Small business consistently best at producing new jobs and paying fair share of taxes

The new September ADP National Employment Report is out today saying that 162,000 new private-sector jobs were created in the U.S. last month.  And once again small businesses with less than 50 workers created the most new jobs—81,000. 

Since the beginning of this year new jobs from small businesses have accounted for around 50% of all new employment.  The high was 56% in January and the low being 44.8% in July.  The average for the year is 49.95%.  So the 50% new jobs figure for small business in September was right on the mark.

On another issue, small businesses are making their voices heard on the issue of big corporations and the wealthy using offshore tax havens to avoid paying U.S. taxes.  This means that the rest of us, including every real small business in this country, are subsidizing the government services (courts, defense, infrastructure, first responders, etc.) that the multinational corporations and the millionaire/billionaire crowd are using but don’t want to pay for. 

These “moochers” also are depriving the federal government of resources we need to invest in growing our economy as discussed in the story below.

CNN Money
October 3, 2012

Big firms that avoid taxes are moochers, small companies say

By Jose Pagliery@CNNMoney

NEW YORK (CNNMoney) -- When big companies offshore profits to dodge taxes, small business owners say they are left footing the bill -- and they're not happy about it.

A U.S. Senate panel recently reviewed how Microsoft and Hewlett-Packard shaved billions off their taxes in recent years by moving profits offshore.

Microsoft (MSFT, Fortune 500) avoided paying nearly $7 billion by transferring almost half of its U.S. revenue to a subsidiary in Puerto Rico and moving patents to foreign subsidiaries.

Hewlett-Packard (HPQ, Fortune 500) also dodged taxes -- although the report didn't indicate how much -- by creating subsidiaries abroad and making loans to itself.

Small business owners say they can't offshore profits and take advantage of these opportunities. The strategies require a worldwide presence and are either too complex or too costly.

But those business owners say that's not the only issue. They're bothered by the effect of depleting the government's revenue stream, which creates pressure to cut government spending that the nation's 27 million businesses rely on.

"This tax money goes to support the infrastructure that allows our businesses to be successful," said Joseph Rotella, owner of Spencer Organ, an instrument repair company in Waltham, Massachusetts.

In 2010, Spencer Organ paid $47,000 in taxes while Microsoft gave $4.4 billion. Still, they paid nearly the same effective federal tax rate of 25%.

"These big companies avoid paying their fair share," Rotella said, noting that highly profitable firms rarely pay the actual top federal rate of 35%.

U.S. powerhouses are defending their offshoring of profits by claiming the U.S. corporate tax rate is too high. Currently, a corporation is taxed abroad at the foreign country's rate, and if the United States tax rate is higher, profits heading back to the United States are taxed the difference.

To hotel owner Sue Edgington, whose Adventure Inn is located deep in the woods of northeast Minnesota, the issue of paying taxes is one of patriotism. Like most small business owners, she's fiscally conservative and doesn't gladly fork over more in taxes. However, she said that when companies avoiding paying them, it threatens funding to public colleges like the one she attended -- and protection of wildlife like the kind that draws tourists her way.

"It angers me," she said. "It's morally wrong. That money is being pulled out of our economy. There's a moral obligation to keep it here, because they live in this country and have been able to take advantage of that."

Her frustration could be directed at several of the nation's top companies. Recent financial data reviewed by the Senate panel showed how tech companies Apple (AAPL, Fortune 500), Cisco (CSCO, Fortune 500) and Dell (DELL, Fortune 500), as well as others like American staples Johnson & Johnson (JNJ, Fortune 500), Coca-Cola (CCE, Fortune 500) and Wal-Mart (WMT, Fortune 500) all keep anywhere from 67% to 100% of their cash as "foreign cash."

One small business group, the American Sustainable Business Council, is pushing for the passage of the Stop Tax Haven Abuse Act. The bill seeks to restrict the corporate use of havens like Bermuda and the Cayman Islands. The legislation has a long road ahead, though, as it has died in Congress several times in recent years.

Scott Klinger, tax policy director for the group's partner, Business for Shared Prosperity, said the bill would help the United States raise $1 trillion over a decade.

"When multinationals use accounting acrobatics, they not only shift the tax burden to small businesses. They also create pressure to cut spending on community development and education spending. If those workers lose their jobs to budget cuts, then Main Street loses its customers," Klinger said.

http://money.cnn.com/2012/10/03/smallbusiness/tax-avoidance/

 

 

Small business leaders spotlight high cost of corporate tax dodging

New U.S. PIRG Report Highlights Negative Impact of Tax Haven Abuse
 on Small Businesses, Ordinary Taxpayers

 Washington, DC – Today, Representative Chris Van Hollen, Business for Shared Prosperity (BSP), the American Sustainable Business Council (ASBC) and the Main Street Alliance (MSA) joined U.S. PIRG in unveiling its new report, “Picking Up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens.”

