Affiliates
Here’s an interesting article founder Ben Kyriagis ran across from a similar group in South Carolina. I encourage members to visit the site and see where we might be in a few years. Reprinted here with permission.
-Geo
Majority of Small Businesses Not Affected by Rule, Want End to Tax Cuts for Highest Incomes
Washington, DC – Today, the American Sustainable Business Council (ASBC), Business for Shared Prosperity (BSP) and Main Street Alliance (MSA) called on the Senate to legislate a “Buffett Rule” by passing the Paying a Fair Share Act (S. 2059), assuring that households with incomes above $1 million don’t pay lower tax rates than middle-income taxpayers.
In a letter delivered to Senators, nine business organizations disputed claims that a Buffett Rule would negatively affect small businesses owners, the vast majority of whom are middle-class Americans with incomes under the rule’s $1 million threshold. Only 1 percent of the 34 million households reporting any business income on their tax returns earn more than $1 million annually, according to data from the non-partisan Tax Policy Center.
“I could have all the South Carolina small business owners making more than $1 million a year over for a backyard barbecue and have plenty of room left over,” said Frank Knapp, president of the South Carolina Small Business Chamber of Commerce and vice chair of ASBC. “It’s time for the real millionaires club – CEOs of big corporations, hedge fund managers and corporate lobbyists – to pay their fair share.”
“When politicians who stand against a Buffett Rule for millionaires wring their hands about how it will impact small businesses, let’s be clear: that’s small business identity theft,” said Benjamin Markeson, owner of Three Star Flea Market in Apopka, Florida, and a leader with MSA. “They’re stealing the good name of small business owners like me, who believe millionaires aren’t paying their fair share of taxes, and using us as a human shield to protect the richest one percent from pitching in.”
The letter also cited national, independent polling data showing that 57 percent of small business owners support the tax increase included in the Buffett Rule. The scientific poll revealed that only one of the 500 small business owners surveyed reported an income above $1 million.
“Those who benefit most from our national expenditures on infrastructure, education and law enforcement need to pay their fair share,” said Lew Prince, owner of Vintage Vinyl in St. Louis, Missouri, and a BSP leader. “I’ve been in business 33 years, and I’m appalled that my customers, who worry about scraping up enough to pay for their next tank of gas and groceries, pay higher tax rates than some oil and food executives. The Buffett Rule is the right step in bringing more fairness to the tax system and supporting the public investments and job creation we need for a healthy economy.”
Business leaders have been pushing Congress to restore higher tax rates for high-income Americans since 2010. ASBC, BSP and MSA have signed a petition with hundreds of small business owners to let the high-end tax cuts from the George W. Bush presidency expire at the end of 2012. BSP also released a 2011 report detailing the business benefits of fair income taxes and setting the record straight about the impact of top-rate tax cuts on small businesses.
The Senate is scheduled to vote on the Paying a Fair Share Act, introduced by Senator Sheldon Whitehouse (D-RI), on April 16. Following the delivery of the business leaders’ letter, Sen. Whitehouse said small business owners “work hard every day, play by the rules, and pay their fair share in taxes. It’s not right for ultra-high income earners to play by different rules and pay lower tax rates, and I’m committed to correcting this inequity.”
###
The American Sustainable Business Council is a growing coalition of business networks representing over 100,000 companies and 200,000 business leaders. ASBC advocates for public policies that meet the realities of the 21st century global economy. www.asbcouncil.org. (SBM IS A MEMBER)
Business for Shared Prosperity is a network of forward thinking business owners, executives and investors. BSP has organized petitions for positive corporate tax reform and for ending top-rate tax cuts, and produced related reports. BSP is a member of the American Sustainable Business Council. www.businessforsharedprosperity.org
The Main Street Alliance is a national network of state-based small business coalitions. MSA creates opportunities for small business owners to speak for themselves on issues that impact their businesses and local economies. www.mainstreetalliance.org
Some of you may have viewed the Employee or Contractor Webinar and you will be happy to know that this and other Webinars are now online at the IRS!
