2012 Advocacy Wrap-Up--Happy New Year!

The S.C. Small Business Chamber of Commerce (SCSBCC) again had an outstanding year of fighting for the best interests of small businesses in South Carolina.

At the top of the major SCSBCC accomplishments are victories in workers’ compensation insurance and electricity rates:

• In February the Workers’ Compensation Insurance industry proposed a 7.3% increase in premiums from businesses in South Carolina.  Only two organizations, the SCSBCC and the State Consumer Advocate, intervened in the regulatory process to oppose this hike.   In August a settlement was reached that cut the proposed increase by 58% to only 3%.  The savings to South Carolina businesses -- $23 million the first year.
• In June South Carolina Electric & Gas (SCE&G) filed for a 6.6% average general electric rate increase for its 668,000 customers.  Small businesses would have seen their rates go up 4.19%.  SCSBCC president, Frank Knapp, intervened as an individual in the rate case to oppose the hike on small businesses.  In December the S.C. Public Service Commission approved a settlement between Mr. Knapp, other intervenors and SCE&G.  The net impact to small businesses will be only a 0.08% increase in electric rates. The agreement also provides for no other general SCE&G electric rate increase until January 1, 2015.

There were also legislative victories in the South Carolina Legislature:
 

• Successfully opposed a bill that would have unfairly increased the operating costs of bars and restaurants to pay for mandatory bottle and can recycling.
• Successfully supported a bill to level the playing field between a multinational corporation (Safelite) and locally-owned small auto glass installers.
• Successfully supported a bill to allow businesses to organize as Benefit Corporations if their mission is to create profit as well as invest in more social goals to promote a sustainable economy.
• Successfully supported a bill that will continue to lower the state income tax paid by small businesses that are S-Corps, LLC’s or sole proprietorships.  The rate on this small business pass through income now at 5% will be lowered by two-thirds of percent for the next three years until it reaches 3%. 

You’re Invited

South Carolina Small Business Chamber of Commerce

 ANNUAL POLICY SUMMIT

WHEN:  Monday, January 14 from 6 to 8 pm.

WHERE:  South Carolina Press Association

                 106 Outlet Pointe Boulevard, Columbia, SC
                
KEYNOTE:  State Senator Vincent Sheheen

TICKETS:  Free for all members (and a guest) who have paid dues in 2012.  Only $20 for non-dues paying members.

Join SCSBCC President Frank Knapp, Jr., the Board of Directors, BuySC Advisory Committee Members and Chamber Ambassadors for a fun social evening, networking and discussion of small business issues and the SCSBCC's advocacy efforts in 2012 and 2013. 

Enjoy gourmet food provided by the Spotted Salamander Catering and wine from the Hampton Street Vineyard.  Beer and non-alcoholic beverages will also be available.

RSVP to sheila@scsbc.org or 803-252-5733.  You must have a ticket to attend.  Space is limited so get your tickets now.

‘Crowdfunding’ Rules Are Unlikely to Meet Deadline

The New York Times
December 26, 2012

By ROBB MANDELBAUM

When the Jobs Act became law in April, supporters proclaimed a new era for small businesses seeking to raise money.

The “game changer,” as President Obama put it in the Rose Garden as he signed the bill, was a provision to let small companies “crowdfund” — that is, sell stock and other securities over the Internet directly to the public. “For the first time,” the president said, “ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

But it now seems that dawn will break late on this new age of democratic investing. The Securities and Exchange Commission appears certain to miss its end-of-year deadline for issuing regulations to put the provision into effect. And with the departure of the S.E.C. chairwoman, Mary L. Schapiro, and three of her top deputies — including two who manage the offices writing the regulations — some in the nascent equity crowdfunding industry worry that it could be 2014 before their line of business becomes legal.

The delay has frustrated many crowdfunding backers. The 270 days that Congress gave the S.E.C. to write the rules “is not a suggested timeline; it is a Congressional mandate,” said Kim Wales, an organizer at Crowdfund Intermediary Regulatory Advocates, a lobbying group formed in April to represent the new industry, in an e-mailed statement. “The S.E.C. answers to Congress, not the other way around.”

The crowdfunding provision, Title III of the Jumpstart Our Business Startups Act, creates an exception to the general rule that before a company can sell its stock to the public, it must register with the S.E.C., a process of disclosure requiring elaborate and expensive assistance from lawyers, accountants and investment bankers that most small companies cannot afford. Instead, businesses seeking less than $1 million will be able to raise capital online from small investors in a streamlined process.

But the law insists on strong investor protections, and as a result, the S.E.C. must iron out numerous issues concerning how crowdfunding companies, the intermediaries handling the transactions and even investors themselves can operate.

Small businesses, especially start-ups, are notoriously risky; in essence, the S.E.C. is writing rules that will govern a very dangerous game. “It’s actually a significant job to do the regulations in this area, so it was an unrealistic expectation that the S.E.C. would have it completed by now,” said Barbara Roper, director of investor protection for the Consumer Federation of America, which is lobbying the agency on other aspects of the Jobs Act. “I think they have 21 or 22 separate regulations to write.”

S.E.C. employees began accepting comments from and arranging meetings with interested members of the public about crowdfunding shortly after the Jobs Act became law. In those meetings, agency officials “have come in with our white papers fully highlighted, line by line, to discuss it,” said Alon Hillel-Tuch, co-founder and chief financial officer at RocketHub, a crowdfunding site that lets people and businesses raise money through donations or by offering rewards. (Current law allows sites to accept donations or deposits on a product.)

A spokeswoman for Senator Jeff Merkley, an Oregon Democrat who largely wrote the crowdfunding measure, said that the S.E.C. was grappling with the more stringent requirements courts had imposed for conducting cost-benefit analyses when writing regulations. This “has slowed down everything from Dodd-Frank to the Jobs Act,” the spokeswoman, Courtney Warner Crowell, said in an e-mail.

