Archive for January 2012

Support growing for taxing the rich -from the rich!

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.

 

The Real Job Creators

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.

More on Citizens United and Small Business

This article that hit the front page of Daily Kos today talking about Citizens United and how it affects small
business. The ASBC was mentioned as well as Main Street Alliance, Small Business Majority, and NFIB.

http://www.dailykos.com/story/2012/01/19/1056410/-Small-business-leaders:-Citizens-United-stacked-the-deck-against-small%C2%A0business?showAll=yes&via=blog_1

 

Contractor or Employee?

The IRS is offering a great webinar on February 15 at 1:00 pm.

The topic is “Worker Classification”.  This means that small business owners will learn how to determine if their workers are independent contractors or employees.

 

Register for the webinar here:  http://www.visualwebcaster.com/IRS/84525/reg.asp?id=84525

 

 

POLL: Citizens United Hurts Small Biz, Say 7 of 10 Owners

66 percent of small business owners view Citizens United v. FEC decision as bad for small business; 88 percent hold negative view of money in politics overall.*

Washington, DC – Two-thirds of American small business leaders believe the controversial U.S. Supreme Court decision in the Citizens United v. FEC case handed down two years ago on January 21 hurts small companies.

In fact, only nine percent of small business leaders thought the ruling positive, according to an independent national survey of 500 small business leaders released today by the American Sustainable Business Council, Main Street Alliance and Small Business Majority

The survey also found that 88 percent of small business owners hold a negative view of the role money plays in politics, with 68 percent viewing it very negatively. Click here to read the report

As we approach the two-year anniversary of the Citizens United case, the verdict is loud and clear: the ruling hurts the small businesses that we need to be strong for economic recovery,” said David Levine, executive director of the American Sustainable Business Council. “Business owners are frustrated because they have to compete with big business bank accounts to be heard, and they are fighting back. More than 1,000 business owners have joined ASBC’s Business for Democracy campaign to fight for a constitutional amendment that overturns this decision.”

Small Business Minnesota believes that large corporations, PACs and Super PACS, the US Chamber of Commerce and individuals of great wealth have excessive influence over our elections and national discourse.  The Citizen’s United decision has elevated the needs of big business and entrenched wealth over the needs of small businesses, the communities they operate in and the employees they hire.

The Citizens United case, decided by the Supreme Court in January 2010, upheld an argument that government could not place limits on political spending by independent organizations such as corporations. The landmark decision sparked a heated national debate over the role of money in politics, with calls for everything from new SEC rules requiring disclosure of corporate political spending to a Constitutional amendment overturning the Citizens United ruling.

Today, ASBC and partner Free Speech for People announced that we reached 1,000 business leader signatures on our petitions supporting a constitutional amendment to reverse the decision that is allowing corporations and others to spend unlimited money to influence elections.  This remarkable achievement is due to your effort and commitment.  Thank you.

We are not stopping at 1,000, however.  We ask that you share with your colleagues and networks the www.businessfordemocracy.com link and ask them to sign the petition.

The petition press release is available here.  Again, we encourage you to share it.

 

*For more information on these poll findings, visit:

http://www.asbcouncil.org/poll_money_in_politics.htm

Poll results reported in this statement represent findings from an Internet survey of 500 small business owners nationwide, commissioned by the American Sustainable Business Council, Main Street Alliance and Small Business Majority and conducted by Lake Research Partners. The survey was conducted between December 8, 2011 and January 4, 2012. It has a margin of error of +/- 4.4%.

###

Small Business Minnesota is an affiliate of The American Sustainable Business Council, a network of business organizations 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 including strategic investments in workforce and infrastructure; standards and safeguards that promote innovation, prevent abuse and protect critical resources; and a new sustainable economic model that fosters a growing, economically-secure middle class. www.asbcouncil.org

Tax info for 2012

IRS NEWS FOR BUSINESS

FEBRUARY 2012

 

IR 11-116 The standard mileage rate for business stays at 55.5 cents per mile (unchanged from the July 1 mid-year adjustment).

Headliner 317  FUTA tax: Employers in credit reduction states must adjust the unemployment tax liability on their 2011 Form 940. Twenty-one states are affected. These include Minnesota, Wisconsin, Illinois, Indiana, Kentucky, Arkansas, Michigan, and Missouri.

IR 11-124The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends through Feb. 29, 2012, the two percentage point payroll tax cut for employees, continuing the reduction of the Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. A new “recapture” provision, applies to those employees who receive more than $18,350 in wages during the two-month period.