The IRS Video portal contains video and audio presentations on topics of interest to small businesses, individuals and tax professionals. If you were unable to attend a webinar when it was broadcast live, you can watch a recorded version of the IRS webinar by going to www.irsvideos.gov Click on the tab for Small Businesses.
Commissioner Rothman will be the guest speaker at Small Business Minnesota’s Spring Meeting
Date: Wednesday, 25th April 2012
Time: TBD, evening
Event: Address by Mike Rothman, Commissioner of the Minnesota Department of Commerce
Location: Green Mill restaurant, Plymouth
Plan to be there for a most informative presentation and discussion about healthcare and other pressing topics for small business owners. Bring a guest!
Details to follow
We’ll be sending a follow-up email later this week with specifics.
Small Business Minnesota is a nonprofit, nonpartisan, statewide association that promotes its members’ interests by advocating for the real needs and priorities of small businesses, and by providing opportunities for networking, education, and mutual support.
Last Wednesday, President Ben Kyriagis and SBM member Clark Dircz testified in Senate and House committee meetings on behalf of the Governor’s Job Now Tax Credit. Their Statements below will give you more insight into the Jobs Credit than anything else out there.
Clark Dircz before the Senate committee :
1) MN needs to be competitive as to employment incentives. Most of us, especially in high tech, have choices, we can hire outside MN, if not globally. I have a letter on my desk from California this AM reminding our company to take the corresponding CA credit for last year (that we do not presently have in MN).
2) There is no way to judge whether a given candidate in any position (which is where this credit focuses) is the “best”. Most companies attract many qualified candidates for all openings. Without the credit, MN loses on ties. Our past 12 hires – 10 CA, 1 IL, 1 MN.
3) For the types of jobs we provide, this credit costs the State NOTHING, because at 50k in salary for a single college grad, the MN income tax is $ 2748. So, in 12 months, the 3k credit is almost paid for. MN is ahead after that. This also does not take into effect the fact that the 50k in income is spent here, generating sales taxes, property taxes etc. In short, for most hires, this costs the State zero. Our employees’ average incomes are in excess of 75k per year by the time they have been with us 3 years and if they don’t start working here, they will most likely never end up in MN, a loss that keeps on losing.
4) State taxes have almost nothing to do with where companies hire and locate. To wit, per the Wall Street Journal (WSJ), taxes are the 26th most important factor in where to locate a business. #1 is demand for products, #2 is education/skill sets of employees/resources. In my earlier career as a CPA, I completed over 3k tax returns and have advised over 500 companies. Taxes were NEVER a primary factor in what they did with their business. How many companies (on net) have relocated to (or are located in ) SD, ND, or Montana from MN or anywhere else because of their zero income taxes? Zero per any actual study I have seen. There is one significant company in ND that is HQ’d there –in mining , because they mine the primary ingredients for their fertilizer there. On net, companies have been leaving those states due to lack of educational skills or because the low skill jobs they have created can be exported anywhere easily. “Buying” companies into your state via tax gambits is a zero sum game, but at times must be played until everyone stops doing it. I applaud the state staff that testified to the fact that we have no choice at this point to participate in this game. $10MM is chump change at that table, see below.
5) Reasons for hiring in states depend on company type, we are in high tech software. Overwhelmingly, our industry hires because of education and somewhat due to proximity to customers. MN used to be (pre-2000) a “low cost” state to hire from because of the high quality educated workforce here that obtained degrees at low cost (which includes my stint at UofMN). During the last 10 years education costs have exploded, forcing many graduates to leave the state to maximize income and we are not turning out as many graduates as needed. The state (pre Dayton) has also been hell-bent on ruining the public education system here due to underfunding.
6) Once you get past agriculture, recreation and some mining, the only real resource MN has is a highly educated workforce. This was heavily invested in during the 60, 70s, leading to Control Data, Honeywell, Cray, Medtronic etc. Since, 2000, nothing of the scope of those companies has been created in MN, with the possible exception of Compellent, which was sold to Dell last year. Since 2000, high-tech in MN other than medical has basically been gutted compared to the truly competitive states. Medical will be gutted too as non-MN ownership/management succeeds the generation of MN founders if we are not competing HARD with multiple programs to keep them here.
