The Hill: A Charlie Brown Congress?

Below is the opinion editorial by Frank Knapp that ran in The Hill's Congressional Blog on June 29, 2011.

A Charlie Brown Congress?

Lucy is at it again. “I’ll hold the ball, and you come running and kick it,” Lucy tells Charlie Brown.
We all know what to expect. Charlie Brown will run to kick the football and Lucy will pull it away...again. Charlie will fall flat on his back.

This gag is playing out right now in Congress. U.S. multinational corporations (aka Lucy) are holding hundreds of billions of dollars in profits overseas to avoid paying U.S. taxes. They want Congress (aka Charlie Brown) to let them bring those dollars back to the U.S. without paying hardly any taxes (Congress committing to kick the ball) in the belief they will invest them in production and hiring here at home (the football flying through the air instead of Charlie).

This process is called a “repatriation tax holiday” and, just as in the Peanuts cartoon, Congress has seen this before.

In 2004, most of the same multinational corporations made the same offer. Even the Bush administration thought it was a bad idea and said it would be unfair to companies who had “already paid their full and fair share of tax” and “would not produce any substantial economic benefits.”

Still, Congress agreed to a “one-time-only” repatriation run at the ball. But instead of using their almost tax-free billions for hiring and investing here, companies like Hewlett-Packard, Pfizer, Ford Motor Company, Merck and Honeywell International gave big windfalls to their corporate owners and shareholders in stock buybacks and dividends while laying off tens of thousands of American workers.

The National Bureau of Economic Research found that the tax holiday did not increase domestic investment, employment or research and development. Instead, they found, a dollar increase in repatriated earnings was associated with an increase of almost a dollar in payouts to shareholders.

It’s not that Congress has amnesia about this failed tax policy, as some have suggested. Charlie Brown remembers Lucy’s trick all too well.

“You must think I’m stupid,” Charlie Brown tells Lucy in the Great Pumpkin episode. But Lucy persists, “This time you can trust me. See, here is a signed document testifying that I promise not to pull it away.”

Tax holiday advocates say this time the legislation will really guarantee that the repatriated profits will be used to invest and create jobs in America.

Charlie Brown, in spite of all of us yelling, “Don’t do it,” gives in. “It’s a signed document,” he says. “I guess if you have a signed document in your possession, you can’t go wrong. This year I am really going to kick that football.”

“AAUGH!”

Lucy pulled the football away with the excuse the document wasn’t notarized.
There’s no foolproof way of writing legislation to stop corporations from behaving the way they did in 2005. And the reality is that the corporations don’t really need the repatriated profits to invest and create jobs here. As conservatively calculated by the Center on Budget and Policy Priorities from company financial statements, the ten corporations doing the heaviest tax holiday lobbying (Adobe Systems, Apple, CA Technologies, Cisco, Duke Energy, Google, Microsoft, Oracle, Pfizer and Qualcomm) have at least $47 billion in cash and other liquid assets readily available for domestic investment and job creation right now.

When Lucy suckers Charlie Brown more than once, she knows that she can do it again and again.

Giving U.S. multinational corporations another “repatriation tax holiday” will encourage them to shift even more of their profits into offshore tax havens until the next time they trick Congress to try and kick the ball. As a result, our country’s deficit will increase when an estimated $79 billion more in corporate taxes is not collected over the next 10 years according to Congress’s Joint Committee on Taxation. That means the rest of us will continue to pay more than our fair share for the essential services of government.

These big corporations benefit immensely from all the advantages of being headquartered in our country. They need to start paying their taxes just as every citizen and small business does.

That’s why Congress should listen to our raised voices: “Don’t do it, Charlie Brown!”

http://thehill.com/blogs/congress-blog/economy-a-budget/169051-a-charlie-brown-congress

Action Alert--SBDC budget vetoed

Yesterday Governor Haley vetoed the entire state budget for the South Carolina Small Business Development Center. Please see the letter below for our reasons for asking the Legislature to override Veto # 12.

Call your House and Senate member ASAP, before noon today, and ask them to vote t override Veto # 12. You can find a list of all House members here and all Senators here.

Please take this action immediately.

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June 29, 2011

South Carolina General Assembly
State House

Re: Veto 12, Small Business Development Center

Dear Legislator:

Governor Haley, like Governor Sanford before her, has vetoed the entire state budget of the South Carolina Small Business Development Center (SBDC). We are asking you to vote to override Veto 12 as you and Representative Nikki Haley did last year. The reasons for your override vote have not changed since last year because the incorrect reasons for the veto are the same.

Governor’s Reason #1: This program is not central to the university’s (USC) mission.

