Tag Archives: entrepreneur

What Obama doesn’t understand about the American entrepreneur

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Our President bemoans those with means. Unfortunately, he doesn’t even understand what “means” means or what a “job” really is.

When was the last time our commander-in-chief decided not to cash his own paycheck so that his employees could cash theirs? I did that just two weeks ago and will likely do it again in the near future.

When was the last time the President paid a plumbing company to clear out an old sewage system so that his customers had functioning bathrooms while holding off on cashing that paycheck too?

Running a business looks nothing like the hired-in, vogue-hair, Armani suit things you see on television. Small business is down-in-the-weeds, making sacrifices, trying to make payroll and “hope that check cashes” kinda stuff.

Anyone that has ever run a small business with employees knows what it means. It isn’t luck – it’s sacrifice. Something the Obama’s know nothing about with their celebrity bashes, all-star parties and tax-payer funded vacations. Small business owner’s don’t get any of that, we just get bills, responsibilities, regulations and taxes.

Entrepreneurs have to navigate federal tax forms, state tax forms, unemployment insurance forms, worker’s compensation applications, insurance audits, EPA permits, OSHA inspections, ATF audits, city permitting and more.

America was built on the idea that we could risk it all and become so much more. Obama believes that by some miracle, no one should have to risk anything but should be gauranteed success – that’s just not realistic, common sense or any other term he tends to use to push his nonsensical initiatives.

Unicorns don’t exist Mr. President, it’s time to realize that we’ll all need to actually work to make our wishes come true and to make our nation stronger.

Most of the pile of crap small business owners deal with on a daily basis has NOTHING to do with selling their products. The government makes everything you buy cost more because store owners have to expend resources to deal with this stuff. It is “common-sense” math – government costs too much.

President Obama doesn’t understand the American economy because he’s never had to be a part of it – not as an employee and certainly not as an employer. If we want to see the employment situation get better, we should probably have someone else leading us. Until then, anyone that voted for him should just hang their heads and say “I’m sorry” to those of us actually sacrificing every, single day.

The Call of the Entrepreneur

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The antithesis of Barack Obama’s ‘”calling” and “vision” in life, this is the trailer for a new documentary that tells the stories of three entrepreneurs.

From the YouTube description:

A study of the call to create wealth and the benefit of business and free markets to society.

Under Obama, U.S. Economy Slips – First to Seventh in just three years

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As voters begin to choose the next President of the United States, a firm reminder of Obama’s failure to run the world’s most prosperous economy came to light. From 2009 to 2012, the U.S. economy has gone from frist place to seventh – the entire slip occurred under President Obama’s leadership.

A report released by the World Economic Forum today put the United States behind Switzerland, Singapore, Finland, Sweden, the Netherlands and Germany when rated for economic competitiveness. Pointing to Obama’s distaste of free-market economics and attack on business owners, the report said that “some aspects of the country’s institutional environment continue to raise concern among business leaders, particularly the low public trust in politicians and a perceived lack of government efficiency.”

The World Economic Forum is a not-for-profit entity that ranks global economies on factors such as business climate, infrastructure, productivity and innovation.

Productivity in the U.S. has dropped drastically under the current administration as more Americans turn to government handouts for their subsistence instead of employment.

The Obama administration has spent much of its time lambasting entrepreneurs, the Chamber of Commerce and the successful in an all out class war. This anti-business climate along with the entitlement mentality being promoted by the President most-likely affected the ranking directly.

“Build” Video: Small business owners response to Obama’s anti-business speech

Build Video

WASHINGTON – American Crossroads today launched a new web video featuring the reactions of small business owners to President Obama’s speech where he told business owners “you didn’t build that” – and that other people were responsible for the success of their enterprises.

The video, entitled “Build,” shows small business owners watching the Obama speech on an iPad, then captures their reactions and responses to the president’s comments.

Some reactions from small business owners in the video include:

  • · “Unbelievable.”
  • · “What an insult.”
  • · “I am outraged.”
  • · “I can’t believe he just said that.”
  • · “I can’t believe the president of the United States could say that I have not made this.”
  • · “We risk everything every day…”
  • · “It came from my personal savings…”

“President Obama should immediately apologize for the remarks he made that denigrate the incredible risk entrepreneurs take when starting and building an enterprise,” said American Crossroads communications director Jonathan Collegio. “Obama’s remarks capture what many people have long suspected about the president – that he is out of touch with the small business owners and doesn’t value the risks they take to build their businesses and create jobs. This is clearly reflected in Obama’s high tax and regulatory policies.”