7) Where are the “true competitors” and how are they succeeding? WSJ tracks 15k venture-funded companies every year, and culls that list to the top 50 “new” ones per year. Where are they located per last year’s awards? 40 CA, 3 NY, 4 MA, 3 in other states ( 2 in TX). Note that other than TX, these are all “high-tax” states (much higher than our actual status at 33rd highest overall, although our nominal rates look high- there were discussions about this in the meeting as well). Why are the competitors located there? Qualified people & aggressive funding culture. By the way the ones in TX were nothing to brag about- they were R&D energy-related and would generate low-paying jobs.
8) Since 2000, the US has created 60k high-tech targets for the type of products my company creates. 40k+ of these were created in CA alone. Of the remainder 10k+ are located on the East Coast. 95%+ of them are located in states with much higher taxes than MN because of point 7. What about MN? Only 300 – almost all in medical. 85% of our customers are now outside MN.
9) VC funding in MN is almost dead and has gone down every year since 2000, the end of Pawlenty’s term saw the worst investment performance in MN ever. Of the VC’s I talk to, this is due to lack of suitable targets, which = shortage of educated people & related culture. See the above points. Where are almost all the VC’s? CA and East Coast.
10) Capital is key although not part of the credit I was asked to endorse today. By contrast, while we in MN are agonizing over a $10MM seed fund, Massachusetts has spent over $3B (yes $B) in funding the items talked about today in just the last few years. They are on track to reclaim their spot as one of the leading technology hotspots in the world. Invest and you get return. Don’t invest, you get beat- turn out the lights.
So, there is a debate over the “cost” of this miniscule program? And many of the legislators in attendance were concerned about “taxes” and they are “pro-business”?
I certainly don’t know what businesses they are “Pro” for. As they were crowing today about the “success” of the GOP programs that are “creating” the budget “surplus”, I am sure that they are already hoping to give that money away in lower taxes, as opposed to say paying back the $B’s we have borrowed from our schools to fake balance the budget?
As I noted, this credit is a mandatory no-brainer.
Bren Kyriagis before the House Comittee:
My name is Ben Kyriagis. I am a small business owner and the President of a new group called Small Business Minnesota. A nonprofit, nonpartisan association of Minnesota small business owners.
I am here to testify in SUPPORT of the GOVERNOR’S TAX CREDIT on behalf of myself and of Small Business Minnesota.
I will not talk about the obvious benefits of this TAX CREDIT- I.e. the simplicity, the targeting of specific groups, or that it will pay for itself. I think you already have heard that.
I will try to address instead the following 4 POINTS:
-
Is this necessary since most businesses would hire the people regardless of the Tax credit?
The answer is maybe so. The great advertising man David Ogilvey said this about advertising expenses. “ Half of all advertising expense is totally wasted. The problem is… we do not know which half”.
Perhaps most businesses would hire the people anyway without this credit. Perhaps not. The TAX CREDIT will surely make the difference in cases where some extra incentive is needed. It will give an extra psychological boost.
-
Are we perhaps spoiling businesses to expect incentives of this type ? Our entire economy is based on incentives. The Free market depends on them. One way we can look at this is “ as incentive for training”.
All businesses have to invest approx. 3 months of pay in training of any new employee before they become fully productive. A $ 3,000 Tax Credit only covers approx. one month of that three month investment. And it is an investment for the hiring company as well as for the state. The new employee will gain new skills and can be more productive for the company and therefore more productive for the state in the form of higher tax contributions and positive impact on the economy. In general, investments in training and education always pay off.
-
Is there anything wrong with this plan? Sure. No plan is perfect. I already mentioned that we will not know which companies would hire any way without this tax credit. Another thing that I do not like is that companies that had less than five employees in December of 2011 do not qualify. In my view we need to encourage all small companies to hire and this five employee restriction should be eliminated so that all companies that had at least one full time employee in December 2011 will qualify for the tax credit on first come first serve basis like the rest.
-
What is the best thing about this plan? This is easy. This is not perfect but it is a reasonable, rational, modest, JOBS PLAN. Our economy runs on consumer and business confidence. If you pass a bipartisan JOBS PLAN this Spring it will send a message to all businesses that our politicians are trying their best and they are working together. And this will help improve the overall business climate and confidence. This new climate in itself may actually help create more jobs than the TAX CREDIT. I hope you will keep this psychological factor in your mind as you vote for this bill.