With data for analyzing equity crowdfunding in short supply, the S.E.C. asked RocketHub and Indiegogo, another donation-based crowdfunding service, to provide information about their operating practices and campaigns they had conducted. RocketHub complied, Mr. Hillel-Tuch said.
But Indiegogo did not, said Slava Rubin, the company’s chief executive, because it did not want to share trade secrets.

Mr. Hillel-Tuch said S.E.C. officials also requested help from Kickstarter, another leading crowdfunding site. Officials spoke with a Kickstarter executive in July, but neither the agency nor Kickstarter would comment on the meeting.

Under Title III, companies wishing to sell stock to the public will have to provide information to investors and the S.E.C., including financial disclosures that grow more extensive as the size of the offerings increases. They will be allowed to sell stock only through an intermediary: either a broker-dealer or a specialized crowdfunding Web site, or portal. The intermediaries will have to take steps to ensure that small investors are protected, even from themselves. The law limits how much a person can invest in crowdfunding in a year, depending on income and net worth.

Advocates for both investors and members of the crowdfunding industry have dissected nearly every element of the legislation. “I think there are probably 25 or 30 legitimately important issues,” said Douglas S. Ellenoff, a New York securities lawyer who is advising some in the industry. “But I think they’ve all been hashed out. They have heard issues from a variety of angles, and I think that the draft proposals are fairly advanced.”

High on the list of priorities for the portals is to make sure they face less scrutiny from regulators than broker-dealers do. “What we’re asking for is the funding portals are viewed as sort of a broker-dealer-lite sort of model, where the mandates for broker-dealers are not imposed on a funding portal,” said Ms. Wales, the crowdfunding lobbyist.

The crowdfunding interests are also warning regulators that some of the stringent investor protection measures could, if fully adopted, make crowdfunding prohibitively expensive. The law, for example, requires intermediaries to “make such efforts as the commission determines appropriate” to verify that investors have not exceeded their investment limits, across all intermediaries and stock issuers. But would-be intermediaries fear the prospect of having to confirm this independently, which could entail checking tax forms or creating a database of all investors.

The industry is likewise taking aim at a requirement that issuers raising more than $500,000 provide investors with audited financial statements. “If you’re a new business and you have to submit audited financials that you don’t have yet, it doesn’t make sense,” said Mr. Hillel-Tuch of RocketHub. The law gives the S.E.C. discretion to change this threshold, and Mr. Hillel-Tuch argued that no business seeking to crowdfund should be subject to it.

Calling the requirement unrealistic, Indiegogo’s Mr. Rubin said, “There’s no question that this is a massive deal breaker.” He urged regulators to tread lightly. “There’s a lot to do here, but why not let the industry figure it out?” he said. “Along the way there will be some ups and downs, but in the long run, like the Internet, we’ll have created an amazing industry.”

Investor protection advocates remain concerned about those downs. “The thing about crowdfunding is that it brings together unsophisticated issuers with unsophisticated investors,” said Ms. Roper of the Consumer Federation of America. “What could possibly go wrong?”

An S.E.C. spokeswoman declined to comment on the status of the rules. This month, Mr. Merkley and several other legislators wrote to Ms. Schapiro, who stepped down on Dec. 14, to urge the agency to propose rules putting the crowdfunding legislation into effect “in the most expeditious manner possible.”

Outside observers can only guess at what the commissioners — now two Democrats and two Republicans — will do next. But crowdfunding proponents say they remain optimistic, in part because they feel they have developed a good working relationship with their regulators at the S.E.C. “I believe that with the dialogue we have had with the staff, we will see proposed rules that facilitate a responsible emerging industry with a viable economic model,” said Mr. Ellenoff, the securities lawyer. “I’ve been involved in other programs where I don’t feel the same way.”

http://www.nytimes.com/2012/12/27/business/smallbusiness/why-the-sec-is-likely-to-miss-its-deadline-to-write-crowdfunding-rules.html?pagewanted=1&_r=1&partner=rss&emc=rss&adxnnlx=1356552015-turgiOx4dxz6a9T3MwDntA&

 

A present for small businesses

If you’re small business pays South Carolina Electric and Gas (SCE&G) for electricity, your holiday gift arrived yesterday. 

Back in June SCE&G had filed for a 6.6% average general electricity rate increase.  As I have done numerous times I intervened as an individual in the process to argue against increasing rates. 

You might remember the controversy I caused in revealing that included in the justification of the rate hike request was the cost of Zumba classes for SCE&G employees and expensive alcohol and dinners for SCANA board members.  To read this information and an explanation of how the regulatory process works, click here.

Now for your gift.

Yesterday the SC Public Service Commission approved a Memorandum of Understanding between SCE&G and most of the intervenors in the company’s rate case.  The net impact to small businesses will be only a 0.08% increase in electric rates.  The agreement also provides for no other general SCE&G electric rate increase until January 1, 2015. 

SCE&G will have a net revenue increase of $32 million or 1.38%.  The significant decrease from the original proposal was due to several factors.  The agreement moved-up an anticipated decrease in fuel costs, the company’s rate of return on equity was reduced from the requested 10.95% to 10.25%, and the Office of Regulatory Staff struck out $1.4 million in unallowable company expenses.

Residential, medium size businesses and large businesses will also benefit from the settlement.  The net rate increases for residential customers will be 1.8%, 0.63% for medium size businesses and 1.67% for large businesses.

This is very good news and I am very appreciative of the dedicated efforts of the Office of Regulatory Staff (ORS), which is responsible for making sure consumers and power companies are both treated fairly in the regulatory process.  ORS worked with all the intervenors to craft this very favorable agreement for small businesses and the other groups. 

