Showing posts with label financial reform. Show all posts
Showing posts with label financial reform. Show all posts
Friday, November 19, 2010

Whats Really Best for Small Business

Posted by American Forum at 2:06 PM

AMERICAN FORUM

By Brian Setzler

As a Certified Public Accountant and business owner, I know the impact of taxes up close and personal. And the claim that ending Bush-era tax cuts on income over a quarter of a million dollars will hurt the economy, reduce employment and burden small businesses is patently false. Let’s take a look at the evidence.

First off, small business owners rarely have taxable income in excess of $250,000 (gross income would be substantially more as taxable income includes reductions for business expenses, personal deductions and family exemptions). Hiring people and investing in your business actually reduces taxable income, so hiring and investing decisions would be unaffected. At issue is the tax on income, or the money the owner has available to take out of the business.

According to the Congressional Joint Committee on Taxation, less than 3 percent of tax filers with any business income make over $250,000 (couples) or $200,000 (individuals) a year, the thresholds above which the Bush tax cuts would expire, and many of those are not small business owners. As Ed Kleinbard, former staff director of the Joint Committee on Taxation, said, “Every student who is a part-time Web designer, partner in a law firm with a billion dollars of revenue and investor in a hedge fund gets lumped together in the data, along with real small businesses.”

Even if someone does have over $250,000 of taxable income, the additional tax rate is a marginal tax rate, which means they only pay the higher rates on the portion of income over $250,000, not under it. When the rate goes from 35 to 39.6 percent (back to the level under Clinton) in the very top bracket, for example, it doesn’t mean they pay 39.6 percent of their total income in taxes any more than they paid 35 percent of their total income before. They still start at a 10 percent rate for their first portion of income and work their way up incrementally through the tax brackets. They still pay the same rates everyone else does up to that level of income.

Those fortunate enough to make these high incomes will still benefit from the tax cuts on their first $250,000 of income, just like other Americans. The amount at issue is 3.9 percent or $39 for every $1,000 of income above $250,000. You can check out your own tax situation with the calculator at the non-partisan http://calculator.taxpolicycenter.org/ to see how you might be affected.

When someone claims a small businessperson will pay additional taxes of $20,000, that small businessperson must have taxable income in excess of $700,000. If they claim they’ll pay $120,000 more, they have an eye-popping “small business” income of $3 million. Sounds more like a hedge fund manager to me.

Small businesses are crucial job creators, but if lower tax rates produced job growth, we should have seen a boom in new jobs following the tax cuts. Instead, even the Wall Street Journal, not a bastion of liberal economic policy, said President Bush “shows the worst track record for job creation since the government began keeping records in 1939.” In fact, it’s much worse than under President Clinton who increased taxes. As a new report by Business for Shared Prosperity explains, “The Bush administration created just 1.1 million jobs net while the Clinton administration created 22.7 million.”

The choice is stark. Do we borrow $700 billion from China as we did this past decade to pay for tax cuts for hedge fund managers and Wall Street barons -- irresponsibly burdening our children with repaying, a debt with interest we don’t need to incur?

Do we make deep cuts in social services, education and public safety and forgo investing in the 21st Century infrastructure we desperately need to be competitive?

Or do we do the right thing and ask fellow citizens with really high incomes to pay their fair share? These are real choices our Congressional representatives will make in coming days.

Let’s tell Congress that investing in the infrastructure our businesses and well being depend on, educating our children, caring for the sick and the elderly, and investing in the future are what made America great in the first place.
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Setzler is a certified public accountant since 1989 and president and founder of TriLibrium, an accounting and business advisory firm located in Portland, OR.
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Copyright (C) 2010 by the American Forum. 11/10

 

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Tuesday, October 26, 2010

Think Your Tax Dollars Don't Create Economic Growth?

Posted by American Forum at 12:54 PM

MINNESOTA EDITORIAL FORUM

By Beverly Caruso

There’s heated debate over whether to extend the Bush-era tax cuts for families with incomes over $250,000.We’re hearing the argument that letting the high-end tax cuts expire will hurt business. Yet I’ve seen first-hand how well-designed tax policy is critical for spurring innovation and business development. It plays a very different role than the anti-tax crowd leads us to believe.