American Crossroads is a non-profit 527 political organization dedicated to renewing America’s commitment to individual liberty, limited government, free enterprise and a strong national defense through informed and effective political action. American Crossroads seeks to educate voters and empower citizens to hold lawmakers and office-seekers accountable for where they stand. Paid for by American Crossroads. Not authorized by any candidate or candidate’s committee. www.americancrossroads.org

Lemonade Girls: We Built This Business

lemonade

Many left leaning bloggers are criticizing this video clip.  (Huffington Post, Mediaite) They are offended that Fox and Friends are politicizing the president’s words made during a campaign speech… Perhaps they haven’t noticed many morning show hosts often share their personal political positions.

Whatever you think, the girls are very entertaining. And smart. And if these young businesswomen are conservatives, all the better.

 


 

Married To The Game: Where Have All Of The Entrepreneurs Gone?

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In this episode of the Married to the game, we discuss:

-Why Mitt Romney’s supporters should thank Newt.

-Why sex offenders should volunteer to remove themselves from society.  (self deportation)

-Where have the entrepreneurs gone?

-Can we make people “work” for their welfare?

-Why does Day Care cost SO MUCH???

-Have we reached a point where government regulation is killing our small businesses?

-What is America going to look like, if ONLY the irresponsible people continue to reproduce/have children?

-What if YouTube made you have to join an Actor’s Union to create and post videos?

-What did Michelle Ray do to risk Social Services being called on her?

CLICK HERE NOW to listen to the lengthy, yet fresh discussion.

 

Listen to internet radio with CDNews Radio on Blog Talk Radio

Capitalist America, to Be or Not to Be Free

According to Barack Obama, the Democrat party and Occupy Wall Street, society’s ills are primarily the fault of the entrepreneurial class.  The rich and greedy.  Those evil corporations who sap the life blood out of working class men and women.  For maximum profit.  Servants to the god of mammon, capitalists defraud their workers of time and energy compensating them only as much as required to keep their work force at work and generating fat profits for the fat cats.  The poor get poorer and the rich get richer.  Business owners obscenely profiting off of the noble sweat of their enslaved and powerless labor force.  The exploitation of the common man.

This is the worldview of the liberal/progressive.  The socialist, Marxist and anti-capitalist.  And the President of the United States.

As the world’s foremost anti-capitalist, Barack Obama promises to punish “the rich.”  Though the top 1% of Americans pay 37% of America’s tax revenue, Obama claims they should pay more.  They should “pay their fair share.”  As defined by Obama.

Instead of celebrating achievers as examples to follow, Obama has spread a malignant contagion of class warfare, deep resentment and good old fashioned envy.  This manipulation of the darker side of human nature is the most sinister and ruthless kind of political tactic.  Turning brother against brother.  Blaming “the haves” and inciting the “have-nots.”  Scapegoating is nothing new.  Class envy and racial hatred are tried and true tools of despots and dictators.  The world has seen this drama played out before.  In Turkey, Germany, Cambodia and Bosnia.  With horrific consequence.

Since William Bradford introduced market forces into the Plymouth Colony, America has been the land of capitalism.  And capitalism favors the industrious.  The risk-takers.  The American economy was designed to provide a greater reward to those who innovate, invest, build, develop, create and hire.  And when success is achieved, all Americans benefit.

Early American entrepreneurs grew the economy and in the process, grew the new nation.  They provided innovative products and services.  They created jobs and in some cases entire new industries.  As a result of their efforts, tax revenues increased as the employers, employees, vendors, consumers and investors all participated in free market capitalism.  The positive ripple effect in America and throughout the world is hard to overestimate.

This is the economic template that built America.  And it can build America again.

But, business owners today face a grim reality.  Innovation, risk-taking, investment, growth and hiring used to result in higher profits.  Profits, of course, being the incentive for being in business in the first place.  Higher profits resulted in further investment and growth.  More jobs.  More production.  More profits.  Leading to more investment, growth and jobs.  It’s a neat little cycle.  And it works.  However, with Obama’s promise to increasingly “tax the rich,” there is no incentive to grow and increase profits.  With the burden of Obamacare and the punitive costs associated with compliance, there is no incentive to hire more employees.  Businesses and business owners want to grow.  But, they will not invite punishment.

These thoughts have been clearly expressed by big and small business owners alike.  Steve Wynn, Las Vegas casino mogul, was very clear in July of this year when he said, “… I’m telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States.  And until he’s gone, everybody’s going to be sitting on their thumbs.”  Small businessman Bill Looman, the owner of U.S. Crane LLC, gained recent notoriety as he proclaims loud and clear from his company trucks, “We are not hiring until Obama is gone.”