“U.S. multinational corporations should not be rewarded for hurting our Main Street economy by shielding money in tax haven countries, moving jobs offshore and using tricky accounting maneuvers to avoid paying taxes,” said Joseph Rotella, owner of Spencer Organ Company in Waltham, Mass. and a member of Business for Shared Prosperity. “Taxes are not just numbers in spreadsheets. They provide the revenues that pay for public safety, public schools, public transportation and other infrastructure and services that businesses and customers rely on. We need to stop the tax haven abuse that lets big corporations avoid paying their fair share and gives them an unfair advantage in the marketplace.”

The U.S. PIRG report illustrates the high cost of corporate tax avoidance by using data from the Census Bureau and U.S. Senate to calculate the amount small businesses would need to pay if they were to compensate for the annual $60 billion in tax revenue lost because of corporate tax dodging through offshore tax havens. According to the report, small businesses with fewer than 100 employees would have to pay on average an additional $2,116 in taxes to make up for the large shortfall in revenues.

A recent national, independent survey also revealed that 91 percent of small business owners agreed that U.S. multinational corporations’ use of accounting loopholes to avoid taxes by shifting profits offshore is a problem. Moreover, three out of four owners said loopholes allowing big corporations to avoid taxes harmed their small business.

“America’s corporate profits as a share of our nation’s economy are at a 50-year high, yet at the same time corporate taxes as a share of our economy are at a 50-year low,” said Scott Klinger, director of tax policy for BSP and ASBC. “Big business tax avoidance has increased the pressure for deep budget cutbacks, draining our nation of the strategic investments needed to rebuild our crumbling infrastructure and support the education, research and development underpinning economic success.”

BSP, ASBC and MSA have sponsored a petition calling for strong legislation to stop tax haven abuse, signed by more than 1,100 business owners and leaders to date. Specifically, the organizations have endorsed the Stop Tax Haven Abuse Act and the CUT Loopholes Act, legislation sponsored by Senator Carl Levin to rein in tax haven abuse and recover lost revenues.

Read the U.S. PIRG report here: http://uspirg.org/reports/usp/picking-tab

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Business for Shared Prosperity is a network of forward thinking business owners, executives and investors. BSP has organized petitions for positive tax reform and for ending tax haven abuse and produced related reports. BSP is a member of the American Sustainable Business Council. www.businessforsharedprosperity.org

The American Sustainable Business Council is a growing coalition of business networks representing over 100,000 companies and 200,000 business leaders. ASBC advocates for public policies that meet the realities of the 21st century global economy. www.asbcouncil.org

Riots vs. Jobs

There are riots in Greece.  The economies of Britain, Italy and Spain are not bouncing back from the Great Recession like they did after the Great Depression. Why?  Because the governments in these countries opted for austerity and deficit reduction instead of investing in jobs as a way out of the recession.

Which brings us to President Obama’s proposed 2013 budget released yesterday. 

As you might recall, I serve as Vice Chair of the American Sustainable Business Council.  That organization and Business for Shared Prosperity put out a press release yesterday to discuss some of the President’s budget items.  The release (below) was picked up by some of the national media (here and here).

Happy Valentine’s Day!

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February 13, 2012

Small Business Owners Support President’s Budget on Taxes, Infrastructure

Majorities favor higher taxes on wealthy, closing corporate loopholes, investing in infrastructure

Washington, DC – Small business owners favor key provisions of the President’s 2013 budget designed to support domestic job creation, modernize infrastructure and raise needed revenue with fairer taxes. These include increasing taxes on the wealthy, eliminating hedge fund manager tax breaks, ending tax deductions for shipping jobs overseas, closing corporate loopholes, investing in infrastructure, and keeping first responders and teachers on the job.

"Small business owners struggled through a recession we didn't cause yet we still lead the economy in job creation. So it's good to see the President propose steps that small business owners know will really jumpstart the economy – investing in infrastructure to create blue-collar jobs, keeping valuable service providers on the job, bringing manufacturing jobs back home and covering the cost by asking the wealthiest and big corporations to pay their fair share in taxes,” said Frank Knapp, President and CEO of the South Carolina Small Business Chamber of Commerce and Vice Chair of the American Sustainable Business Council. “Austerity plans, like those that are causing riots in Europe, are wrong for America. We need investment in job growth. We are the 'job creators' – listen to us."

Small business owners made their views clear on taxes and investment in a recent nationwide survey in which 50 percent of respondents identified as Republican or independent-leaning Republican; 32 percent as Democrat or independent-leaning Democratic; and 15 percent as independent. Majorities in the scientific poll commissioned by the American Sustainable Business Council, Main Street Alliance and Small Business Majority, said the following:

Taxes

·   57 percent said individuals earning more than $1 million a year should pay a higher tax rate on the income over $1 million.

·   81 percent favor hedge fund managers paying taxes at the ordinary income tax rate, which currently tops out at 35 percent, rather than the 15 percent capital gains rate they pay now.

·   91 percent said that U.S. multinational corporations’ use of accounting loopholes to shift their U.S. profits to their offshore subsidiaries to avoid taxes is a problem.

·   When asked what would do the most to create jobs, small business owners chose eliminating incentives to move jobs overseas.

·   51 percent say tax cuts on taxable household income over $250,000 a year should expire (only 40 percent believe they should be extended).