The federal government requires that its one-to-one matching funds for the nation’s SBDCs go through an institution of higher learning. USC provides this administrative function for its partner institutions of Clemson, Winthrop, and SC State. The approximately $1.4 million federal dollars the state receives is added to the state, local government and some private funds to operate SBDC offices in Aiken, Beaufort, Charleston, Clemson, Columbia, Florence, Greenville, Greenwood, Hilton head, Myrtle Beach, Newberry, Orangeburg, Rock Hill, Spartanburg and Sumter. Every one of these offices will close if the Governor’s veto is not overridden. Local governments and private businesses will not continue to fund a program the state has abandoned.

Governor’s Reason # 2: This program duplicates services already offered by the South Carolina Department of Commerce and the U.S. Small Business Administration (SBA).

Neither the S.C. Department of Commerce nor the SBA provides one-on-one consulting services to small business owners trying to grow their businesses or simply trying to survive in this economy. The S.C. Department of Commerce only lists three small business functions of its website: providing information on educational resources, providing information on financial resources and its small business ombudsman’s office (which refers small business owner to the SBDC). The SBA lists Small Business Development Centers as a provider of SBA’s consulting services. Therefore the SBDC is not a duplicative service of the SBA because the SBA relies on the services of the SBDC.

In her letter, Governor Haley indicates that her vetoes will help us “move forward in strengthening our economy”. Her veto 12 does the opposite. It will seriously damage our economy that depends on our small businesses.

Sincerely,

Frank Knapp, Jr.
President & CEO
The South Carolina Small Business Chamber of Commerce

Whose Stimulus?

The below is an editorial from the New York Times.
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The NY Times
June 26, 2011

Whose Stimulus?

Big businesses are telling Washington that they are willing to do their bit for the economy — if the price is right. Multinational companies say they could repatriate hundreds of billions in foreign profits and pump them into domestic investment and hiring, but only if Congress and the White House agree to cut the tax rate on those profits to 5.25 percent from 35 percent. They call their plan “the next stimulus.” Sounds more like extortion.

In the last five years American businesses have kept abroad more than $1 trillion worth of foreign earnings, according to government data. An article by David Kocieniewski in The Times last week noted that Microsoft has $29 billion offshore, Google has $17 billion and Apple has $12 billion.

The Obama administration should not give in to such corporate coercion. The last time big businesses got such a “tax holiday,” in 2005, companies spent most of the money rewarding their shareholders with stock buybacks and dividends, not in hiring.

Truth is, businesses’ decisions to invest or increase employment depend on the state of the economy. If consumer demand is depressed, as it continues to be, corporate chieftains see no business logic in raising production. In the second quarter of 2010, when expectations of recovery were rosier, nonresidential investment jumped 17.2 percent. In the first quarter of this year it grew only 2 percent.

Bringing more money home at lower tax rates isn’t going to change that thinking. What these businesses don’t say is that they are already awash in cash. According to Federal Reserve data, companies in the United States have $2 trillion stashed in bank accounts, Treasury securities and other investment-ready assets. And this excludes cash held abroad by their foreign subsidiaries to avoid taxes.

Businesses will always want a tax cut. And they will always justify it as good for hiring and investing, whether or not it is. We remain perplexed by the Obama administration’s decision to consider businesses’ contention that cutting employers’ contributions to payroll taxes will lead to more jobs. It probably won’t — especially if the break is not specifically tied to new hiring.

The faltering economy needs real stimulus, like extending the payroll tax cut for workers until the end of next year. That would put money directly in the pockets of American workers and stimulate consumption. Investing in infrastructure would also help.

Beyond pleasing shareholders, there is one other guaranteed result of giving employers a big tax break on their foreign profits: less cash to finance government programs or pay down the deficit. According to Congress’s Joint Committee on Taxation, the proposed cut would cost $79 billion over 10 years.

Survey says....

Deloitte has just released its 2011 Survey of Health Care Consumers: Global Report and the results don’t look good for the United States in spite of us spending 17.6% of our GDP on health care (far more than any other country included in this survey).

Here are just a couple revealing survey results.

--Only 22% of U.S. consumers give our health care system an “A” or “B” grade. That puts us just ahead of Portugal (18%) and Mexico (15%). Brazil brought up the bottom at only 8%. Which health care systems were liked the best by consumers? Luxembourg (69%), Belgium (57%), Switzerland (52%), France (51%), Canada (50%), and the United Kingdom (46%).

-- 37% of U.S. consumers give our health care system a failing “D” or “F” grade. That makes only Portugal (39%), Mexico (44%) and Brazil (57%) the countries in which their people dislike their health care systems more than we dislike ours. Even fewer Chinese give their health care system a failing grade (29%). Here are some of the other countries and their “D” or “F” grades—Germany (20%), United Kingdom (15%), Switzerland (17%), Canada (14%), France (11%), Belgium (8%) and Luxembourg (4%).