Recent legislation expands the work opportunity tax credit. The credit is available to businesses that hire eligible unemployed veterans who begin work on or after Nov. 22, 2011, and before Jan. 1, 2013.

The IRS offers a video onChoosing a Tax Preparer for a Small Business. Also see Fact Sheet 12-5, Choosing a Tax Preparer , Tax Tip 2012-06.and a YouTube video for individuals.

NewForm 14157, is used to submit a complaint about a tax preparer. 

Headliner 316 explains the new process to amend a previously filed Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.

Notice 12-09 provides additional guidance regarding the requirement that certain employers report the value of employer-sponsored health care coverage on the employees’ Forms W-2. The notice restates and amends the interim guidance in Notice 11-28ACA pages

IR 11-121 Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2011 and the years ahead.

Property Tax Commentary

SBM Advisory Board member Jim Mulder, retired executive director of the Association of Minnesota Counties, and Independence Party’s candidate for lieutenant governor in 2010 has a view on property tax in the Star-Tribune:

http://www.startribune.com/opinion/otherviews/137321553.html

Note: Property tax is an ongoing subject at SBM and we do not yet have a defined position. We welcome your comments!

Governor’s Jobs Plan

We encourage our members to take a look at the Governor’s new proposed tax plan:

 

banner_jobs-plan-mn-FINAL 

Getting Minnesota back to work is our top priority this legislative session.  To help get Minnesota back to work, Governor Dayton and DFL Legislators have come together to create a series of proposals designed to help businesses create more good jobs in Minnesota.  This new job growth plan focuses on things that have proven to work: providing businesses with new incentives to create jobs, improving workforce development and training, and investing in infrastructure.  These investments in our state’s economy and future prosperity will help position Minnesota for success by putting thousands of Minnesotans back to work.  

Helping Businesses Grow Jobs

New Jobs Tax Credit:  The New Jobs Tax Credit is focused on immediate job creation.  It would provide businesses with a $3,000 tax credit for each unemployed Minnesotan, Veteran or recent graduate hired in calendar year 2012 and a $1,500 credit for each new hire through June 2013.  This $35 million initiative would create over 10,000 new, private-sector jobs each year.  

Invest in Infrastructure:  A new bonding bill, to be announced next week, would provide $775 million for new investment in infrastructure, allowing primarily private-sector employers to put tens of thousands of Minnesotans back to work.  

The bill would also include $20 million in bonding requests by the Department of Employment and Economic Development specifically designed to help businesses expand in Minnesota.  These initiatives would provide grants to cities for business infrastructure, help local authorities renew old property for business development and aid in the development of transportation improvements focused on businesses.  

Help Minnesota Compete for Business Expansion: $10 million in additional funding would be provided for the Minnesota Investment Fund, which has a track record of helping Minnesota to attract businesses to locate or expand here.  In the last legislative session Governor Dayton secured $3 million in funding for the Minnesota Investment Fund.  Prior to that, the fund had received only $4 million since 2005 well below the funding level for similar funds in our neighboring states.  The money secured in the special session has allowed DEED to attract new business to Minnesota, resulting in $46 million in private investment and the creation of 218 new jobs.  Communities across the state, including Faribault, Owatonna, Sauk Rapids and Jackson, have been able to attract new companies thanks to this fund.

Internet Sales Tax Fairness—Affiliate Nexus: Under current law, out-of-state retailers that do not have a physical presence in Minnesota are not required to collect the sales tax on online purchases used and consumed in Minnesota.  As a result, a large portion of the taxes due on sales by large internet retailers—such as Amazon—go uncollected.  This results in a loss of state revenue and gives these remote retailers an unfair competitive advantage over Main Street Minnesota retailers.  Passing the Internet Sales Tax Fairness bill would level the playing field for Minnesota businesses and generate about $3.5 million in FY2013.

Training Our Workforce for the New Economy

Expand the FastTRAC Initiative Statewide: Minnesota FastTRAC helps underprepared adults succeed in the workplace by integrating basic skills education and career-specific training in fields where new skills are in high demand.  By addressing local skills gaps, FastTRAC programs work as effective supply chains for employers in need of skilled labor.  This approach helps match business needs with workforce development more efficiently.   To date, 88% of participants in FastTRAC credit-bearing courses have successfully completed their course. An expansion of FastTRAC statewide would cost $4.5 million/year.  By 2013, the overarching goal is to serve 3,000 adults and establish 50 FastTRAC adult career pathways offered at MnSCU campuses.