Happy Holidays!

Harry, Fix the Senate

Action Alert!

Call NOW to push filibuster reform

Possibly as early as today U.S. Senate Majority Leader Harry Reid will make a decision that will determine if the Senate will remain a dysfunctional body that can’t address any of the nation’s problems for the next two years.

Senator Reid is putting together his filibuster rules reform package today to be presented to the Senate immediately.  If that package doesn’t contain at a minimum the requirement that all filibusters must be a “talking filibuster”, then the Senate will continue to be paralyzed from taking any meaningful actions.  More background on this issue is below.

Call Senator Reid’s office NOW.  202-224-3542 and press 1 to leave this message:

“Please include a “talking filibuster” requirement in Senator Reid’s rules reform package.”

This could be the most important call you will make for moving the nation forward.

 

Background

Current U.S. Senate rules require 60 votes out of 100 to end a filibuster and allow the Senate to proceed on an issue.  Filibusters in the Senate are at an all-time high: during the six years that Senator Harry Reid has been the Majority Leader, he has had to file cloture motions (to break a filibuster) 386 times. During the six years prior to his time as Majority Leader, cloture motions had to be filed 201 times. During the six years that Lyndon Johnson was Majority Leader, he had to file a cloture motion only once.

Filibustering is also occurring at steps of the legislative process that used to be noncontroversial. There has been a major increase in filibustering motions to proceed, which is filibustering against the beginning of debate. In the last six years there have been 130 filibusters used to block the beginning of debate -- more than a third of all such filibusters in the 20th century.

The following rule changes are under consideration:

The Talking Filibuster

The most significant reform currently under consideration is known as the "talking filibuster." It simply proposes that if a Senator or group of Senators want to block the majority from getting to a decision on a bill (or nomination or other business before the Senate) by insisting on their right to unlimited debate, then they need to be on the floor and debating. Under current rules, a Senator can literally phone in an objection. Simply notifying a party leader that the Senator would object to the Senate acting on a given bill is a filibuster, and that's enough stop further progress. To overcome that objection, the Senate has to invoke "cloture," the official process for ending a filibuster, which not only requires a supermajority of 60 Senators to agree to end debate, but also four days of procedural time.

The "talking filibuster" would say that if a majority of Senators want to end debate, but not 60, then the filibustering Senators would be required to hold the floor and debate continuously. If at any point no one is debating the bill that the minority is insisting requires more debate, then a majority of Senators (51 if all Senators are voting) can end debate and move toward final passage.

There are two goals here: One is to put the burden of obstructing the Senate on those who would obstruct. Requiring more time and energy in order to block the majority from passing legislation should move the Senate back toward the earlier more balanced situation where filibusters were a rarely-used procedural tool. In addition, this would bring transparency, debate, and deliberation to the process. If Senators want to object to bills coming to a vote, they should not be able to do it quietly, with the public unable to know who is objecting or why. They should stand on the floor, make their case, and let the public and other Senators judge their arguments.

 

No More Filibustering Simple Procedural Steps

Motions to Proceed

The current minority has brought filibustering to a whole new level, not just in terms of the number of bills and nominations filibustered, but also in filibustering procedural votes where the minority's right to make sure their voice is heard has little relevance. For example, a "motion to proceed" is the way the Senate decides to start debate on a new bill -- by deciding to "proceed to" the consideration of the bill. There have been an escalating number of filibusters against motions to proceed. If the filibuster is a tool for the minority to insist on further debate, it makes little sense that the question of whether to even start debate should be filibustered. This behavior does not encourage debate, it blocks it. So one proposal is to eliminate filibusters against motions to proceed.

 Motions to get to Conference Committee

Another example is sending a bill to conference committee. After the Senate has passed a bill, if the same bill is passed in a different form by the House of Representatives, a conference committee is appointed to reconcile the differences. In the Senate, three separate motions have to be adopted in order to set up a conference committee, each of which can be filibustered. This too makes no sense: a majority of the Senate has already agreed to pass the bill (which in recent years almost universally means 60 Senators have already voted to end a filibuster against the bill), so there's no justification for filibustering against the next routine step in the legislative process. So the second proposal in this category is to eliminate filibusters on motions to proceed.

 

Other Ideas

Expediting Confirmation of Nominations

The last four years have seen an unprecedented level of obstruction against nominees submitted by the President for Senate confirmation. Until recently, non-controversial nominees were relatively filibustered and were often confirmed by unanimous consent (without even a vote) after committees vetted them. Nominees are now routinely held up only to slow the progress in getting the President's choices confirmed -- in the past year there have been multiple judges who had 90 or more Senators vote for their confirmation after the cloture process was used. Since there were far more than 60 votes for the nominee, the filibuster is being used in these cases simply to slow down the process. The most likely proposal to address this problem (beyond the Talking Filibuster, which should make this kind of filibuster much more rare) is to eliminate the 30 hours of debate that are allowed after 60 Senators have voted to end a filibuster against a nominee. Since nominations aren't subject to amendment, there is no rationale for further debate. Furthermore, this would allow the Senate to vote on nominations back-to-back so that even if they need to use the cloture process on the first nomination, they could move on to rapidly confirm multiple nominees in a row.

Shifting the Burden

Under the current rules, the burden of ending the filibuster falls on the majority -- 60 senators must show up and vote for cloture in order to bring debate to a close. This is one reason filibustering is easier on Senators trying to obstruct than it is on Senators who are working to pass legislation. If the burden were changed so that 41 Senators had to show up and vote against cloture in order to keep a filibuster going, the burden would shift to those who seek obstruction.

 

Gun retail stores must demand change in law

As President Obama said last night in Newtown, Connecticut, "We must change."

There is no one thing we can do as a nation to prevent massacres like the one the other day and stop the daily loss of life across this country from gun fire. 