CyberOptics, a leading high-tech company in the area of electronic inspection, was founded by my husband, Steve Case, in 1984, and now employs 180 people in Minnesota and around the globe. How this business came about tells a very different story about the role of our tax dollars – and the public investments they support - in job creation. This is an important story to tell if we want to recreate the fertile ground that allows new companies to start up and become successful, sustainable job creators.

Steve was a physicist and entrepreneur, whose education was financed totally by National Science Foundation grants and scholarships. Later, as a young professor he would again gain our government’s support through a Fulbright Scholarship. The scholarship led us to Germany where Steve deepened his scientific knowledge and met executives in Europe who would become major clients of his new business. Steve always said that fellowship year had a profound impact on his creativity, confidence, and skills. As a professor at the University of Minnesota, his partnership with a government contractor made it possible to conceive of and establish CyberOptics.

Every step of the way, programs funded by our tax dollars paved the way for Steve and CyberOptics’ success. The return on our tax dollars through these investments has been high.

While it’s easy to think that companies like Google and Sun Microsystems are the result of one or two people with the intelligence, creativity, and entrepreneurial spirit to take a risk and win big, the truth is more complex.

Like CyberOptics, these businesses rely on the court systems that enforce patent and copyright laws, roads, railroads and bridges that bring raw materials and deliver finished product, as well as the research and development grants to institutions of higher education, the high-quality primary and secondary public schools that educated generations of American students, and the grants and scholarships to those students during college and graduate school.

I would argue that the reason the United States has been so economically successful since the 1940s, is the combination of regulated capital markets and thoughtful, well-funded public institutions and structures. Steve’s story, like the story of so many American entrepreneurs, illuminates the role that public investment and public institutions play in creating the small companies that are the job engines we so desperately need.

Our country’s problems are large and complex, and we must attend to them now and cease putting them off. According to a report by Wealth for the Common Good, between 2001-2008, tax cuts for the wealthy cost the U.S. Treasury $700 billion, directly adding to the national debt. Retaining these tax cuts will likely cost another $700 billion over the next decade.

One thing we can do is to tell Congress to let the Bush-era tax cuts on the wealthy expire this year. The rise in incremental tax rates on people like me would be modest but the $700 billion in savings over 10 years would be a wonderful investment in the next generation. For those who have benefited enormously from our country’s investment, it’s time to share that opportunity with others. Letting tax cuts for the wealthy expire at the end of 2010 is a good and necessary first step.
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Caruso is a psychotherapist, community volunteer and civic leader in the Twin Cities. Her late husband, Dr. Steven Case, is the founder of CyberOptics, a high tech firm in Minnesota. Dr. Case was killed in a plane crash in June 2009.
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Copyright © 2010 by Minnesota Editorial Forum. 10/10

 

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Wednesday, October 20, 2010

To Grow Our Prosperity, Let my Tax Cut Expire

Posted by American Forum at 11:43 AM

AMERICAN FORUM

By Peter Heegaard

Congress should do the responsible thing and let tax cuts for high earners expire at the end of this year.

As someone who has benefited from these tax cuts, I believe we must restore balance to a federal tax system that has been tilted in favor of the wealthiest 5 percent for a generation.

I’ve had a lifelong interest in the vital role of social entrepreneurs, the local heroes who take risks to lead innovative nonprofit organizations to solve problems at the local level.

I’m a big believer in the importance of mentorship, of helping the next generation of business and community leaders find their way.

But I also view efficient government and adequate tax revenue as essential ingredients in a fostering the fertile soil for business development and healthy communities. Just as a healthy farm or garden needs a balance of nutrients, our country needs a balanced and fair tax system.

Yet the overheated anti-tax rhetoric is alarming. There are loud voices that will object to any tax and claim that raising taxes on higher income people will destroy economic growth and punish success. They argue that we don’t need additional revenue, that we can simply reform entitlements, cut spending and root out waste.

We should obviously press for greater government efficiency and accountability. But it is irresponsible to suggest that we can proceed without increasing tax revenue. No gardener or farmer would expect their crops to grow year after year without regular additions of fertilizer.