Infrastructure and other Investment

·   69 percent of small business owners support committing $50 billion to new and existing infrastructure projects that would generate jobs—such as making improvements to road, bridge and water systems.

·   59 percent favor creating a nationwide wireless network and improving the accessibility of high-speed wireless services.

·   59 percent support creating a National Infrastructure Bank to help fund infrastructure, like roads, bridges, and water systems, via private and public capital.

·   53 percent favor spending $35 billion to prevent layoffs of police officers, teachers, and firefighters.

Read the poll reports here:

Small Business Owners’ Views on Taxes and How to Level the Playing Field with Big Business

Small Business Owner Opinions on Access to Credit and Proposals to Boost the Economy

“The American Sustainable Business Council supports the sensible tax and investment provisions in the President’s budget,” said David Levine, CEO of the American Sustainable Business Council. “The smart use of public funds for job creation, education, infrastructure and scientific research is crucial to restoring American leadership in world-class innovation, services and manufacturing.”

“As a successful corporate executive, I recognize that our tax code is unfair and replete with tax shelters and loopholes favoring the wealthy,” said Jack Kintslinger, chairman emeritus of KCI Technologies, Inc. and a member of Business for Shared Prosperity. “Most wealthy business executives I know are prepared to contribute more in taxes if the additional revenues are spent wisely. They know that they can spare paying higher taxes and that the nation desperately needs more revenue for essential services.”

“The combination of a hurting middle class, crumbling infrastructure and irresponsibly low taxes on the biggest corporations and richest Americans is no recipe for innovation, employment and national success,” said Jody Gorran, owner of Aquatherm Industries Inc., a manufacturer in New Jersey. “It’s time for big corporations and wealthy Americans to stop passing the buck, pay their fair share in taxes, create jobs here at home and invest in our nation’s future.”

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

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The American Sustainable Business Council is a growing coalition of business networks representing over 100,000 companies and 200,000 business leaders. ASBC advocates for public policies that meet the realities of the 21st century global economy. www.asbcouncil.org

Business for Shared Prosperity is a national network of forward-thinking business owners, executives and investors. BSP is a member of the American Sustainable Business Council. www.businessforsharedprosperity.org

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/

Help stop a bad business decision—Join public briefing call today

This is a crucial week in Washington. Congress is back in session and the White House is holding a meeting Thursday with Congressional leaders to discuss issues.

One of the issues will be extending tax cuts to the wealthiest 2 percent of the taxpayers—tax cuts that will increase the deficit by $700 billion over the next 10 years and not be effective at all in creating jobs and helping small businesses.

How can you help stop this bad business decision?

Join me in a public briefing to learn more today at 2:45 p.m., sign a petition (see below) and call your elected officials. Thanks to Business for Shared Prosperity for their hard work and coordination on this effort.

JOIN THE BRIEFING CALL on Monday, Nov. 15 at 2:45 PM EST with Frank Knapp, CEO and President of the South Carolina Small Business Chamber of Commerce, and Steve Wamhoff, Legislative Director of Citizens for Tax Justice. Insight on the issues, legislative environment and tips for taking action.

► Call in #: (760) 569-7676, access code 818215. Monday, Nov 15 at 2:45 pm EST

SIGN/CIRCULATE PETITION: Urge Congress to let the high-end, budget-busting tax cuts expire for taxable income above $250,000.We can't afford to lose $700 billion to invest in small business job creation, education, health, infrastructure and renewable energy in the next decade.

► Sign the petition today

"Extending the high-end Bush tax cuts serves K Street lobbyists, not Main Street shop owners. Politicians should not use us to justify a very bad business decision." - Frank Knapp, CEO, South Carolina Small Business Chamber of Commerce.

TELL PRESIDENT & CONGRESS WHAT YOU THINK:

Sign the petition and follow it up with a personal call or letter for maximum impact.

► Phone the White House Switchboard 202-456-1414; Comment line 202-456-1111

► Congressional switchboard 202-224-3121.


► Write Your Senator at http://www.senate.gov/general/contact_information/senators_cfm.cfm

► Write Your Rep at https://writerep.house.gov/writerep/welcome.shtml

REPORT & TALKING POINTS: Restoring Top Tax Rates Makes Sense for Small Business.
 Our short report tells why it makes good business sense to reset top tax rates to where they were between 1993 and 2000 during the longest economic expansion in US history.

► Read the Report, Use the Quotes and Talking Points

GET YOUR VOICE IN THE MEDIA

► Press Release: Business Leaders Call on President, Congress to Let Bush’s High-End Tax Cuts Expire

► Letter to the Editor: Write a short letter to the editor responding (pro or con) to an article, editorial or op-ed you see. Refer if you can to Business for Shared Prosperity. Letters to the editor are widely read!

► Recent Press: Frank Knapp, We Didn't Vote for This, The Hill

► Talk to the Press: The more people involved, the more areas we can cover. Contact Bob Keener at bobkeener@businessforsharedprosperity.org or 617-610-6766.

Thank you for signing the petition, speaking out and spreading the word!