Such is the world of Ayn Rand’s famous 1957 novel, Atlas Shrugged.  As the Atlas of Greek Mythology bore the world on his shoulders, Rand’s novel portrays business owners and entrepreneurs holding up the financial world while simultaneously supporting the non-productive members of society.  Her words seem prophetic as she describes a world where the job-creators have finally had enough.  Punished by excessive taxation and regulated to the point of extinction, the producers of society go on strike.  Ceasing production, eliminating jobs and bringing the economy to its knees.

So, what if today’s producers and job-creators decided to slow down or stop producing?  What would happen if American entrepreneurs and business owners refused to take risks, spend money, expand their businesses and hire new employees?  The unemployment rate would shoot up.  Jobs would be in short supplyProduction would diminish.  Construction jobs would grind to a halt.  The economy would slow to a crawlTax revenues would diminish.  State, county and city governments would struggle to meet their obligations.  Some would be pushed into default.  The federal government, given the ability to print money out of thin air, would continue to spend indiscriminately.  Federal printing presses would go into overdrive, increasing the money supply and eventually resulting in massive inflation.  Rapidly climbing food and energy prices would hurt those least able to afford it.  Welcome to America, 2011.  Like Rand’s Atlas, American businesses are beginning to shrug.

The reason is clear.  Business owners and entrepreneurs are afraid.  Of the President of the United States.  And they have good reason.  Obama is a socialist.  A Marxist.  A redistributionist.  He lives and breathes “social justice.”  His core beliefs are at odds with the economic structure and foundational truths that made America the greatest economic power in world history.  And he’s not going to change.

And that’s the problem.  American businesses do not face a problem of “uncertainty” as is often claimed.  The problem is, they are quite certain about the future they face under Barack Obama.  Punishing  taxes and burdensome regulations.  A future of government intrusion and interference in the free market.  A future where government exacts such harsh penalties for doing business that it squelches the entrepreneurial drive and creates a disincentive for any new businesses or ideas to be born.

As a capitalist nation, the U.S. economy does indeed rest on the shoulders of those brave adventure seekers among us.  Those bold innovators who choose to risk their time, energy, ingenuity and capital in pursuit of profit by producing something that the world wants and needs and at a price that the world is willing to pay.

As the American economy teeters on the brink of depression, American businesses wait and watch.  The presidential election of 2012 will be the tipping point for the American economy.  If Barack Obama wins a second term as President of the United States, capitalism will be fighting for its very survival.  If capitalism cannot survive in America, it cannot survive anywhere for long.  And where capitalism cannot survive, political freedom cannot exist.

“The record of history is absolutely crystal clear. There is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”  -Milton Friedman

Oba-Entrepreneurship

The kids filed back into class Monday morning. They were very excited. Their weekend assignment was to sell something, then give a talk on productive salesmanship.

Little Sally led off: “I sold girl scout cookies and I made $30,” she said proudly, “My sales approach was to appeal to the customer’s civil spirit and I credit that approach for my obvious success.”

“Very good Sally,” said the teacher.Little Mary was next: “I sold magazines,” she said, “I made $45 and I explained to everyone that magazines would keep them up on current events.”
“Very good, Mary” said the teacherEventually, it was Little Johnny’s turn. The teacher held her breath. Little Johnny walked to the front of the classroom and dumped a box full of cash on the teacher’s desk. “$2,467,” he said.
“$2,467!” cried the teacher, “What in the world were you selling?”
“Toothbrushes,” said Little Johnny.
“Toothbrushes!” echoed the teacher, “How could you possibly sell enough tooth brushes to make that much money?”
“I found the busiest corner in town,” said Little Johnny. “I set up a Dip & Chip stand and gave everybody who walked by a free sample.” They all said the same thing, “Hey, this tastes like dog crap!”
Then I would say,”It is dog crap. Wanna’ buy a toothbrush?” “I used the Obama approach of giving you something shitty for free, and then making you pay to get the taste out of your mouth.”

Selling Ice to Eskimos

A Georgia company that makes chopsticks is not only growing rapidly, but is exporting chopsticks to foreign countries.

Georgia Chopsticks is located in Americus, Georgia, just a couple of hours south of Atlanta. The owner, Jae Lee, said that his company is producing about two million chopsticks a day and is exporting them to China and Japan in huge numbers.

The poplar and gum trees that Lee uses in his chopsticks is popular with overseas and domestic consumers.

Imagine that – selling chopsticks .. to the Chinese.

Government Regulation Kills Entrepreneurial Spirit – Again

Midway, Georgia Police shut down a one-day old small business siting a lack of permits. The enterprising young entrepreneurs had decided that instead of working for someone else, they would open a business and make their own way – their way.

The business was a lemonade stand run by three girls trying to save up for a trip to a water park The cost of the licenses required to run the stand – $50.00 per day. It would be nearly impossible for the enterprising young ladies to raise the money required for their excursion with the weight of the local government holding their profits hostage.

