland ’s business tax climate in the short term. However, if it is expanded to other companies, it will be an additional impediment to Maryland ’s ability to attract jobs and investment in the long term. Maryland already has the 17 th highest state and local tax burden in the nation. The additional burden of the Wal-Mart tax will only worsen the state’s current situation, and will do nothing to help the workers it is intended to help.
A common view among lawmakers is that if companies are given a choice between special tax incentives or more neutral, broad-based tax relief, they'll favor tax handouts every time.
But as we've noted before, this is often not true. Companies today are increasingly aware of the dual-edged nature of targeted tax preferences: they may provide short-term economic stimulus, but ultimately they increase tax complexity and compliance costs, encourage costly industry rent seeking, and raise tax burdens elsewhere in the economy.
The latest issue of Budget & Tax News features an excellent interview with Mark Baker, CEO of Gander Mountain, the nation's third-largest outdoors retailer. In it, Baker makes a persuasive case against the sort of targeted tax incentives that are widely employed by today's state and local governments. From the interview:
Interviewer: Gander Mountain has launched a national campaign in opposition to government subsidies in the outdoors retail industry. What is wrong with subsidies?
Baker: Competitors of Gander Mountain have successfully convinced state and local governments in several states to provide large tax incentives in order to build stores in their communities. They portray their stores as "destination retail" in order to secure the incentives, claiming that by having their store in a community it will draw millions of tourists, and their wallets, to the area. However, these retailers are in the marketplace to sell product and turn profit, and like all retailers they analyze the markets to determine where their customers live and shop.
Playing one community off another, these retailers push for tens of millions of dollars from taxpayers to help finance their stores. Even more troubling, in some cases they are persuading states to give them favorable "nexus rulings" that are costing taxpayers even more in lost sales tax collections.
Cabela's estimates that tax increment financing and other forms of government assistance [cover] about one-third of the cost of building new stores--or an average of $10 million to $20 million per location. However, the public financing packages can be larger. For instance, Cabela's received a tax increment financing package totaling $40 million to build a mammoth 180,000-square-foot store in Kansas City, Kansas.
Neither Cabela's nor Bass Pro would disclose the total amount of public money they have received over the years, but our estimates put the combined total at well over $400 million. When you add the value of the nexus rulings, the total goes even higher.
Interviewer: What are you doing to oppose these subsidies?
Baker: We've put together and distributed a booklet and educational materials for state and local officials all across the country outlining our concerns. We are meeting with state and local officials directly, and communicating with the media and opinion leaders all around the country. We are building coalitions with taxpayer groups and other nonprofit organizations that share our concerns. We have worked extensively to identify and assist grassroots opposition in targeted communities.
We are building a network of like-minded individuals and think tanks that can defeat these proposals on the ground. We are doing everything in our power to encourage a discussion about retail subsidies and educate the state and local officials that will have the final say.
Interviewer: Why doesn't Gander Mountain join in and take the subsidies?
Baker: We believe in the American system of free enterprise and consider these demands to be anti-competitive and fundamentally inappropriate. We cannot in good conscience go down that road and maintain our integrity as a good corporate citizen. We think it's wrong. So we are unwilling to accept the "everyone is doing it" argument and become part of the problem.
Who says companies don't care about sound tax policy? Read the full interview here.