However that doesn't mean we don't make some reasonable changes that will make our children safer...and small business should be in the lead calling for this rational reform.

Every gun retail store follows the law and responsibly conducts background checks to prevent criminals, suspected terrorists and persons with documented mental problems from purchasing weapons. 

But while our brick and mortar stores take steps to protect the public, out of town gun dealers swoop into our local communities, rent some space, sell guns to anyone with cash without being required to do background checks and then leave.  This is dangerous.  This is unfair to our locally-owned small businesses.  This must change.

The business community in general and retail gun shops in particular should be leading the charge to make background checks a requirement in all weapon sales.  There is no excuse for this Jekyll and Hyde regulatory approach to keeping guns out of the hands of dangerous people. 

This change won't prevent all the senseless killing but there is no question than some lives will be saved.

We can make this change.  We must change.

  

GOP state leaders fumble by ceding control of health exchanges to federal officials, critics say

Washington Post

By N.C. Aizenman, Published: December 13

Republicans frequently denounce the health-care law as a dangerous overreach of federal power. But now Washington’s role is expanding, and some conservatives charge that Republicans have only themselves to blame.

The vast majority of Republican-led states, faced with a Friday deadline to submit plans for running the insurance exchanges at the heart of the law, have opted instead to relinquish much or all of their control to the federal government.

Just 18 states and the District say they plan to operate their own exchanges, which are slated to begin enrollment in October. In an additional 32 states, the exchanges will be run either entirely by the federal government or a federal-state partnership.

“If you believe in states’ rights and you believe in state control, why would you cede that control?” asked Robert Laszewski, a prominent insurance industry consultant.

A longtime critic of the health-care law, Laszewski argues that Republican state leaders have allowed their ideological and political differences with President Obama to override pragmatic considerations, to the detriment of their residents.

“There’s a lot of cut-off-your-nose-to-spite-your-face going on,” he said.

But several governors, including New Jersey Gov. Chris Christie (R), have complained bitterly that the administration has been slow to answer questions on critical issues including the cost of running the exchanges.

“I will not ask New Jerseyans to commit today to a State-based Exchange when the federal government cannot tell us what it will cost, how that cost compares to other options, and how much control they will give the states over this option,” Christie said in a statement last week after vetoing a bill passed by the Democratic-controlled state legislature that would have established an exchange.

Under the 2010 law, the online exchanges are supposed to function as a sort of Travel­ocity for health insurance — allowing shoppers to compare policies and buy affordable coverage. By 2016, an estimated 23 million Americans are expected to get their coverage through the exchanges, many with the help of federal subsidies.

With dozens of states deciding not to set up their own exchanges, at least for now, the federal government might need more resources to do the job itself. Administration officials said they don’t have any estimates on how many more employees or how much more money they might need.

But there’s no question that federal officials will wield substantially more power.

The states that run their own exchanges, for example, will decide whether to allow all health plans that meet the law’s minimum standards to be sold on the exchange or to limit the selection to a few that regulators think offer the best value.

In the federally run exchanges, federal officials will make that call.

Similarly, states that set up their own exchanges will determine what type of oversight body is needed and the extent to which insurers and consumers are represented.

Such decisions could be crucial to the fate of the exchanges: Regulate insurers too lightly and consumers could get stuck with skimpy coverage. Impose too many requirements on health plans and premiums could soar.

John McDonough, a professor of public health at Harvard University who was among the key Senate staffers who helped draft the law, said the widespread rejection of the exchange option by Republican state leaders was “an amazing irony” given that Senate Democrats specifically included it to placate them.

McDonough noted that the first version of the legislation, crafted by House Democrats — “who are generally less deferential to states” — would have directed the federal government to run the exchanges, allowing states to step in only by special request. But the Senate Democrats tweaked their draft, which became the template for the final version, to give states the lead role, even sparring with White House officials to keep it that way.

“Now it looks like the House Democrats may come close to achieving their vision because of Republican disinterest in implementing something that was done to please them in the first place,” McDonough said.

Douglas Holtz-Eakin, who was director of the Congressional Budget Office under President George W. Bush and a senior adviser to 2008 Republican presidential candidate John McCain, has repeatedly warned GOP officials that they will be “outfoxed and overrun” if they leave the exchanges to Obama administration officials.

He warned that the administration could impose too many regulations, ultimately ruining the exchanges and opening the door to a “Washington takeover of health care.” He added, “If conservatives allow it to happen, they will be consenting to an unprecedented and potentially irreversible intrusion into states’ economies and health-care systems.”

At a meeting with about 100 members of the GOP-controlled legislature in Kansas — a state whose Republican governor, Sam Brownback, rejected the state-run option last month — Laszewski urged lawmakers to consider forming a partnership with the federal government rather than opting for an exchange entirely run by federal officials.

The administration has set a deadline of Feb. 15 for states to determine if they want to form such a partnership, which could entail states handling consumer outreach or monitoring the industry’s compliance with regulations.

Many conservatives say the health-care law is so objectionable that Republicans should not do anything to help implement it. The libertarian Cato Institute’s Michael Cannon has been crisscrossing the country urging state leaders to steer clear of the exchanges. He said that the law grants states so little flexibility as to be meaningless.

Such arguments have resonated with Republican leaders in Oklahoma. The state’s attorney general, Scott Pruitt, has filed a lawsuit in U.S. District Court challenging the law.

Last month, Oklahoma Gov. Mary Fallin announced her intention to forgo operating an exchange because “any exchange that is [health-care-law] compliant will necessarily be ‘state-run’ in name only and would require Oklahoma resources, staff and tax dollars to implement.”

Still, a handful of state GOP leaders have come around to Holtz-Eakin’s argument that setting up a state-based exchange is better than handing over control to the federal government. Idaho Gov. C.L. “Butch” Otter, after much public agonizing, announced his support for a state-run exchange this week.