One girl, 14-year-old Casity Dixon, says the three had to listen to police and shut down.

The girls are now back to performing tasks for their parents to earn their money, realizing that government regulation has effectively strangled their enterprise when it had barely a chance to get started.

City Council Attacks Taxicab Entrepreneurs

City councils across the nation are taking a page from the Federal Government in their ability to take over entire industries. Taxicab companies are fighting against their local bureaucrats for their very existence. In Hampton Roads, Virginia, it is no different. Just like when the Federal Government accused doctors of cutting off limbs for more money, apparently local governments feel taxicab drivers exhibit the same characteristics. They claim drivers take longer routes, overcharge customers, drive unsafe vehicles and provided selected services. These bureaucrats use crony capitalism to dismantle the taxicab industry. Now, the term public-private partnership is worn proudly.

In 2007, the City of Hampton, Virginia used tax money to hire the Tennessee Transportation and Logistics Foundation (TTLF) to conduct a Taxi study. The study states that restructuring “depends upon the actions of the existing or potential full service taxi companies.” It also states that things could deteriorate with the loss of Hampton’s only full service taxi company if it decides to relocate its equipment and capacity elsewhere. In addition, GPS technology to track cabs; vehicle age limits and 24/7 dispatching were requirements within the study and it acknowledged some businesses will not be able to comply and go out of business. So, the City of Hampton implements an ordinance that prohibits nearly all from doing business in Hampton Roads.

Someone gave this college professor (disguised as a company) the authority to implement an ordinance that puts people out of business. Our local governments are instilling draconian ordinances that cannot be refuted and greatly impacts the industry catering to limited number of companies.

The neighboring city of Newport News took a slightly different route by appointing a Transportation Panel to engage the issue. Two organizations represented were the airport and the Chamber of Commerce. The Chamber who voiced concern about the customer service and impact that the taxicab industry has on tourism in Newport News. So, when researching the Chamber’s membership, the two active members under the taxicab category are the Yellow Cab of Hampton and Yellow Cab of Newport News, the largest companies in their respected locales.

If the Transportation Panel wishes to protest the taxicab customer service or tourism issues, the airport should not be involved. With body scanners, taxicabs are the least of their customer service problems. While the airport implemented a 10-year vehicle age limit on taxicabs, the average age of a Delta aircraft is 13.8 years and US Airways is 12.2 years. What age restriction is the airport going to require of these airlines? Oh, that’s right…. Crony Capitalism.

There are situations like this happening across the nation. Salt Lake City reduced the number of taxis 25 percent and the number of cab companies to two. They even restricted the number of taxis waiting at the airport. Just this week, San Francisco taxi drivers went on strike due to mandatory credit card machines. Now, where’s the outrage at our city government for pushing credit card machines.

In Miami-Dade they conduct audits and they have an auction for taxi medallions at a minimum bid of $100,000. They also require wheelchair accessible vehicles, security cameras, rear compartment swipe (credit cards) and dispatch systems. Of course, TTLF conducted a study in 2007. In Austin, they had a four-person team from the city conduct an audit to where they required more than one full-time Enforcement Officer to ensure compliance. Again, the implementation of these requirements was preceded by a TTLF taxi study.

City council members need to consider where you stand on this issue because if you vote to implement this, this will create another bureaucratic department and put businesses out of business. For a small business owner, buying a new taxi every so many years or demanding expensive oversight equipment is the equivalent to a major airline purchasing an aircraft. But this is a good test to see who is willing to make the vote…crony capitalism for the airlines, credit card companies & government control or entrepreneurism for their constituents?

To my fellow citizens, it is a time to see where your city council actually stands. If they vote for it, they are either ignorant on the subject or exercising crony capitalism. Either way, they may need to go. Either way, let their actions speak.

Many Private-Sector Employees May Be Independent Contractors Soon

The last eighteen months have been the most traumatic to America’s businesses community ever.  The Obama administration started out by bashing those who run companies and those who invest in them: CEOs and Bankers.  Oddly enough, now those two demographics are a little punch drunk and unable to do what the American economy needs: make money, invest, grow, hire.

From Politco.com

In the eyes of corporate America, President Barack Obama relied on a healthy dose of industry-bashing to sway votes in Congress for health reform and the new Wall Street regulations signed into law Wednesday.  Now those efforts threaten to undermine the one agenda item essential to Democrats’ hopes in the midterms and Obama’s chances for reelection: turning around an economy still just a half step out of recession.  Some corporate leaders said Obama’s comments prove that he’s hostile to business. Others cited corporate fears of a credit crunch as banks comply with financial reform or the possibility of significant tax hikes if the Bush administration tax cuts are allowed to expire.  But it all adds up to a lack of confidence in Obama among some in corporate America — and that’s fueling a reluctance among executives from Wall Street to Main Street to deploy their large cash reserves to make new investments and hire new workers.