Thank you very much.
From the IRS
If you are a small employer with fewer than 25 full-time equivalent employees that earn an average wage of less than $50,000 a year and you pay at least half of employee health insurance premiums…then there is a tax credit that may put money in your pocket.
The Small Business Health Care Tax Credit is specifically targeted to help small businesses and tax-exempt organizations. The credit can enable small businesses and small tax-exempt organizations to offer health insurance coverage for the first time. It also helps those already offering health insurance coverage to maintain the coverage they already have.
Here is what small employers need to know so they don’t miss out on the credit for tax year 2011:
- Qualifying businesses calculate the small business health care credit on Form 8941, Credit for Small Employer Health Insurance Premiums, and claim it as part of the general business credit on Form 3800, General Business Credit, which they would include with their tax return.
- Tax-exempt organizations can use Form 8941 to calculate the credit and then claim the credit on Form 990-T, Exempt Organization Business Income Tax Return, Line 44f.
- Businesses that couldn’t use the credit in 2011 may be eligible to claim it in future years. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.
For tax years 2010 to 2013, the maximum credit for eligible small business employers is 35 percent of premiums paid and for eligible tax-exempt employers the maximum credit is 25 percent of premiums paid. Beginning in 2014, the maximum credit will go up to 50 percent of qualifying premiums paid by eligible small business employers and 35 percent of qualifying premiums paid by eligible tax-exempt organizations.
Additional information about eligibility requirements and calculating the credit can be found on the Small Business Health Care Tax Credit for Small Employers page of IRS.gov.
YouTube Video:
Small Business Health Care Tax Credit | English
Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.
Our partner, The American Sustainable Business Council has provided some documents for our members that talk about the President’s 2013 budget and how small business factors in:
“We wanted to share this White House Business Council briefing with you discussing the President’s 2013 budget. On Monday, ASBC and Business for Shared Prosperity issued a press release (attached) supporting the budget’s stance on taxes and infrastructure investments. Also attached are several fact sheets from the White House.”
2013 Budget Overview Fact Sheet
Small Business Owners Support President’s 2013 Budget
Ron Wacks is an SBM Member!
Ask yourself this question: Do you want to call people or have them call you?
Featuring Speaker: Ron Wacks
Tuesday Feb. 21st, 2012 7:00-8:45 PM
@ Dunwoody College of Technology
Admission: FREE for IN Members, $15 fee for Visitors (cash or check)
You’ve heard it many times: “it’s not what you know, it’s who you know”. And frankly they’re
right. A well-developed and e ectively used network is critical to the success of any business,
organization or endeavor. This session is speci cally designed for inventors/innovators and
resource providers who have a modest understanding and practice of Networking.
You’ll learn how to cultivate and develop longer-term relationships; how to climb the “Networking
Ladder”; what are strategic partnerships; being memorable; and why pulling a rabbit out of a hat
helps you monetize. You will also learn the critical importance of:
• What is Networking and what it is not
• How to practice the Networking basics and create good impressions
• How to become “well connected” rather than just knowing lots of people
• Where to find the animals every time and why that’s crucial to you and those you serve
• How to “pull a rabbit out of a hat” and why problem solving is critical to effective Networking
• Why resourcefulness and creativity are crucial to Networking…and being memorable
• Specific Networking elements relevant to inventors and innovators
• How to network your network (and not just yourself)
• How the fur trappers of 1750 are relevant to the modern professional and to effective Networking
Of all the tactics and strategies one can learn to improve a business or organization, learn why
Networking is the most important skill to develop…and why it’s the most important thing you’ll do
every day other than getting up in the morning.