Minnesota Opportunity Grants Pilot Program:  These grants will go to adults who pursue and complete short-term education and training at a Minnesota State Colleges and Universities institution in regionally high-demand career fields, as identified by DEED’s Current Demand Indicator.  The Opportunity Grants will provide a $2,000 grant for 2,000 Minnesotans for up to two semesters of training for jobs that pay more than 175% of the poverty level.

Before you buy the story about Minnesota’s high taxes, read this

From Growth and Justice’s Charlie Quimby

One of my pastimes is following coverage of tax issues across Minnesota, which means every so often, a letter to the editor like this one pops up in my email. Here’s the money paragraph:

[W]hen comparing states with similar geographic and economic profiles, Minnesota extracts substantially more taxes per capita than surrounding states like Wisconsin, Iowa and South Dakota. Total state taxes per capita in 2010 were as follows: Minnesota $3,245, Wisconsin $2,527, Iowa $2,235, South Dakota $1,602 and national average $2,282.

The author uses these “facts” to support his opinion that Minnesota is a “Business Hostile” state that is driving away companies and jobs.

Since the letter writers keep misusing the data Census Bureau data — let’s be charitable and call them mistakes — I feel bound to keep pointing out why these comparisons are misleading. I hope you will apply these points when you see similar screeds against Minnesota’s tax rankings.

1. The problems with per capita comparisons. The Census Bureau itself [PDF] cautions us not to use its  statistics on state tax revenues per capita to compare individual tax burdens. That’s because their figures “reflect the taxes a state collects from activity within the state, not necessarily from the individuals within a state.”

States that rely on sales taxes (South Dakota, for example) collect revenues from every tourist who visits Wall Drug, rallies in Sturgis or visits the Black Hills.

States that benefit from severance taxes from mining and oil and gas (North Dakota, for example) collect from the companies doing the extraction, and those companies incorporate those fees in the prices they charge consumers across the country. That’s why the letter writer left out North Dakota from his list. The state’s per capita taxes were the highest in the region at $3934.

There’s a second problem with per capita comparisons. If people make more money, they tend to pay higher taxes. Since Minnesotans make more money per capita, they also pay more.

The Minnesota Taxpayers Association publishes an excellent report called How Does Minnesota Compare? [PDF] that looks at total state and local taxes per capita and as a percent of income. Because of our higher average income, Minnesota ranks 12th per capita, but 23rd based on income. When federal revenues to the state are included, we rank 17th and 32nd, respectively.

2. What’s taxed differs by state. The Census Bureau again: “Different states use different approaches to taxation, and comparing only the total taxes collected by each state is not enough to understand the economic impact of those states’ taxes.”

If we’ve learned anything in Minnesota after the latest budget battle, we know that states can shift taxes or costs to local governments. The Census Bureau figures quoted above don’t take into account local taxation.

Thus, a state like Wisconsin that has higher property taxes levied locally appears to have a lower state tax burden. But when local taxes are included, the gap closes. And when income is taken into account, Cheeseheads rank 15th highest to our 23rd.

3. State revenues are redistributed within the state. In the past year, I’ve seen the Census Bureau figures quoted in papers serving Park Rapids, Walker and Bemidji.

Guess what? Residents in those regions pay well below average in state income taxes, sales taxes and business taxes [PDF]. Park Rapids’ Hubbard County, for example, averages less than $1,650 per capita in total state taxes (vs. $2434 on average statewide) while receiving more that $3,000 per capita in state aids and credits (vs. $2645 on average).

If taxpayers writing letters to those papers still feel they’re getting a raw deal, at least now they know what the deal is.

4. Minnesota’s taxes don’t exactly drive away the wealthy. Before you buy the claim that Minnesota is unfriendly to high earners, look at how those neighboring states compare.

Minnesota has a higher ratio of millionaire households than any of those other states. Here are the rankings as of 2007 [PDF]:

MN 12th
WI 24th
IA 33rd
SD 47th
ND 48th

Yes, we even do better than Florida (18th) and Arizona (21st) where our wealthy snowbirds are supposed to be flocking.

Next time you see “facts” that purport to prove how terrible our tax climate is, take these points into account. And note, we haven’t even touched the spending or quality and efficiency of state services.

—Charlie Quimby