We have racked up over $13 trillion in national debt, thanks to borrowing to pay for two wars and a decade of tax cuts. Yet, we have long overdue investments in education, reducing our dependence on foreign oil, and public infrastructure, such as roads, bridges, broadband access, and market protections. Where will the money come from?

Generous tax cuts for the wealthy, passed by Congress in 2001 and 2003, are due to expire at the end of this year. Between 2002 and 2009, households with incomes of over $250,000 received more than $700 billion in tax cuts, according to the Center on Budget and Policy Priorities. This was essentially added to our national debt.

The higher income people I know didn’t lobby for these original tax breaks and recognize the need to allow them to expire. If we retain these tax cuts, we’ll add another $700 billion to the debt over the next decade. These are funds better spent in deficit reduction and targeted investments.

The retired business leaders I serve with on community boards are thankful for the opportunities we’ve had to do business and grow wealth in this remarkable nation and free market economic system. None of us exist on an island and no wealth can be created without a society that provides a fertile ground of opportunity for everyone.

In the 30 years after World War II, 1947 to 1977, we taxed ourselves at significantly more progressive tax rates than today. The highest earners paid twice as much of their income in taxes in 1960 as they do today, according to a new study by Wealth for the Common Good. With that money we made investments in public infrastructure, affordable homeownership and expanded education at all levels. These far-sighted leaders supported policies that propelled millions of Americans into the stable middle class.

Today, young people are graduating from college with $100,000 in school debt, as undergraduates. We’re coasting along on previous generations’ investments in water treatment facilities, bridges and other essential infrastructure -- and we’re leaving too many talented young people behind. Our failure to make investments today will undercut prosperity for the next generation.

Congress will be under tremendous pressure to continue providing tax breaks to high income groups. Let’s hope they have the fortitude to let mine expire. The fertility of our economic soil depends on it.
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Heegaard is retired from banking and a former Managing Principal of Lowry Hill, a subsidiary of Wells Fargo. He is founder of Urban Adventure and author of “Heroes Among Us: Social Entrepreneurs Strengthening Families and Building Community” (Nodin Press).
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Copyright (C) 2010 by the American Forum. 10/10

 

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Tuesday, September 14, 2010

Pioneers of the New Normal

Posted by American Forum at 9:59 AM

AMERICAN FORUM

By Sarah van Gelder

Americans are facing a troubling reality. The economic recovery they were promised has not materialized. There’s growing talk about a “new normal”—a new way of life to take us through a long period of failed recoveries.

There are, indeed, good reasons to believe we won’t go back to the old ways. But this new normal doesn’t have to be a time of chaos and decline. Instead, many Americans are building stronger families and communities, rejecting the waste and greed that made our economy implode, and turning instead to self-reliance and the sort of neighborliness that embraces diversities of all sorts.

Why not go back to the consumer ideal that was the foundation of the American Dream? Many who live paycheck to paycheck have lost jobs, homes and hopes for an education, retirement security and belief in a more prosperous future. CEO pay is on the uptick, as are corporate profits. But the anti-tax, anti-regulation fever that enriched some undermined the real wealth of our country—our education system, infrastructure, communities and natural resources. And much of our economy has been outsourced, making it difficult for stimulus spending to get growth going again.

But it’s not only a stalled economy that is threatening our future. Leading scientists now say that climate disruption is behind the massive flooding in Pakistan and the record-breaking fires in Russia. Shortages of food, water and energy—with attendant price spikes—along with displacement and migration, are likely, not just abroad, but here in the United States.

As if that wasn’t enough, the Gulf oil disaster is showing the limitations of another sort of security we once took for granted: cheap oil. As the easy-to-exploit oil is used up, oil companies are turning to increasingly difficult-to-reach sources of oil. This means we are likely to see still more expensive disasters associated with oil, whether caused by human error—as in the Gulf—or just part of the extraction process, as seen in the communities devastated by mountain-top removal or tar sands exploitation. Analyst and author Michael Klare says we have reached the “Age of Tough Oil,” and every barrel of oil we extract will be more difficult and expensive to get than the last one.