Personal contact:
Ron P. Wacks, CEO, Microbusiness Strategies
Author, Instructor “Power Networking: How to Solve any Problem by Connecting with the Right Person” 612-922-6000 • info@microbusinessstrategies.com • www.microbusinessstrategies.com
Director International US-China Conference • International Chapter Expansion
US-China Business Connections (UCBC)
rwacks.ucbc@gmail.com • 612-961-6002 • http://www.ucbcgroup.org
www.inventorsnetwork.org
Business for Shared Prosperity sends this:
We wanted to share some comments Business for Shared Prosperity members made regarding the President’s call last night to end millionaire tax breaks and stop rewarding companies that move jobs and profits abroad. We encourage you to get your views out through Letters to the Editor, for example, and welcome copies/links to them if you do. Of course, we’re always happy to help. You can find more information and petitions on corporate and individual taxes at our website as well as our latest press release. We look forward to working with more of you who are interested in talking to the media or policy makers in the weeks ahead. And we’ll be in touch soon about new initiatives for 2012.
“As a successful corporate executive, I recognize that our tax code is unfair and replete with tax shelters and loopholes favoring the wealthy,” said Jack Kintslinger, chairman emeritus of the Maryland-based engineering and construction firm, KCI. “Most wealthy business executives I know are prepared to contribute more in taxes if the additional revenues are spent wisely. They know that they can spare paying higher taxes and that the nation desperately needs more revenue for essential services.”
“It’s ridiculous to think that low taxes for wealthy individuals like Mitt Romney and me will help create jobs,” said Paul Egerman, co-founder and former CEO of eScription. “It certainly hasn’t worked that way for the past 10 years. The real job creators in our society are middle-class consumers. Jobs are created when consumers purchase cars, for example. Jobs are not created when investors squirrel away money in the Cayman Islands. Those of us who are wealthy investors will benefit when middle-class consumers are economically secure and can afford products and services. And we have an obligation to pay forward, so that the next kid will have the same opportunities that we had.”
“I have been prosperously involved in small business for most of my 45-year working life and have never made a decision based on the marginal rate of my taxes,” said David A. Brown, co-founder of the California-based real estate development firm Reynolds & Brown. “I don’t know any businessperson who uses that as an investment criteria. The rate should be raised on the higher brackets to help fund all of the beneficial services only the government can provide. Both the expense and the revenue side of the government ledger need to be modified.”
“It’s wrong for millionaires to pay less than middle-class Americans and wrong for multinational corporations to pay less than small businesses,” said Scott Klinger, tax policy director of Business for Shared Prosperity. “The reality is that the corporate tax share of federal receipts has fallen from 32% in 1952 to just 9% now and income tax revenue as a share of GDP is at the lowest level since 1951. If we want an economy with 21st Century infrastructure, jobs, education, research and economic development, we have to pay for it.”
“I welcome the President’s effort to have wealthier Americans pay higher taxes,” said Mark McLeod, executive director of the Sustainable Business Alliance of Oakland/Berkeley and steering committee member of the American Sustainable Business Council. “The last time in our nation’s history when there was such extreme disparity between the income and wealth of the 1% and the 99% was in 1928, just prior to the beginning of the Great Depression. That such wealth concentrated in the hands of a tiny minority of the population is not taxed more highly is both obscene and self-destructive. Our nation needs more revenue to invest in education, healthcare, renewable energy and other infrastructure in order to succeed in the very tough world we live in.”
For more information contact Bob Keener at 617-610-6766 or bobkeener@businessforsharedprosperity.org.
There’s some required reading on the Bloomberg site, Raise Taxes on Rich to Reward True Job Creators by Nick Hanauer, that goes to the very heart of what Small Business Minnesota is all about.
Our businesses don’t exist or succeed solely on our brilliance as entrepreneurs. We are just one part of a dynamic that includes our communities and our customers. Our collective well being creates and sustains the cycle of business that allows us all to flourish.
Hanauer makes the point that without demand there would be no business and if the middle class cannot consume, businesses will not thrive (a lesson Henry Ford learned almost a century ago).
That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
The single minded focus on business success alone (actually big business) has destroyed the dynamic and naturally our economy. Today it seems many wealthy individuals and big businesses measure success by their own success, but is it really “success” if their actions impoverish millions and destroy the middle class? This country has been most successful when wealth was more equitably distributed -and at this point in time it may be the only thing that saves us.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.
The article frames this issue exceedingly well and we recommend it to all of our members.
Follow Us!