So the next time you hear a politician brag about the U.S. having the best health care in the world, remember that they are talking about health care services for those who have easy access and can afford the insurance premiums, deductibles and co-payments.

For the rest of the country, and especially the 37% who gave our health care system a failing grade, we’re looking forward to 2014. That is when most of the new health care law, the Affordable Care Act (ObamaCare for some of you), is in place so that most Americans can get that great health care.

Party loyalty & political fear wins, small business loses…again

The S.C. House voted 69 to 43 along party lines with one exception yesterday to force every small business in the state to only use E-Verify when hiring a worker to prove immigration status. Starting in 2012, regardless of a small business’s ability to access the internet, employers in the state are now required to treat a drivers license or social security card as worthless documentation of citizenship. Only the federal government can give permission to hire a worker (oh, and instantaneously keep track of who you are hiring).

No amount of common sense espoused by numerous Democratic speakers, our small business arguments against E-Verify or the principled opposition by numerous leaders of the state’s Tea Party organizations could overcome the Republican chant—“The U.S. Supreme Court is making us do it”.

If that sounds too simplistic and silly of an explanation, it is. It wasn’t just the recent Supreme Court ruling. It was Governor Haley, Attorney General Wilson and Haley’s Labor, Licensing and Regulation agency insisting that the state kowtow to the Supreme Court or our immigration reform law would be challenged in court. Then it was the Republican leadership in the Senate who bowed to the Haley interpretation of the Court ruling. In the House, not even the “state’s rights” GOP reps put up any objections or even words of caution just as their counterparts in the Senate had failed to do.

The House Republicans just let the Dems point out over and over the impracticality of implementing the E-Verify system in a poor state with limited internet access in our rural counties. It was the Dems that spoke about the dangers of the big federal government dictating the hiring process of private business. It was the Dems that complained about the state adding more and more costly bureaucratic regulations on small businesses. It was the Dems that argued that there were other ways of addressing the court ruling on immigration that wouldn’t burden small businesses.

Ironically it was the Dems that were articulating Tea Party principles to the point that the House Minority Leader, Harry Ott, told the chamber that he felt like a member of the organization.

But yesterday the rank and file Tea Party folks were mislead by Roan Garcia-Quintana, the self-proclaimed executive director of the cyber-group “Americans Have Had Enough Coalition”.

Mr. Garcia-Quintana takes pride in pointing out that he is an “American Citizen of Spanish Heritage”. He does this not because he is actually proud of his heritage but because he feels it gives him a higher moral authority to oppose others with the same heritage who are in the country illegally. Of course it doesn’t but it looks good on his political resume.

Ahhh, yes. There is that issue of a political resume that explains why Mr. Garcia-Quintana was so willing to lead his minions to bombard House members with demands to violate basic Tea Party principles.

You see Mr. Garcia-Quintana is a political consultant to Republican Party candidates. His passionate beating of the email drum to stir up his subscribers had more to do with supporting Republican clients than serving the Tea Party cause. It is also entirely possible that Mr. Garcia-Quintana wanted to open up a business opportunity for one of his political clients, something that he acknowledged in one of his misleading emails (“a small business that simply cannot perform the E-Verify function for itself can designate a 3rd party administrator such as an accountant to do it”).

Mr. Garcia-Quintana is a political hack who has disguised himself as an upstate Tea Party leader in order to put fear into Republican officeholders who don’t tow the party line. His GOP masters expect him to deliver and he did for them yesterday while throwing small businesses and the real Tea Party under the bus.

Top 8 reasons for House to oppose E-Verify mandate

Today the message below from the Small Business Chamber will be given to House members before they debate whether to concur or non-concur with the Senate's mandatory E-Verify amendment to S.20, immigration reform.  A non-concur vote would send the bill to a conference committee to work out the difference between the House and Senate versions.
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Top 8 Reasons

to non-concur with the Senate’s E-Verify mandate amendment

on S.20

1. Be a hero to small business by opposing more burdensome, costly regulations.

2. Champion immigration reform by voting for the final small-business friendly S.20.

3. Oppose big government in small businesses’ business.

4. Fight against federal mandates—health insurance and E-Verify.

5. Support a more effective immigration reform such as a universal DMV E-Verify for all workers—just like the DMV voter ID’s.

6. Show the Senate that the House is the deliberative body.

7. Avoid future small business criticism of “What were you thinking?”

8. You owe us one after Amazon.☺

Don’t Make Small Business do the State’s Work

ACTION ALERT!!!