That brings us back to the prospects for an economic recovery. With cheap oil a thing of the past, an economic recovery that increases demand for energy will drive prices even higher. That energy price increase would stall any recovery.

So what are Americans doing about these very real threats to our security?

Some are exploiting citizens’ fears for their own political ends, blaming President Obama, immigrants or climate scientists for the bad news. These strategies not only distract us from the real threats, they divide our country while offering nothing that can help solve our challenges.

Others are choosing to ignore or deny the depth of these challenges.

But there are people across the political spectrum, in every part of the country, gathering with friends and neighbors to build sources of security close to home.

These folks are turning lawns into vegetable gardens and organizing their neighbors to start pea patches and farmers markets. They’re getting together with neighbors to swap preserves and skills, and to relearn the skills their grandparents had. They are protecting local resources—water, land, forests and fisheries—that can offer sustenance into the future, and they are starting up energy and weatherization cooperatives.

They’re paying off their debt, moving their money out of big corporate banks to local banks and credit unions, and supporting local businesses. As they do, they are freeing themselves from the global corporate economy that moved jobs overseas and fueled the speculation that undermined the real economy of jobs, goods and services. These folks have chosen instead to use their resources to strengthen local economies and the small and medium-sized businesses that are most likely to create the new jobs of the next economy.

These are the pioneers of the new normal, and you can find them building the foundations of a hopeful future in urban centers, small towns and suburbs. Maybe you’re one of them.

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Van Gelder is executive editor of YES! Magazine (www.yesmagazine.org), a national media organization that fuses powerful ideas and practical action for a just and sustainable world. The Fall 2010 issue of YES! Magazine features stories of the New Pioneers and the resilient communities they are creating.
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Copyright (C) 2010 by the American Forum. 9/10

 

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Thursday, September 9, 2010

Laboring for Justice

Posted by American Forum at 1:31 PM

NEW MEXICO FORUM

By Rev. Gary Kowalski

Americans are more likely barbecuing this Labor Day weekend than singing “Which Side Are You On?” We’ve forgotten the workers who were our own forebears.

My wife’s family, for instance, came from Nanticoke, Pennsylvania. Today it’s an unremarkable crossroads, but a century ago, it saw a titanic contest between labor organizers and the Reading Railroad, which ran the nation’s coal mines. The union wanted an eight hour day and took 100,000 men out on strike. The walk-out finally ended six months later when Teddy Roosevelt established a commission for binding arbitration. In his closing argument to that commission, the railroad CEO testified that “These men don't suffer. Why, hell, half of them don't even speak English.”

Three years after the strike, a government report found thousands of children still picking chunks of coal by hand from the mountains of slag. And this was my wife’s hometown. Her great-grandfather Balliet died of black lung, as did great uncle Ellis. Grandmother Jeanette told stories of her brother Evan, who was so small when he trudged off to the pit that his lunch bucket dragged the ground; he perished in an accident at age 14. So the history of labor in this country is our family history. It’s a story whose repercussions are still felt.

Labor Day started long ago, but the financial panic of 1893 was eerily similar to the current economic meltdown. Then, robber barons accumulated vast fortunes through speculative investments. Waves of bankruptcies ensued as gambles went bad. Banks went belly-up, wiping out the savings of folks who then couldn’t make their mortgage payments. With balance sheets plummeting, companies slashed payroll, leading to revolts like the one in Nanticoke and the Pullman strike of 1894, where federal troops were dispatched to smash the union. Facing re-election that year, President Cleveland declared a “Labor Day,” to mollify the workers whose dreams he’d destroyed. He lost. But it took years, not until FDR, before reforms addressed the boom-bust cycle that left so many in distress.

This brings us to now. Many New Deal regulations have been de-regulated and the gap between rich and poor has never been greater. True, most Americans consider themselves “middle-class,” not working class. But that’s because they’ve gone deeper into debt for that college degree and for homes their actual earnings no longer justify. Forced to borrow beyond their means, many defaulted on loans they couldn’t repay and, as in 1893, banks went bust while ordinary stiffs got evicted and saw nest eggs evaporate. But now as then, Goldman Sachs did all right, disbursing billions in bonuses. Perhaps the biggest difference between 2010 and a century ago is that instead of a Populist or Progressive movement, we have the Tea Party.