“Our options have come down to this: Do nothing and be at the federal government’s mercy in how that exchange is designed and run, or take a seat at the table and play the cards we’ve been dealt,” he said.
“I cannot willingly surrender a role for Idaho in determining the impact on our own citizens and businesses.”

http://www.washingtonpost.com/national/health-science/critics-blast-gop-state-lawmakers-for-giving-control-of-insurance-exchanges-to-federal-officials/2012/12/13/a638a4f8-452d-11e2-8061-253bccfc7532_story.html?wpisrc=nl_headlines

The Medicaid expansion debate heats up

The advocates of expanding Medicaid in South Carolina were out in force last night at the USC School of Law auditorium.  Hundreds of people turned out to hear presentations by three supporters of the expansion and one opponent, Tony Keck the Director of the SC Department of Health and Human Services.

In his remarks, Mr. Keck chastised the first speaker for barely mentioning health while focusing on the economic reasons for providing Medicaid to South Carolinians up to 138% of the federal poverty level.  His position and that of his boss, Governor Nikki Haley, is that spending money to expand Medicaid to hundreds of thousands of uninsured low income citizens is not the best way to improve their health. 

One of the two slides Mr. Keck showed was the underpinning of this argument.  The slide of a map showed federal data on health outcomes for Medicaid recipients in the state.  Those with Medicaid in the I-95 corridor of shame had far more health problems than Medicaid recipients outside of that area.  This demonstrated, according to Mr. Keck, that government health insurance was not a good determinant of health outcomes.  Better education, jobs and personal decisions along with genetics were more important to better health than simply having health insurance.

When I was recognized to speak, I pointed out that the map he was of present Medicaid recipients but that these were not the people we were actually talking about.  I wanted to see a map of the uninsured South Carolinians who would be eligible for Medicaid under the expansion and how their health outcomes compared with today’s Medicaid recipients.  I predicted that we’d see a big difference between the two groups with those with Medicaid having better health.

Mr. Keck responded with more of the same concerns that expanding Medicaid was not going to be successful in improving health.  But I was able to get in one last question.  Did he think that there would be a different health outcome for a person at 50 percent of the federal poverty level with a child who has Medicaid under our law compared to a person at 60% of the federal poverty level who does not have Medicaid today. 

Mr. Keck responded that of course the person would be better off with Medicaid than without it.  “But at what cost?" he added.

Cost?  Wasn’t this debate supposed to be about health?  When the proponents cite the economic benefits, they get criticized.  But when the opponents of expansion agree that having Medicaid will yield to better health outcomes than not having it, then they evoke “COST”. 

This is going to be an interesting legislative session.

Expand Medicaid

The fight has begun on whether South Carolina should expand its Medicaid program as allowed under Obamacare.  Last week a report produced by the University of South Carolina Moore School of Business found that from 2014 to 2020 the state would experience a $9 million net increase in revenue if it expands Medicaid for citizens up to 138% of the federal poverty level.   The increase in revenue comes from new workers generated by the expansion paying more income tax than the cost of implementation of the program.

Find out more about this important issue at a community forum being held in Columbia tomorrow evening.  Judi Gatson of WIS-TV will moderate a panel to discuss the issue.

When:  Tuesday, December 11, 2012

Time:    6:00 p.m.

Where:  University of South Carolina School of Law Auditorium
              701 Main Street, Columbia
              (between Green and College Streets)

Who:    Representative Joe Neal
             Tony Keck, Director, SC Department of Health and Human Services
             Rozalynn Goodwin, SC Hospital Association
             Robert Greenwald, Professor, Harvard Law School

Push multinational corporate tax dodgers over the fiscal cliff

The Wall Street Journal
December 5, 2012

By Carl Levin

America stands at the edge of a fiscal cliff with drastic budget cuts and painful tax increases on the middle class unless we can agree on a comprehensive, balanced deficit-reduction plan.
This challenge lends new urgency to cutting loopholes and gimmicks to avoid paying taxes.

Tax loopholes are one significant cause of the budget deficit, and they add to the tax burden ordinary Americans bear.

The Senate Permanent Subcommittee on Investigations, which I lead, this year exposed how multinational corporations have taken advantage of loopholes in tax law and weaknesses in enforcement to shift their profits overseas to avoid paying taxes.

The first step in shifting profits offshore is when a U.S. company sells or licenses a valuable asset, such as software developed in the United States, to a subsidiary in a low-tax jurisdiction for a price below fair market value.

Profits from the software's sale are shifted to that tax haven.

We showed how Microsoft used this process, called "transfer pricing," to shift $8 billion in income from products developed in the United States to subsidiaries based in Singapore and Ireland to dodge taxes.

We also showed how, through complex transactions, Microsoft was able to use a subsidiary in Puerto Rico to shift nearly half the profits from Microsoft products sold in the United States to Puerto Rico, avoiding a stunning $4 million a day in U.S. taxes.

The second step involves games played with profits shifted from one offshore entity to another.

Under our tax law, companies with income offshore normally don't have to pay U.S. taxes until they bring that money home to the United States.

If the income consists of royalties, licensing fees or other funds that don't require the active involvement of the business, that "passive" income is supposed to be taxed, even when it's offshore.

Our hearing showed how some companies use an IRS regulation, which changed a provision in the tax code, to dodge those taxes.

Literally, they're able to check a box on an IRS form and make offshore subsidiaries, and their taxable income, invisible for tax purposes.

From 2009 to 2011, Apple has been able to defer taxes on more than $35.4 billion using this loophole.

Google has deferred more than $24.2 billion in the same period.

For Microsoft, the number is $21 billion.