Don’t Make Small Business do the State’s Work

This week the S.C. House will make an extremely important decision for every small business in the state.  Without any public hearings or thorough discussion of alternative solutions, the Senate voted to mandate that our small businesses not be allowed to use a driver’s license or other state document to determine citizenship when hiring a worker.  Instead the Senate mandated that only the federal E-Verify internet-based system can be used in the future.

Now it is up to the House to protect possibly up to 1/3 of the state’s small businesses (according to the FCC) from either purchasing broadband in order to hire a worker or find the nearest state One-Stop Workforce Center to borrow a computer with broadband access when hiring a worker.  The the small business owner will have to read the 82-page user manual and hope not to make a mistake.

“The E-Verify process has changed multiple times just in the short time that we’ve been using it.  I can imagine that businesses who rarely hire employees would basically have to have new training in the system each time they have to use it.  It would be a pain.”
—Erlinda McCoy, HR Manger, Boykin Contractors, West Columbia

While we do not oppose S.20, immigration reform, the bill can be passed without the late amendment that places an unnecessary regulatory burden on small businesses with the possibility of revoking the business license of those not cooperating.  If the state wants to assist the federal government in verifying citizenship, it should do the work itself instead of mandating the burden be put on small businesses.  Let the state use E-Verify when issuing driver’s licenses or other state approved documents to be used during the hiring process. 

Call or email your House member today.  You can find a list of all House members along with contact information by clicking here.  You can also call the House Clerk’s Office at 803-734-2403 and ask to be connected to your Representative.

Ask your House member to vote against mandating all businesses to use E-Verify.  Tell them that it is an unnecessary burden on small businesses.  Feel free to use any of the above information. 

Thank you for your support.

Frank Knapp, Jr.

President & CEO

Senate throws small businesses under the bus….again

Tuesday evening the South Carolina Senate, after considerable debate, voted to amend an immigration reform bill to require all businesses, small and big, to only use E-Verify when hiring an employee. This would mean that no longer can a business simply use a driver’s license or other state approved document to indicate a person’s immigration status.

The S.C. Small Business Chamber opposes this provision (see Tuesday’s blog) as too burdensome for many small businesses and will actually encourage breaking the law (which can result in a business license being revoked).

Fortunately, there is an effort in the House, being led by Representatives Mac Toole and Mike Anthony, to have the House non-concur with the Senate provision. This would put the bill into a conference committee where we hope to work out an alternative, more small-business friendly position on the issue. The House will probably take up the bill next Tuesday.

Thanks to all for your calls and emails in support of our efforts.

ACTION ALERT!! Say NO to mandatory E-Verify

An amendment to a bill (S.20) in the S.C. Senate this week could place an unnecessary burden on small businesses. The S.C. Department of Labor, Licensing and Regulations (LLR) wants to force every business to stop using a drivers license, social security card, birth certificate or other official state document to prove U.S. citizenship when hiring a worker.

Instead LLR wants all businesses to only use the federal E-Verify internet-based system. While there are no fees to use E-Verify, there are considerable costs in terms of time and money for a small business to comply.

1. The E-Verify Users Manual is 82 pages long! Even businesses with an HR department complain. Elrinda McCoy, HR Manager for Boykin Contractors in West Columbia says, “The e-verify process has changed multiple times just in the short time that we've been using it. I can imagine that businesses who rarely hire employees would basically have to have new training in the system each time they have to use it. It would be a pain.”

2. There are wide areas of the state without the broadband internet service necessary to use E-Verify efficiently. “South Carolina's access to broadband is quite poor -- 8th worst in the nation in access to the kinds of connections that allow one to take advantage of the full Internet according to a recent FCC report [pdf],” (Community Broadband Networks)

3. Even if broadband service is available, the E-Verify mandate would force the small business owner to buy broadband if they don’t already have it or take the time to go to a local library or state workforce One-Stop office to use the broadband service there.

4. E-Verify is not totally reliable. According to Erlinda McCoy, “there are several glitches with the system. For example, we are not allowed to specify which ID's to obtain from the employee. But if we don't enter the name exactly the way it appears on the social security card, it will result in a ‘Not Authorized to Work’.”

Call or email the Senate office of your state Senator today. You can find a list of all Senators along with contact information by clicking here. You can also call the Senate Clerk’s Office at 803-212-6200 and ask to be connected to your Senator.

Ask your Senator to vote against mandating all businesses to use E-Verify. Tell them that it is an unnecessary burden on small businesses. Feel free to use any of the above information.

Thank you for your support.

Reducing unemployment by 45%

Boeing is here! Yeah!

And it only cost the taxpayer about $225,000 per new job.