I believe in the dignity of labor. I’ve hauled cable and washed dishes; I’ve never felt anything demeaning in hard work. I was taught to be self-sufficient, but I’m well-educated enough to realize I’m not self-made. Whatever advantages I enjoy come from living in a land that other people helped build -- people who deserve a share of the riches they worked to create such as farm workers, child care providers, and nurse’s aides who do jobs that are absolutely necessary and ought to pay a living wage but don’t. They deserve more. We deserve more. And it’s about time we achieve it.

So in regard to that old song, “Which side are you on,” I’m not on the side of trickle down, but on the side of acting up. I’m not on the side of a rising tide lifts all boats, but on the side of a rising demand for justice.
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Kowalski is new interim minister at the Unitarian Universalist Congregation of Santa Fe.
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Copyright (C) 2010 by the New Mexico Editorial Forum 9/10

 

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Monday, July 26, 2010

Healthy Democracy Needs Philanthropy

Posted by American Forum at 9:17 AM

AMERICAN FORUM

By Aaron Dorfman

When those who speak for regular folks – you, me and everyday working people – are outspent in Washington, even the most welcome legislation tends to serve the rich and powerful. As the country anticipates President Obama signing financial reform legislation, the scorecard is so starkly out of balance that it's shameful. While a coalition of national and community-based organizations was able to raise $3 million to advocate for average people, the financial industry was spending $1.4 million a day on lobbying efforts.

Americans for Financial Reform, a broad coalition of local, state and national organizations, took up advocating for a financial system that's for the people, one that's accountable, fair and equitable. Despite the enormity of what’s at stake – jobs, economic security and the future of millions of Americans – a new report from the Institute for American’s Future makes it all too clear how much the coalition has been severely outspent by larger, better-funded interest groups.

If financial reform, or any reform, is ever to serve the interests of the people, the balance of power – which is to say, the ability to generate vital lobbying resources – must shift.

Our nation’s 70,000-plus grant-making foundations – which steward half a billion dollars of partially public money – have an opportunity to help solve pressing social problems by investing in grassroots civic engagement and advocacy. Their commitment to democracy can save it; their failure may well doom it.

The recent passage of health care reform shows that David can win against Goliath, especially when foundations help out. Thanks in large part to efforts of Health Care for America Now (HCAN), a broad coalition of advocates, Americans now have the beginnings of a better, more accessible and affordable health care system. HCAN would not have been as successful as it was, however, without the impressive support it received from numerous foundations, including the largest advocacy grant in history, provided by The Atlantic Philanthropies.

HCAN raised and spent some $40 million in its effort to represent health consumers in the debate. Sure, its spending was dwarfed by the spending of health industry interests. But at least HCAN had enough resources to mount a strong fight. That fight clearly demonstrated that the nation’s private and community foundations are the perfect vehicle to ensure that voices of our communities are heard.

A recent study on the effect of foundation support to nonprofit organizations involved in advocacy, community organizing and civic engagement in Los Angeles County demonstrates conclusively that it makes a world of difference. In greater L.A., over a five-year period, foundations invested $58 million in the advocacy work of 15 grassroots organizations. This handful of groups trained more than 14,000 community leaders, generated more than 40,000 new members and drew close to 55,000 people to public events focused on critical civic issues. By promoting democratic participation in this way, their efforts resulted in nearly $7 billion in tangible benefits for families and communities – benefits like higher wages, better access to health care, expanded civil and human rights, and a cleaner environment.

Given the remarkable impact this modest investment in democracy delivered, there is little doubt that vigorous support for advocacy and policy engagement will help counter rising corporate influence on our democratic debates.

The Los Angeles experience is not unique. Similar studies in Minnesota, New Mexico and North Carolina reveal the same result – where foundations support civic engagement, democracy grows dramatically stronger.

Sadly, too many nonprofits that seek to broaden citizen participation in the policy process are underfunded. Efforts to bring voices of ordinary Americans into policy debates need more support from the philanthropic sector to balance out the efforts of other interest groups. We need a concerted, concentrated commitment from local, state and national foundations to support the broadest possible participation in the discussions.