Yet many multinationals have at the same time launched a massive lobbying effort, promising to bring billions of offshore dollars back to the United States if they get a "repatriation tax holiday," a large tax break for returning offshore funds to the United States.

These companies assert they intend to indefinitely or permanently invest this money offshore while planning to bring it home as soon as Congress grants them a tax holiday.

That's not any definition of "permanent" that I understand.

We simply can't afford these corporations' offshore tax dodges.

Carl Levin is the senior U.S. senator from Michigan and chairman of the Senate Armed Services Committee. Write him at Russell Senate Office Building Room SR-269, Washington, D.C. 20510; call him at (202) 224-6221; or e-mail him at http://levin.senate.gov/contact/.

 

Take Two Minutes to Speak up for Small Businesses Today

American Sustainable Business Council supporters – 

The fiscal showdown over the Bush-era tax cuts continues in Congress… and defenders of extra cuts for the top-tiers of incomes continue using lip service to small business as their leading excuse for opposing the tax cuts for the middle class.

That’s not right. And, if the middle class tax cuts aren’t renewed, that will be bad for the economy – and especially bad for smaller businesses that rely on middle-class spending. 

Will you take a minute or two to post on social media your support for small business in this fight?

It’s time to put a stop to this small business identity theft. It’s time for small business owners to speak for themselves. And it’s time for Congress to listen to Main Street and do what’s right for small businesses: end the extra Bush tax cuts for the top-end of incomes while extending lower rates for 98 percent of families and 97 percent of small businesses.

On July 25, the U.S. Senate passed the Middle Class Tax Cut Act (S. 3412) to do just that.  Now the House of Representatives, led by Speaker John Boehner, needs to act.

On Wednesday, small business owners across the country will join in a national day of online action on Facebook and Twitter, calling on the House to get the job done and using the hashtags #my2k, #smallbiz, and #asbcouncil. Can you join us?

 Here are some sample tweets you can use:

              More than 600 business leaders call for end of Bush tax cuts for the highest incomes 

              #asbcouncil urlm.in/puhi

              Majority small biz owners support ending tax cuts on highest incomes #asbcouncil urlm.in/puhj

              Small business needs customers, not tax cuts. 

              Small business needs investment on Main Street, not tax cuts for Wall Street

Thanks for your support!
American Sustainable Business Council

Home Builders and Agents behind Coverage Alert System

Workcompcentral.com
By Michael Whiteley, Eastern Bureau Chief

The Home Builders Association of South Carolina and a Columbia, S.C.,
insurance agency that specializes in the construction industry are jointly
funding a new system that alerts users when a workers' compensation policy
has lapsed prior to its scheduled expiration date.

The system was first proposed six years ago by Frank B. Norris Co., a
Columbia, S.C.-based insurance agency and picked up the support of the home
builders' group last year. It launched Nov. 15 on the website of the South
Carolina Workers' Compensation Commission.

The system lets users know of mid-term lapses in coverage − usually a day
after a policy is canceled. South Carolina Gov. Nikki Haley approved the
system this summer for a trial run.

Gary Cannon, the commission's executive director, said on Monday the system
is geared toward general contractors who risk liability when a
subcontractor's employee gets hurt on the job.

A provision of South Carolina workers' compensation law, known as the
"up-the-ladder" law, makes general contractors responsible when workers are
hurt on a job site and their employers are uninsured.

Cannon said the state's general contractors have been left holding the bag
by subcontractors who present certificates of insurance to obtain work and
then fail to make premium payments on those policies.

"We don't have numbers, but there is anecdotal evidence that this is going
on," Cannon said.

Julian Barton, director of government affairs for the Home Builders
Association, said a lawsuit filed by an uninsured subcontractor who fell
from a scaffold several years ago helped fuel the push for the system.

The Home Builders and construction companies whose business is handled by
Norris and Co. agreed to pay the estimated $10,000 in start-up costs.

"Just because someone tells you they have insurance and present a
certificate today doesn't mean they have insurance tomorrow or down the
road," Barton said.

"It took over a year to actually get it up and running, and we don't know
how effective it's going to be," Barton said. "But, if it catches five
people who are working without insurance, then that's five subcontractors
that won't be having injuries that a general contractor is going to have to
pay off on."

Frank Norris, owner of the insurance agency, said he came up with the idea
six years ago while viewing a presentation on the commission's
proof-of-coverage database, which allows users to check online for
employers' coverage.

"Some of our clients had people working pretty much full time just verifying
that subcontractors' compensation coverage was still in force," Norris said.
"And we've seen plenty of cases in which a subcontractor's employee gets
hurt and the general contractor ends up paying. The only people who will get
hurt by this are those who are trying to hurt the system."

Users, who can sign up for the system free-of-charge, can query a company by
name or insurance certificate number. They then supply an email address and
request an email alert – by company name – for any mid-term lapse in
coverage.

Norris said cancellation information is uploaded daily to the commission's
database by the National Council on Compensation Insurance. The system scans
the data, checks for matches with the database of users and sends out the
alerts.

Norris says the system does not send out alerts on policies that have
reached their expiration dates.

"Our clients can monitor those policies for expiration dates and then go
online to verify that coverage is still in force," Norris said.

The system advises users that the South Carolina Code of Laws 42-1-400 and
42-1-410 make general contractors liable for worker injury costs incurred by
subcontractors.

G. Frank Sheppard, president of the Independent Insurance Agents & Brokers
of South Carolina, said he's not aware of any similar alert system in use
around the nation. He said he is encouraging member agents to begin using
the system.

"Like any other state, we've had problems with certificates of insurance and
policy lapses," Sheppard said. "It's better than a paper system."

The new system also has the support of the South Carolina Small Business
Chamber of Commerce. Frank Knapp, president of the chamber, said the only
businesses negatively impacted by the system will be those that aren't
playing by the rules.