And the Daily Caller chimes in on the tone-deafness of Obama’s circle of anti-business cronies:

“By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses,” said Seidenberg, who had been one of Obama’s strongest allies in the business world up to that point.

General Electric CEO Jeffrey Immelt said around the same time that “government and entrepreneurs are not in synch,” and said the Obama White House and business leaders were not getting along.

By early July, the charge that Obama is anti-business had become a mainstream idea, with everyone from Newsweek to speakers at the Aspen Ideas Festival voicing doubts about whether the president understands markets and their interaction with government policy.

If the Obama administration’s attitude wasn’t enough to get businesses to re-think their hiring and investment strategies (yes, of course hiring is a form of investment – but progressives might read this and it must be explained), he went on a wreck-loose, anti-business revolution via massive government reforms.

First, health care reform.  This legislation puts massive new responsibilities on companies – companies that really just want to make money, expand, hire, invest, make more money.  Now they have to mind how much insurance and what kind of insurance their employees have or pay a penalty.

If health care reform didn’t put business owners over the edge, how about this idiotic push by Congress.  According to an article at CNSNews.com, Obama and his lackeys are forcing companies to report how much they pay each employee broken down by race, gender, national origin – heck BMI may not be far away.  This is intended to force fairer pay practices, but as usual with government overreach, will do the opposite.

The same CNSNews piece continues:

But critics charge that the Paycheck Fairness Act will be harmful to small businesses and the economy. The National Association of Manufacturers issued a statement about the bill in April.

“The Paycheck Fairness Act, which purports to prevent instances of illegal gender-based discrimination, could outlaw many legitimate practices employers use to set employee pay rates, even where there is no evidence of intentional discrimination and employers act with reasonable belief that their pay policies are lawful,” the statement said.

“Manufacturers strongly oppose unlawful discrimination in any form, but the Paycheck Fairness Act would impose unparalleled government control over how employees are paid, among even the nation’s smallest businesses,” it added.

“It would drastically alter the Equal Pay Act to allow unprecedented penalties of unlimited punitive and compensatory damages in cases of alleged discrimination,” the statement said.

James Sherk, Bradley Fellow in Labor Policy in the Center for Data Analysis at conservative The Heritage Foundation, said that the law would be a boon to trial lawyers seeking damages from employers for their clients and would allow the courts to “micro-manage” American businesses.

Unionization has been an issue for quite some time.  Their demands for outlandish benefits and ridiculous compensation has put a stranglehold on American industry.  Independent contractors may represent a way to weaken the those organizations.  Why would businesses collectively bargain with a union when a hungry contractor will certainly take a contract over a promise?

A good businessman or woman knows that success is all about adapting to change.  The government assumes that the only changes a business will make are those that their newest shiny tax or rule intended.  Fortunately for the economy entrepreneurs are in business to make money, not make the government happy.  So what will businesses do?

Adapt – and as usual, not in the way the government intended – I believe they will be increasingly going to go to contract labor models.

Contract labor changes the relationship between the consumer of services and the producer.  In standard employment situations, the relationship is employer-employee.  For contract labor, the business becomes the client and the worker is now the business.  According to the IRS, it uses three characteristics to determine if the relationship between two entities is employer-employee or client-contractor:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

Why would business choose this model?  First, overall costs for contract labor are estimated to be 20-30% less than an equivalent employee.  Consider what a business provides to or pays for employees:

  • Social Security taxes (6.2% up to the annual maximum)
  • Medicare taxes (1.45% of wages)
  • Federal unemployment taxes (FUTA)
  • State unemployment taxes (SUTA)
  • Social Security (Employee pays 6.2%)
  • Social Security (Employer pays 6.2%)
  • Medicare (Employee pays 1.45%)
  • Medicare (Employer pays 1.45%)
  • health care insurance (soon to be required)
  • worker’s compensation
  • tools, computers, facilities

For independent contractors businesses supply:

  1. Only what is stipulated in a negotiated contract

In some cases, like Fed Ex, the trucks are actually leased or purchased from fed ex by the operators.  Imagine that model where you work.  Lease your computer, tools, fax machine, etc.  Nothing prevents it other than those IRS characteristics mentioned earlier.

Granted, for critical business functions, a company may not choose the volatility the independent contractors represent.  If there is even the hint that the relationship is indefinite, the IRS may very deem the contractor as mis-classified and demand back taxes.