Democracy and the future of America are at stake. Philanthropy can open – and keep open -- the door to more vigorous, thoughtful and creative debates about who government serves: corporations or individual citizens.
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Dorfman is executive director of the National Committee for Responsive Philanthropy, which conducted the studies on the impact of foundation support for advocacy.
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Copyright (C) 2010 by American Forum. 7/10

 

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Monday, May 24, 2010

What is the Financial Industry So Afraid Of?

Posted by American Forum at 2:24 PM

AMERICAN FORUM

By Lew Prince

I’ve owned a small business in St. Louis for 31 years. Like most of my customers and my 26 employees, I watched as greedy hedge funds, irresponsible investment banks and unscrupulous mortgage companies decimated our savings, investments and pension funds, and nearly drove our country into another Great Depression. Now those same hedge funds, investment banks and mortgage companies are spending more than $1.4 million dollars a day (that’s right -- a day) to scuttle financial reform legislation in the U.S. Senate.

What’s the financial industry so afraid of?

Well, there’s the Consumer Financial Protection Agency (CFPA), which passed the U.S. House of Representatives but is under siege in the Senate. The CFPA would make sure banks, mortgage companies, payday lenders and car dealers lay out loan terms in plain language so individuals, families and businesses will know what they’re getting into when they borrow money. It would set clear ground rules for loans, protecting Americans from the kinds of sleazy deals that cost so many people their homes and livelihoods in the wake of the recent Wall Street collapse. And it would actually reduce government bureaucracy by streamlining and combining all federal consumer loan regulations under one roof.

The financial meltdown has shown us how greedy and unscrupulous operators can disrupt the flow of credit and bring our economy to its knees. A consumer protection agency would protect my customers, my business and the economy, keeping responsible lenders from having to compete with sleazy credit hustlers. Common-sense regulation will free money to flow to responsible borrowers, protect the value of our savings and pension funds and direct our nation's financial resources toward job creation and the return of our national prosperity. That’s why I joined with hundreds of business owners around the country in signing a Business for Shared Prosperity statement in support of a strong, independent Consumer Financial Protection Agency.

The financial industry lobbyists want the senators they've been wining and dining to keep loan regulation in the hands of the same banking regulators that let money-crazed investment bankers nearly destroy our economy. Does that make sense to you?

Another provision that has the financial lobbyists up in arms would bring derivatives trading out of the shadows and into a regulated, transparent exchange. Reckless derivatives gambling led to catastrophe, and will again without tough new regulation.

Another financial reform provision that should be strengthened -- not weakened -- is the language separating risky investments and commercial banking. Banks should not be able to keep gambling for their own profits and executive bonuses while also benefiting from the Federal Deposit Insurance Corp. (FDIC) and subsidies like access to the Federal Reserve discount window.

We need to get banks out of the Casino Economy and back into the business of lending to America’s true wealth creators: working people and small businesses. That’s how to get real economic growth.

Wall Street lobbyists succeeded this week in defeating the Brown-Kaufman amendment, which would have capped the size and leverage of our largest banks so they could be wound down when they fail without sinking the economy. They also succeeded in stripping a dissolution fund for investment banks from the legislation, which would have worked like the FDIC bank-paid resolution fund that protects depositors when a bank fails.

Taxpayers were stuck with cleanup costs for the financial crisis. Banks, not taxpayers, need to pay for future crises. Maybe I’m crazy, but it only seemed fair for us to ask them to take money out of their bonus pot to pay their insurance premiums.

Congress could redeem itself by supporting a permanent bank tax to offset the direct and indirect costs of the financial meltdown and discourage the kind of risk-taking that tanked the economy. This is no radical idea. The International Monetary Fund supports it.

Strong financial reform will help small-business owners by providing the kind of stable financial environment in which small businesses can thrive.

Politicians love to point out that most new jobs are created by small businesses. Senators should listen to the business owners who know the difference between gambling and investment, who didn’t wreck the economy and who want real reform to prevent a repeat.
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Prince is managing partner of Vintage Vinyl Inc. in St. Louis.
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Copyright (C) 2010 by the American Forum 5/10

 

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