Don’t get me wrong. I’m glad Boeing came to South Carolina just as I’m glad that Amazon.com is building a distribution center here also (just wish we hadn’t thrown all our other retailers under the bus to get Amazon).

But we did give Boeing $900 million in incentives (that we know of) to seal the deal to get the plant that should employee about 4000 workers. Go ahead and check my math. That’s $225,000 per job.

So I’m just wondering. What other jobs could we have bought for that same money and maybe gotten a better deal.

What if the state gave a one-time $10,000 refundable tax credit to any locally-owned small business in South Carolina for every new employee it hired in the next 12 months and kept on the payroll for at least two years? I think there are plenty of businesses out there that would jump all over that deal.

If we capped the total tax credits available at $900 million, we could generate 90,000 new jobs spread throughout the state. Yes, even our rural counties would benefit.

Under this scenario the state’s unemployment rate would drop to 5.4% from 9.8% today, our economy would take off and Govern Haley would be an economic development rock star on the national scene.

But then there wouldn’t be that great ribbon cutting photo op for all the politicians.

Billions still waiting for lending to small businesses

Last week at my meetings in DC with representatives of the Administration’s economic development team and key staff of the U.S. Senate Small Business Committee I expressed concern that possibly up to half of the $30 billion Small Business Lending Fund established last year would not be claimed. The fund was to encourage community banks and non-profit lenders to make more small business loans and the deadlines for applying for the money is this month.

On Monday the SBA announced a final push to inform the lending institutions of this important program.

You can help spread the word of the webinar being held today at 3 p.m. Let your community banks and those with Community Development lending programs know about this opportunity.

U.S. Treasury to Host Small Business Lending Fund Webinar

By CARLOS ORTEGA

On Thursday, June 9, at 3 p.m. EDT, the U.S. Department of the Treasury will hold a webinar discussing how Community Development Loan Funds and community banks can apply for the Small Business Lending Fund. The webinar will cover many topics including participation eligibility requirements, small business loan qualifications, and sample financial statement calculations.

The Small Business Lending Fund, part of the Small Business Jobs Act of 2010, is a $30 billion fund established to provide capital to qualified community banks with less than $10 billion in assets. The goal of the fund is to stimulate lending to small businesses, thus working toward the creation of more jobs.

The U.S. Department of Treasury will supply the capital by purchasing Tier-1 qualifying preferred stock or equivalents in each bank.

The cost of capital to the banks will be no more than 5 percent and can decrease if the bank increases its small business lending. However, the cost will increase if the bank decreases its lending in the first two years.

Small business at a crossroads

Below are exerpts of an opinion editorial by Jeff Stibel that appeared in the June 7 edition of Reuters blog.  Jeff Stibel is the chairman and CEO of small business credit rating agency Dun & Bradstreet Credibility Corp.

Small business at a crossroads

by Jeff Stibel

Right now, leading indicators – like lending, hiring and optimism – paint a conflicting picture of the direction of the country’s small business sector. It’s no wonder we’d be confused. It seems one index rises, while another falls.…

.…The irony in our recovery is that a good portion of the government stimulus was aimed at small businesses, including major tax incentives to promote investing and banking regulations to promote lending. But many analysts think institutions still aren’t lending enough to small businesses, even though, in many cases, banks have increased available loans. As a result, it’s a struggle for small businesses to increase hiring, expand their inventory, innovate and grow.

Compounding the problem, many businesses no longer appear creditworthy as a result of the recession, which drove down revenues and profits. Bankers have also increased the level of scrutiny they apply in making lending decisions, making it harder to get a loan.

Right now, we’re at a crossroads. And the question we need to answer is: What it will take to make a small business recovery come full-circle, so that leading indices move together in a positive direction?

Ultimately, lending must flow freely to small business, and much more is needed to make this a reality. While continued low interest rates make credit cheap and available for our largest businesses to get loans, credit remains out of reach for many small businesses. Banks and lending institutions must recognize that their own long-term health is tied to the overall economy, not merely its largest players, and that a sustained recovery ultimately depends upon the recovery of small businesses.

It’s also vital that small business owners continue to proactively build their creditworthiness. Many of them are already rebuilding their credit and reaching out to trade providers and banks to re-establish relationships. We have seen a dramatic increase in businesses that are purchasing credit-building products at Dun & Bradstreet Credibility Corp and many are starting to think about credibility and trust. There’s a recognition that creditworthiness is directly tied to a business’ ability to thrive.

The key now is for small businesses – and those that support them – to maintain the momentum cultivated at the start of the year. It’s something we need to keep up, even if the leading small business indicators don’t always paint a clear picture of where we’re headed.