From a purely theoretical position this sounds plausible but expected, right?  Guess again:

Entrepreneur.com reported

Chicago-based payroll company SurePayroll, which releases a monthly “scorecard” based on data from more than 25,000 U.S. small businesses, calculates small business contracting grew 19 percent last year while staff hiring grew only 3.4 percent. “There was a much greater percentage growth in contractors than there was in the overall small businesses,” says SurePayroll President Michael Alter.

Examples of Companies that went independent contractor:

ZipRealty

Fed Ex

In closing, note that the IRS has noticed and has become fond of this new model as well

From Bloomberg.com:

“It’s easier and quicker to audit smaller businesses”

For decades the IRS has played a game of find-the-freelancer at businesses where independent contractors remain on the payroll for months or even years. Companies, especially small ones, increasingly rely on such workers because they offer greater flexibility—and because they’re cheaper. Employers can save as much as 30% on wages by avoiding payroll taxes, unemployment insurance, worker’s compensation coverage, and benefits they provide regular employees.

Now both the IRS and state agencies across the country are redoubling efforts to uncover long-term “temps.” In February the IRS launched a three-year program that will examine 6,000 companies to find permanent workers misclassified as freelancers in violation of the Tax Code. President Obama’s proposed 2011 budget includes funding for 100 additional federal staffers to pursue such cases, and it would repeal a 32-year-old rule allowing companies in industries ranging from construction to health care to legally classify long-term employees as independent contractors. What’s more, a 2008 initiative linking the computer systems of various agencies makes it easier for the IRS and states to share data on how companies classify employees.

The only question is how will businesses adapt to this government action?

Estate Tax to Return – Right to Property Threatened

Obama and his liberal cronies in Congress are bringing back the Estate tax.  This tax does most of it’s damage to family farms and businesses – it may very much threaten a key to Americas economic strength and what is certainly the last natural right that progressives have been unable to deface – the individual right to property.

As this post at Heritage.org states:

Estates that consist largely of family-owned businesses are the most vulnerable to the death tax. Family-owned businesses and the families that own and operate them are synonymous for purposes of the death tax. The value of the portion of a business owned by a deceased person, including the business’s assets, such as equipment and property, is included in their estate. The high value of these assets is the cause of the problem for family-owned businesses.

The business’s assets make the estate appear valuable on paper and can raise the value of the estate above the threshold over which the estate is subject to the death tax. Just because the business’s assets are worth enough to push the value of the estate above the threshold does not mean the family has enough cash available to pay the death tax.

First I ask, why tax this at all?  Wouldn’t the IRS reap more benefits from the growth of the business as the heirs take over?  If the dying owner is forced to hide assets (which he will) and preserve cash to prevent his children from taking the hit (which he will), the business will have far fewer resources before and after the hand-over with which to grow.  How does this make sense?

As much as a 55% penalty will be assessed on private property, worth more than $1 Million that is passed down to heirs.  At first glance, this looks like the usual progressive/socialist play to take from the wealthy and give to those they feel deserving.  In reality, it destroys private companies and kills job creation.

The Heritage.org article continues:

The death tax slows economic growth, destroys jobs, and suppresses wages because it is a tax on capital and on entrepreneurship. Capital is any resource that individuals or businesses use to generate income. Like anything else, when the income accruing to capital is taxed, its price rises and less of it is purchased. Less capital means slower productivity growth, lower wages, and fewer jobs. As such, taxes on capital should be minimal or nonexistent. In fact, there is a general consensus among economists that there should be no taxes on capital. The death tax:

  1. (1) Discourages savings and investment. For those Americans who think that their estates may one day be subjected to the federal death tax, the tax sends a signal that it is better to consume today than invest and make more money in the future. Instead of putting their money in the hands of entrepreneurs or investing more in their own economic endeavors, Americans are encouraged to consume it now rather than pay taxes on it later.
  2. (2) Undermines job creation. Because the death tax discourages saving and investing, it also undermines job creation. Resources that otherwise would have been available for businesses to use to expand their operations and add new workers are consumed by people who deem it wiser to spend the money now than invest it knowing their inheritors will have to pay the death tax later. Furthermore, resources that businesses otherwise would have used to add jobs are diverted to protect families from the death tax.
  3. (3) Suppresses wages and productivity. Since the death tax lowers saving and investing, there are fewer resources available for businesses to purchase additional tools and equipment or replace old and worn-out pieces with new ones. That means less capital their workers can use, and therefore the workers’ productivity does not increase as much as it would have in the absence of the death tax. If the business cannot replace worn-out capital, the productivity of its workers declines. Wages are a function of a worker’s productivity, growing more slowly when productivity slows, and declining when productivity decreases.