"It's really unfair when a subcontractor abuses the workers' compensation
system. That has a negative impact on all contractors because of the way the
South Carolina law is written," Knapp said.

Although the system is intended to check on subcontractors, it allows anyone
to sign up for the email alerts and request lapses in coverage by any South
Carolina employer.

Don't tie the hands of Consumer Product Safety Commission

The Hill’s Congress Blog 

By Frank Knapp, Jr.

We have heard an ongoing cry from organizations claiming to represent all businesses that they oppose any government action on toxic chemicals in our products, warning of increased costs and job losses. Now, a new independent poll shows that when it comes to protecting workers and consumers from negative effects of toxic chemicals, small-business owners agree with voters in that both want to be protected by stricter regulations.

A national poll released in July also showed that voters are seriously concerned and want action taken regarding the threat posed to people’s health from exposure to chemicals they come in contact with regularly.

This national poll of more than 500 small-business owners was conducted by Lake Research Partners and Public Opinion Strategies. The poll was commissioned by the American Sustainable Business Council, a national coalition of business organizations, which together represent over 150,000 small and medium businesses sharing the goal of a sustainable economy.

Some big-business organizations have dominated the public debate about government regulations, often citing their concern for the impact of regulation on small businesses. Convincing the public that all regulations are evil and a threat to small-business growth, organizations such as the U.S. Chamber of Commerce have made anti-regulation legislation in Congress a priority.

But the reality is that small-business owners are not of the same mind as CEOs of multinational corporations. While the latter are consumed with maximizing profits to satisfy Wall Street, small-business owners are focused on growing healthy Main Streets.

Small-business owners have always had a strong sense of community; they are not just a major part of local economies. They are your neighbors whose children go to local schools. Their families worship in local houses of faith and attend community plays and sporting events. They have the same interests, concerns and desires as the workers they employ and the customers they serve.

The small-business owners’ poll found that:

- 75 percent support stricter regulations of chemicals used in everyday products.
--87 percent support government regulations of chemicals used in growing food.

- 73 percent support government regulations to ensure the products companies buy and sell are non-toxic.


- 91 percent support chemical manufacturers being held responsible for ensuring their chemicals are safe.


- 76 percent support tax incentive for companies that innovate to provide safer chemicals.


- 92 percent support regulations to protect air and water from pollution by toxic chemicals.


- 78 percent support government regulations to reduce air pollutants linked to environmental and health problems.

In this poll, small-business owners strongly believe regulations should require the transparency needed to ensure safer products. Eighty-two percent believe that businesses should be required to share chemical ingredient information all along the manufacturing supply chain -- from chemical production to final consumer product. Creating a public, easily accessible database identifying chemicals of concern to human and environmental health is supported by 92 percent of small-business owners.

Small-business owners understand that the way to achieve greater protection from toxic chemicals is to reform the federal law dealing with chemical regulations. The Toxic Substances Control Act (TSCA) was passed more than 36 years ago and has never been updated to deal with the new world of chemical threats.

Congressional legislation to reform TSCA would require chemical manufacturers to show that their chemicals are safe in order to sell them. Chemicals that may harm the public health could be limited and companies would be able to receive government support for research and development for innovation in producing safer chemicals. Seventy-three percent of small-business owners support this TSCA reform.

As we head into a new congressional session, elected leaders need to take a break from misguided efforts to stall or kill all regulations through legislation such as Senate Bill 3468, which would curtail the Consumer Product Safety Commission from protecting children from toxic chemicals. Instead, Congress should listen to the real opinions of small-business owners and voters. Stronger regulation of chemicals to protect our health and safety, and spur companies to create safer chemicals is a goal shared by all Americans.

Knapp is the vice chairman of the American Sustainable Business Council Action Fund and president/CEO of the South Carolina Small Business Chamber of Commerce.

Source: http://thehill.com/blogs/congress-blog/economy-a-budget/270289-dont-tie-the-hands-of-consumer-product-safety-commission

Caution on use of “free” credit reporting services

By Emerson Smith

South Carolina businesses have been advised by Governor Haley’s office to register for a free credit monitoring service with Dun & Bradstreet (D&B) http://www.dandb.com/sc/ or Experian http://www.smartbusinessreports.com/SouthCarolina . 

D&B has responded to some businesses with emails saying that the business’ credit profile is incomplete and that the business owner should call a D&B Credit Advisor immediately.  The Credit Advisor is telling some businesses that the business needs to have at least four companies with which the business has credit to make the business’ credit profile more complete.  The cost to the business is $948. To further improve the business’ credit profile, the business can add eight credit-providing companies for $1248.

It is not required that South Carolina businesses pay D&B anything for credit monitoring. 

Obviously, D&B is pleased to have South Carolina businesses call them and give them information about the businesses. D&B can then market to these businesses for the many services, such as credit reports that D&B offers for a fee, for many years. 

What D&B offers free is only “credit monitoring” for one year. D&B does not provide a credit report for free.

However, Experian does offer a free credit report as well as free credit monitoring. Businesses can go online at any time after registering with Experian and check the business’ credit report for a period of one year

Was “asinine” too strong?

When told by a reporter Tuesday about the SC Department of Employment and Workforce (DEW) making an error that will cost businesses about $9 million next year, I called it an “asinine mistake” (see story below).

I guess I could have been an apologist for the Haley administration like the president of the SC Manufacturing Association who didn’t criticize DEW but praised the agency for discovering its costly error.

Or I could have just shrugged my shoulders about yet another screw up within another Haley cabinet agency as did the state director of the National Federation of Independent Business who thinks small businesses won’t be affected so no harm no foul.

No, I think the word fits.