Stop the multinational corporation tax break

Message from the American Sustainable Business Council:

Why Should Apple, Kodak and Pfizer Get Another Giant Tax Break?

A coalition of multinational corporations – including many household names – is pushing for a massive tax holiday on profits they’ve parked overseas.

George Bush gave out a similar tax holiday to U.S. multinationals in 2004.

Back then, the money became a huge windfall to corporate owners and shareholders – including many CEOs – in the form of stock buybacks and dividends. And then U.S. multinationals eliminated more American jobs and shifted even more income and investment to offshore tax havens.

This time, it is estimated to cost the U.S. Treasury $80 billion. That’s $80 billion that could be invested in services and infrastructure that all businesses depend on.

Numerous business organizations have sent a letter to Congress opposing the proposed tax holiday for multinational companies and calling for closing offshore tax haven abuse. Read the letter here. Then contact your Congressman to encourage him or her to tell multinational corporations to pay their fair share of U.S. taxes.

Legislative score card

While the South Carolina Legislature might or might not go back into session this week (but for sure next week), the legislative agenda of The South Carolina Small Business Chamber of Commerce is done for this session. But remember that this was the first year of a two year session. So what didn’t get done in 2011 might still have life in 2012.

Here’s our state legislative score card.

S.36—Passed—Good and bad news here. We supported this bill for two reasons. It would prevent the S.C. Department of Revenue from going rogue like it did last year when it told numerous businesses that the service contracts they sold to others should have included sales tax. But these businesses had no idea about this new Revenue interpretation of a law and faced owing tens of thousands of dollars to the state—sales tax they had never collected. Fortunately the bad publicity that we helped generate resulted in Revenue backing off and giving the Legislature time to correct the situation.

This bill also would gradually phase out sales tax on durable medical equipment purchased with Medicare and Medicaid funding from South Carolina retailers by January 1, 2013. Because federal law prohibits these durable medical equipment vendors from charging sales tax on Medicare and Medicaid purchases, requiring them to pay sales tax out of their small profits was unfair. We have supported the elimination of sales tax collection in these situations since 2007 and were instrumental in passing a law that year that should have addressed the problem. But then the economy went south and the phase out stopped. Now the problem is solved.

Now the bad news. This was the bill that the Amazon.com supporters successfully attached an amendment to exempt the retail giant from collecting sales tax on in-state sales for five years. You know the story from here. Our opposition helped force Amazon to increase their offer of new jobs by 60%, expand its investment by 39% and agree to notify its South Carolina customers that they might owe sales tax to the state. But in the end, Amazon won the battle against all the other retailers in the state and will have an unfair competitive advantage over them.

H.3111—Passed the House and is in the Senate Banking and Insurance Committee—Good news. We support this legislation that will require workers’ compensation insurance companies to use the most recently approved Loss Costs and Loss Cost Multiplier. I won’t make your eyes glaze over with an explanation but take my word for it; this would be a good thing for small businesses.

H.3346—Passed House and is in the Senate Banking and Insurance Committee—Good news. This bill has the potential of creating a vibrant, job creating solar industry by providing tax credits for commercial building solar installation.

S.461—Passed Senate and is in the House Agriculture Committee—Not good news here. While we support recycling and the recycling industry, this bill would mandate restaurants and bars to recycle glass, aluminum and cardboard. We oppose requiring small businesses to incur costs that will help all of us in general and provide free resources to some recycling businesses at the expense of other businesses. Either the restaurants and bars should be given tax credits for their required efforts or the users of the recyclable materials should cover the costs of the mandated activity. The proponents of this bill have made some changes to lessen the cost to restaurants and bars but there is still work to do as the bill goes to the House.

H.3473—Lots of discussion but no movement. Still in Labor, Commerce and Industry subcommittee—Not good news. We support this bill that will prohibit the sale of HVAC equipment of more than 3 tons to unlicensed heating and air conditioning contractors. The S.C. Association of Heating and Air Conditioning Contractors believes that H.3473 is needed to protect the public and promote professionalism in the industry.

H.3738—Lots and lots of discussion. Still in House Ways and Means Committee—Good and bad news. First the bad. We support this bill that will establish an insurance exchange for South Carolina and be run by the state. The Affordable Care Act requires each state to have an exchange by 2014. The exchange will be the place (internet based) where individuals and employees of small businesses can go to obtain health insurance. With the failure of this controversial bill getting passed by the House this session, the prospect are not good for it being passed by the Legislature next year.

Now the good news. The federal government will set up and run an insurance exchange for the state if we fail to do so ourselves. In this case, South Carolina might end up with an exchange that is more transparent and easier to use. A federal exchange might also actively promote more insurance company competition and engage insurance companies in making sure consumers get the lowest premiums possible.