And to see how this applies in the real world, a fox news blog post demonstrates the absolute destruction of capitalism that this new tax represents:

For generations, Anthony Timberlands, Inc., has been family-owned, but John Ed Anthony says if the estate tax rate is still 55 percent when he dies, his heirs will have to sell off the business. “What the estate tax will do to us at the time of my death is my son will have a visit from an IRS agent who will simply tell him, ‘Your $50 million dollar mill requires $20 million dollars,’” Anthony worries. He says the land where the company’s timber grows and its mills would have to be sold off in order to pay the tax. “When the estate tax strikes the industry in a small town,” Anthony warns, “[that impacts] everyone that’s in the community, everyone that is employed, all the peripheral businesses that make their money off the company.”

While a bi-partisan measure has been put forth, Harry Reid could kill the effort by simply not allowing it to see the Senate floor.  Considering the current socialist-tint to all of dirty Harry’s moves, he may seek to solidify his base by sticking it to those wealthy business owners.    Others in Congress are playing that card already as the blog post reports:

Senator Bernie Sanders, I-Vt., is floating an estate tax proposal that will bring in more revenue to government coffers than the Lincoln-Kyl measure. Sanders says, given the country’s current financial situation, this is no time to give “the rich” a break.

If privately-owned business are forced to pay these oppressive taxes, they will be forced to close down or sell-out.  Imagine owning a family business worth $5.6 Million at the time of your death.  If you hand it to your heirs, they get a $3.1 Million bill from the IRS. Do we want profitable enterprises to have to keep 50% of their assets in cash to handle this eventuality?  No.

This level of taxation will force private companies to conserve cash they would have invested in expansion, purchases, job creation, growth.  This is one more free-market killing idea from an administration and Congress bent on the death of capitalism.  The only one this benefits is the government.

Socialism is the state ownership of means of production.  Tax these entrepreneurs  into a position where the IRS is owed their assets and well, you know.

Estate taxes are nothing more than a tax on assets simply because the owner is changing.  It is a jobs killer, an economy killer, and it threatens the property rights of successful Americans.  It’s time to repeal the death tax permanently.

Remember in  November.

‘Going Galt’ Without Realizing

Going Galt Atlas Shrugged In March of this year, there was a firestorm of libertarians and ultra-conservatives taking up the call of John Galt from Ayn Rand’s Atlas Shrugged.  Galt is a bright inventor/engineer that decides to quit furnishing his skills to the economy when his company goes Marxist.

Several on the right are considering a Galt-like removal from the economy to starve the money-hungry habits of an increasingly-socialist government.  Others are becoming Galtist without even knowing it.

Many conservatives are shedding debt and increasing assets at an historic pace.  By not needing to service debt, they would need anywhere between 5% and 20% less capital than someone living off of lines of credit from banks and credit card companies.  The popularity of get-out-of-debt personalities such as Dave Ramsey and Clark Howard is massive and escalating.  These personal finance empowerment experts are motivating Americans to shed debt and unnecessary purchases.  According to a Wall Street Journal Article, “Total consumer credit outstanding, which includes everything from credit-card debt to loans for recreational vehicles, fell $12 billion in August, or at a 5.8% seasonally adjusted annual rate, the Federal Reserve reported Wednesday. It was the seventh straight month of declines”. Conservatives are eating-it-up, the whole thing, all the way.

If the major bread winners in the economy stopped buying a new BMW or SUV every two or three years that means that they need far less cash flow to service their lives.  The real drivers of the economy won’t need to grow their business and some are deciding that enough-is-enough by getting what they get and not going after much more.  These people represent almost half of the job creation in the entire U.S. market.  What is pushing them to consume less, need less, and therefor produce less?

As income increases, disproportionately so do the taxes, bureaucracy, risk, disparagement by the socialist-minded left and responsibility.  An Entrepreneur’s appetite for risk decreases as each of the negatives increase in an increasingly-socialistic atmosphere.  Without a tolerance for risk, these captains of the economy will cease to take out loans to finance their future business growth, cease to hire additional workers, cease to find additional ways to increase revenues that will only get increasingly sent to the government.  Have we passed the risk/reward threshold?  Have the capitalist-hating liberals finally crushed the spirit of the entrepreneur?  I don’t think so, but we are approaching these limits rapidly.

Constantly spouting wealth-hating rhetoric, putting in increasingly anti-capitalistic policies, and taxing out high-earners is focusing the mindset of an already fiscally-conservative crowd.  This drives them into sharing the ideals of Ramsey and Howard, shedding liabilities and only adding fully-owned assets or even worse for our Keynesian approach to money – saving. The savings rate in America increased by almost 5 times to 6% in the second quarter of this year. We’re saving at a higher rate than any time in the last 20 years and many economic experts think that rate could exceed 8%.