------------------------------------

The Greenville News

November 28, 2012

DEW mistake spurs debate about governor's cabinet operations

Tim Smith

Capital Bureau

COLUMBIA — Barbara League, the chief executive officer of G.F. League Manufacturing in Greenville, says she isn't surprised to hear that a programming error at a state agency failed to pick up almost $9 million in unemployment charges that must now be billed or used in calculating taxes for nearly 12,000 businesses in the state.

“We've been in business for 95 years and we are so used to those little surprises,” she told GreenvilleOnline.com.

But others are not so open-minded about the mistake caught in an audit this year by the state Department of Employment and Workforce.

“How could you make such an asinine mistake?” asked Frank Knapp, president and chief executive officer of the South Carolina Small Business Chamber of Commerce.

The mistake is also raising questions about the operations of agencies in Gov. Nikki Haley’s cabinet, coming soon after other high-profile lapses that are costing taxpayers money. A spokesman for the governor rejected criticism.

Sen. Kevin Bryant, an Anderson Republican who chairs a Senate subcommittee that deals with issues involving Employment and Workforce, said he was upset that so many businesses would be affected by the error.

“I'm just shocked that we still have this kind of irresponsibility over there that they can't read a calendar,” he said, referring to the programming error.

However, Lewis Gossett, president of the South Carolina Manufacturers Alliance, praised the agency for finding the mistake and bringing it to the surface.

“This is exactly what this agency should be doing,” he said. “I'm giving them credit for catching it.”

The mistake is just the latest headache this year for agencies in the governor’s cabinet.

In April, Department of Health and Human Services officials disclosed allegations that an employee had taken personal data belonging to more than 220,000 Medicaid recipients, while last month, Haley disclosed a foreign hacker had breached the Department of Revenue, potentially taking 3.8 million Social Security numbers, 3.3 million bank account numbers and information belonging to nearly 700,000 businesses.

“What is going on in this administration?” Knapp asked.

Sen. Thomas Alexander, a Walhalla Republican and the likely incoming chairman of the Senate Labor, Commerce and Industry Committee, said lawmakers should be looking at the events collectively, not just as isolated problems.

“To me, it's not acceptable that we are continuing to have these events occur,” Alexander said. “We'll need to address it in some regard. I think it is a bigger picture that we are going to somehow take a look at.”

Rep. Kenny Bingham, the House majority leader who pushed reform legislation when the agency was called the Employment Security Commission, said the events are a reminder that agency directors have to focus on their organizations just as business leaders do.

“It certainly shows there has to be attention paid to the running of these agencies,” he said.

State Democratic Party Chairman Dick Harpootlian said the problems are not unfortunate events.

“They are a lack of diligence and scrutiny and work,” he said.

But Rob Godfrey, a spokesman for Haley, said despite some problems, the cabinet agencies are producing results for taxpayers.

“State agencies aren’t exempt from problems from time to time,” he said, “and that’s why we put strong, business-friendly leaders in place at state agencies who continue to show results for the people of our state – results like more than 29,000 jobs announced and record-breaking investment in South Carolina, more than 12,000 welfare-to-work success stories, transforming DJJ into an agency that trains young people for jobs and erasing deficits at Corrections, Social Services, and Health and Human Services.”

The employment agency error was caused by a programming change in the agency in 2008, officials said, when heavy unemployment claims prompted the agency to begin allowing claims to be filed on weekends. However, the programming for businesses' statements did not match and in three quarters — when the quarter ended on weekends — the agency only counted claims filed Monday through Friday, leaving out about $8.6 million in charges, said Adrienne Fairwell, the agency’s spokeswoman.

An audit during the third quarter of this year caught the error, which could have ramifications for businesses still reeling from the Great Recession.

League said she thinks the programming error is an example of the impact government can have on business.

Other business leaders believe the error will not have a large negative impact.

Ben Homeyer, state director for the National Federation of Independent Business, said he doesn't believe most small businesses in the state will see much change in their taxes next year as a result of it because they are typically in the lowest of the state's 20 unemployment tax tiers.

“We should probably not be affected,” he said. “It's going to be your Tier 20 guys who are truly going to be affected by this issue.”

The agency said about 12 percent of the state's 98,000 businesses, non-profits or government agencies liable for unemployment taxes will be sent revised statements because of the error. However, only 399 of those — non-profits or agencies — will be asked soon to pay additional charges, which total $542,249.

Those organizations will have time to pay the additional bill, agency officials said.

The other types of businesses, known as “contributory” companies that make up the majority of companies in the state, could have their tax bills for next year affected, according to an agency fact sheet.

“While it is true that contributory businesses will not receive a bill for these undercharged benefits, each of these charges is counted in the calculation of that business’ upcoming tax rate," the fact sheet states.

Businesses in the state pay unemployment taxes based on their experience with claims, among other factors, and those with more employees filing for unemployment are placed in a higher taxing tier.

Bingham, who said he knows no details of the error and has not been briefed, said it appears to be a basic mistake in accounting, not catching an imbalance between costs and revenue. He said he is bothered it took the agency so long to catch the mistake.

“It's troubling when we have these issues come up time and time again, especially with an agency that we completely overhauled and the microscope is on it and it should be running like a Swiss clock,” he said.

Businesses in the state will get their bills for next year in January, Fairwell said, instead of December as they have in recent years because it is taking additional time to revise the bills because of the discovered claims.

The agency says it will improve its audit process to try to catch such errors more quickly.

That's fine for Gossett, who pushed for reforming the agency in 2008 and believes it will take some time for it to operate as effectively as it can.

“They are doing the kinds of things we in the business community expect them to do,” he said. “And right now, I don't feel the need to jump on them for that. This is exactly what we hoped they would do. Not this example, but go find this stuff and starting making that place an effective state agency as opposed to what it was.”

http://www.greenvilleonline.com/apps/pbcs.dll/article?AID=2012311280032