S.316—No action. Still in Senate Banking and Insurance Committee—This is very bad. In spite of guarantees that this important bill would be given a subcommittee hearing, the legislation did not move. We support it because it would prohibit a health insurance carrier from forcing a healthcare provider to contractually give the carrier a “most favored nation” status—the provider could not negotiate a lower or even the same reimbursement rate with a different health insurance carrier. The “most favored nation” clause in contracts is one of the important reasons that there is no real competition between carriers resulting in ever-increasing insurance premiums.

S.124—No action. Still in Senate Committee—This is very good. The primary sponsor of the bill has decided not to push for a subcommittee hearing on this legislation we oppose. The bill would require wage garnishment of an employee by the present employer to pay back a commercial debt of the employee. We do not believe that small businesses should be in the debt collection business for other businesses.

S.31—No action. Still in Senate Banking and Insurance Committee—This is also very bad. Again, in spite of promises to hold a subcommittee hearing on this bill that we support, no subcommittee was ever given. The legislation would guarantee that the State Consumer Advocate could ask for a public hearing before a Judge to contest proposed changes, up or down, in workers’ compensation rates. Now only increases in rates allows the Consumer Advocate to make a court challenge but our experience is that proposed reduced rates should be examined because they might not be enough of a reduction.

S.214—No action. Still in Senate Banking and Insurance Committee—We agreed to drop our request for legislative action on this workers’ compensation insurance issue to allow the S.C. Department of Insurance to address the problem administratively. The problem is that there are businesses that have not had their workers’ compensation insurance experience modification rate adjusted downward when it should have been in Second Injury Fund cases. As a result of the insurance carriers not obeying the law, these businesses might be due a premium refund. Unfortunately, the present law and regulation sets up an arbitrary time limit to correct the problem. We want this time limit removed.


We fully expect that in addition to the above bills there will be more legislation that will find its way onto our agenda in 2012.

Small Business Left Out of House Hearing on Tax Reform and Jobs

FOR IMMEDIATE RELEASE

Small Business Left Out of House Hearing on Tax Reform and Jobs; Small Business Leaders Meet With White House Officials Thursday Afternoon

Washington, DC, June 2, 2011- The House Ways and Means Committee is holding a hearing on tax reform and jobs Thursday morning without small business, the engine of job creation. “It’s unfortunate that a hearing about job creation and tax reform doesn’t have room for the voice of small business,” said Frank Knapp, President and CEO of the South Carolina Small Business Chamber of Commerce. “We want reform that is fair to all businesses and provides adequate funding for the public services and infrastructure upon which all businesses depend.”

Mr. Knapp will submit written testimony on behalf of a network of small business organizations who have signed a letter calling upon Congress to generate more revenue and create a level playing field by closing tax loopholes that favor U.S. multinational corporations and opposing short and permanent tax holidays on profits parked overseas. Mr. Knapp is a member of Business for Shared Prosperity, which sponsored the letter co-signed by the American Sustainable Business Council, the Main Street Alliance, American Made Alliance, National Latino Farmers and Ranchers Trade Association, Wealth for Common Good, Green America, Social Venture Network and others.

Scott Klinger, Tax Policy Director for Business for Shared Prosperity, will join Mr. Knapp and other members of the American Sustainable Business Council, a partnership of 30 business organizations, in a meeting with White House officials Thursday afternoon. “Over the last sixty years, the costs of paying for government have been steadily shifted off of the largest and most prosperous corporations and onto small businesses and the middle class. That’s what needs reforming,” said Klinger. “In the 1950s, corporate income taxes accounted for one third of federal revenues; today they make up less than a tenth. Corporate tax avoidance is undermining our economy and our global competitiveness.”

Mr. Klinger’s remarks in the White House meeting and Mr. Knapp’s written testimony make three main points about corporate tax reform:

1) It should be revenue positive, not lock in corporate taxes at an historical low share of total federal government revenue.

2) It should not contain short or long-term tax holidays on profits parked overseas.

3) It should assure that ALL companies pay their fair share toward the cost of government, including the public services and infrastructure we need for a strong economy and job creation.

“Big U.S. corporations are presently sitting on record levels of cash. If they wanted to build new plants and hire more employees, they have plenty of resources to do so now,” said Sam Blair, National Director for the Main Street Alliance. “It is counterproductive to give more loopholes, tax cuts and subsidies to U.S. multinationals while cutting programs and public investment needed to revitalize our economy.”

Mr. Knapp’s full testimony is available HERE on Google Docs:

Business for Shared Prosperity is a network of forward-thinking business owners, executives and investors.