If you believe the news, the increased savings and reduction in credit balances are due to a “credit crunch”. Hooey! Consumers aren’t borrowing. On Bloomberg.com, they state that, “only 8% of adults plan to increase household spending…” while 3% will spend less and a little more than half will spend at their current levels.

This not only takes the interest on credit lines out of the picture, but also takes serious private liquidity out of our financial system.  The U.S. uses a fractional reserve system.  Basically, a bank must hold $1,000 to be allowed to loan $10,000 (not the real ratio, but good for demonstration purposes).  This creates liquidity as $9,000 goes into the economy that did not previously exist.

If the major wealth in the country no-longer believes that some margin of debt is o.k., where will this liquidity come from?  The government.  Now the cycle of artificial public liquidity (loaning by the Federal Reserve, a.k.a. “printing money”) requires increasing taxes, more-and-more people either unsubscribe to the idea that debt is fine or increasing numbers of them go bankrupt and won’t be able to borrow.  A liquidity crisis spiral is created until the big-government spending-based economy collapses under its own weight.  That was the goal of John Galt in Rand’s novel and it would appear that it may be occurring not because people are intentionally “going Galt”, but because they are being driven to it by ever-increasing government spending and derision of capitalistic entrepreneurship.

Reagan had it right, you pump up this economy by empowering the hard-working, wealth-creating capitalists. I’m not sure the current administration understands that.. at all.

Liberals Hate Entrepreneurs – They Just Aren’t Sure Why

Capitalism posterCapitalism is the new “ism”. It is the thing we are all being told to hate, abhor, avoid, and destroy. It’s the “c-word”.  The centrist, elitist mobs are trying to show that capitalism has failed by singling-out CEOs?  What about the hundreds of thousands of small-to-medium sized business owners that are true entrepreneurs.  The liberals just don’t get it, but they will.

If people want to fight corruption, they should. If they want to fight injustice, please do.  Fighting against capitalism does neither and promotes both.  The problem with capitalism isn’t greed, it’s the government.

Two entirely-flawed arguments against a free-market system are in-play.  The failure of the free-market system to keep health care costs down, and the recession in which we currently find ourselves.

First, our health care sector does not function as a free-market system.  When was the last time that you as a consumer tried to figure out whether one doctor’s office charges were less than another (not the co-pay, the actual charge).  When a doctor recommends a certain procedure, we will most-likely just have the work done, or at-best ask for a second opinion.  No one is going to go shopping for the best “value” for that procedure.  The actual costs in health care are hidden from the average consumer so we don’t evaluate them [link]That is why costs are spiraling.  Not greed, not some intrinsic free-market cruelty, it’s simply that if we don’t know what it costs, no one has to care.  Oddly-enough this insulation mechanism also puts many people into debt with credit cards… it’s not real money so it doesn’t really hurt to spend it.

Secondly, the financial collapse last year was not due to the greed of CEOs as the left-wing media would have us believe.  It was actually the power-gobbling, money sucking, worthless crowd in Congress.  By pushing the banks and institutions to loan money to people that did not have the ability to repay it, the government put banks in jeopardy.  To try and deal with the risk that they were forced at gunpoint to take (Community Re-investment Act anyone?), they tried re-packaging the loans into mortgage-backed securities.  Unfortunately, when the loans started going into default, now unwitting investors were in as deep as the banks.  Thanks Barney Frank, brilliant job.  What’s worse is that Frank perpetrated the biggest scam of them all, he pushed off his greed and ineptitude onto “greedy CEOs”.  That’s the only smart thing he did and it benefited no one but Barney.

Liberals are now taking up the call of Pelosi, Dodd, and Frank.  Down with capitalism, down with CEOs, down with entrepreneurs!  I say, it’s time to fight back.  Small-to-medium-sized businesses account for more than 42% of all jobs in the U.S. – almost half.  Maybe that 42% doesn’t need to be open to anti-capitalists.  Heck, maybe they can get a union job somewhere, because of course there’s no top-end greed in the union shop.  Where do those idiots think the rest of us real people are going to find jobs if there is no free-market system?  In the government?  Wait, the government doesn’t make anything, it’s only method of bringing in money is taxes, but without the market… who will they tax?

When they’re bashing capitalism, they are bashing small business owners.  They are bashing success.  They are bashing well-rewarded hard work.  They are bashing everything this country was founded upon.  I submit to you that they do these things, because they don’t understand business, work, or rewards.  they think that everyone deserves a piece of the pie, no matter how little they contribute to the making of it.

In Europe, the tide is turning.  One-after-another, the socialist candidates are being thrown out of office and replaced by free-market leaders.  Even England’s Brown is seeing his poll numbers drop into the chasm.  The era of big government is ending and being replaced by the era of big entrepreneurship.

Vote out liberalism in 2010: Take Back America!