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http://www.businessforsharedprosperity.org/

High-Risk health insurance pool better than ever

South Carolinians with pre-existing conditions now shut out of the individual health insurance market got some very good news this week. Health insurance through the high-risk pool operated for the state by the federal government (because South Carolina officials punted the responsibility to the feds) is now almost 15% less expensive than before and no longer requires a letter of rejection from an insurance company.

See the below HHS press release below.
FOR IMMEDIATE RELEASE

Tuesday, May 31, 2011
Contact: HHS Press Office
(202) 690-6343

HHS to Reduce Premiums, Make it Easier for Americans with

Pre-Existing Conditions to Get Health Insurance

The U.S. Department of Health and Human Services (HHS) today announced new steps to reduce premiums and make it easier for Americans to enroll in the Pre-Existing Condition Insurance Plan. Premiums for the Federally-administered Pre-Existing Condition Insurance Plan (PCIP) will drop as much as 40 percent in 18 States, and eligibility standards will be eased in 23 States and the District of Columbia to ensure more Americans with pre-existing conditions have access to affordable health insurance. The Pre-Existing Condition Insurance Plan was created under the Affordable Care Act and serves as a bridge to 2014 when insurers will no longer be allowed to deny coverage to people with any pre-existing condition, like cancer, diabetes, and asthma.

“The Pre-Existing Condition Insurance Plan changes lives, and in many cases, literally saves lives,” said HHS Secretary Kathleen Sebelius. “These changes will decrease costs and help insure more Americans.”

In 23 States and the District of Columbia, the PCIP program is Federally-administered. The remaining States operate their own PCIP programs using Federal funds provided by the Affordable Care Act.

Under the changes announced today, PCIP premiums will drop as much as 40 percent in 18 States where the Federally administered PCIP operates. These premium decreases help bring PCIP premiums closer to the rates in each State’s individual insurance market; in the six States where PCIP premiums were already well-aligned with State premiums, premiums will remain the same.

The changes announced today will make enrolling in the Federally-administered PCIP in 23 States and the District of Columbia easier. Starting July 1, 2011, people applying for coverage can simply provide a letter from a doctor, physician assistant, or nurse practitioner dated within the past 12 months stating that they have or, at any time in the past, had a medical condition, disability, or illness. Applicants will no longer have to wait on an insurance company to send them a denial letter. This option became available to children under age 19 in February, and this pathway is being extended to all applicants regardless of age. Applicants will still need to meet other eligibility criteria, including that they are U.S. citizens or residing in the U.S. legally and that they have been without health coverage for six months.
HHS also sent letters today to the 27 States running their own programs to inform them of the opportunity to modify their current PCIP premiums.
To further enhance the program, beginning this fall, HHS will begin paying agents and brokers for successfully connecting eligible people with the PCIP program. This step will help reach those who are eligible but un-enrolled. Several States have experimented with such payments with good success. This is a part of continuing HHS outreach efforts with States, insurers, providers, and agents and brokers to reach more eligible people and let them know that coverage is available. HHS is also working with insurers to notify people about the PCIP option in their State when their application for health insurance is denied.

Congress created the temporary PCIP program as part of the Affordable Care Act to help uninsured Americans with a variety of medical conditions get affordable coverage rather than be locked out of the system by insurance companies. In 2014 and beyond, insurers will be prohibited from denying coverage to anyone with a pre-existing condition and new competitive marketplaces called Health Insurance Exchanges will give people the opportunity to shop for the policy that best suits their needs. Millions of Americans also will receive tax credits to help make coverage affordable.
Enrollment in PCIP programs has begun to grow rapidly. In the period between November 2010 and March 2011, enrollment in all programs rose 129 percent to more than 18,000 Americans enrolled in PCIP.

“These changes will get more people covered,” said Steven Larsen, the Director of the Center for Consumer Information and Insurance Oversight. “We’re encouraged by recent increases in enrollment and we’re excited to build on these efforts and reach even more people.”
PCIP provides comprehensive health coverage, including primary and specialty care, hospital care, prescription drugs, home health and hospice care, skilled nursing care and preventive health and maternity care. It limits annual out-of-pocket spending and does not carve out benefits the people need. Eligibility is not based on income and people who enroll are not charged a higher premium because of their medical condition.
To find a chart showing changes to PCIP premiums in the States with Federally-administered PCIP programs, visit www.HealthCare.gov/news/factsheets/pcip05312011a.html..

For more information, including eligibility, plan benefits and rates, as well as information on how to apply, visit www.pcip.gov and click on “Find Your State.” Then select your State from a map of the United States or from the drop-down menu. The PCIP Call Center is open from 8 a.m. to 11 p.m. Eastern Time. Call toll-free 1-866-717-5826 (TTY 1-866-561-1604).

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Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news