What’s Up With Federal Tax Reform

Is anything really happening? Yes.
Will something eventually get passed? Probably.

A group of key individuals who dubbed themselves the “Big 6” has been meeting for a few months and more intently in recent weeks. They include two members each from the administration (Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn), Senate (Majority Leader Mitch McConnell and Finance Committee Chair Orrin Hatch) and House (Speaker Paul Ryan and Ways and Means Chair Kevin Brady.)

Are they motivated to find common ground? Certainly. Is there a consensus? Not yet. Right now, they don’t even agree on whether, or to what extent, the legislation must be revenue neutral.

But they all seem to recognize that they need to do something – failure to coalesce is not in anyone’s interest. So what have they agreed on so far? The border-adjustment tax is out. Some method for allowing the repatriation of overseas earnings (at a one-time low-rate tax) is in. The corporate rate must drop to 25% or less (depending on how many deductions and breaks they can eliminate.) They appear to be embracing a way to allow small businesses to immediately deduct investments in new equipment and facilities, i.e. “full expensing.” On the individual income side, a collapsing of the brackets and lowering of rates (no details.)

Possible tradeoffs or “pay-fors” in tax circles: eliminating some business interest deductions, eliminating the state and local tax (SALT) deductions and capping the mortgage interest deduction. These are yet unsettled issues. But listen and watch closely to the SALT discussions going forward; there is a lot of money and a lot of political (with a small p) interest in this item. It is more a geographic than partisan issue because taking the SALT deduction away will have a significant negative impact on people (constituents of Republicans and Democrats) in states that have high state and local taxes. This item could have a big bearing on the entire effort and whether we get true reform or temporary tax cuts.

Tax cuts are the easy part for these folks. The hard part is finding ways to pay for reductions. The last true tax reform was in 1986, 31 years ago, and it required a lot of time and bipartisan buy-in. The Big 6 are all Republicans and they are anxious to get something done. They could mimic the Bush tax cuts of 2002 and 2003, passed through the reconciliation process, which means whatever they do expires after 10 years. Somewhat ironically, most of those Bush cuts were only made permanent as part of the Obama budget deal of 2012.

To recap the status of tax reform: Much remains up in the air.

Government Book Getting August Update

Here Is Your Indiana Government: 2017-18 Edition is the most comprehensive guide to governance in the Hoosier state. Since its development in 1942, this book has been used by communities and hundreds of thousands of students (from sixth grade to college level) to learn about Indiana and how Hoosiers govern themselves. A variety of local government and agency updates will be included in the new edition.

Topics include:

  • Interesting facts about Indiana (demographics, state song, motto, origin of county names, notable natives, etc.)
  • Historical highlights of Indiana government development
  • State government (explanation of its departments/agencies and their functions, updated budget information, contact information including phone numbers and web addresses)
  • County government (origins of the counties, the elective county administrative officials and their function, council function, powers of the counties, services)
  • Cities and towns (creation, city classifications, incorporated towns, municipal government, public works)
  • Township government (divisions, schools, boards)

Here Is Your Indiana Government is sponsored by Questa Education Foundation and will ship in August.

Large quantity discount pricing is available as follows:

  • 1 to 9 copies: $21.50 each
  • 10 to 25 copies: $14.50 each
  • 26 to 50 copies: $12.00 each
  • 51 to 75 copies: $10.50 each
  • 76 to 100 copies: $9.50 each
  • 101 or more: $9.00 each

Call (800) 824-6885 with questions or if you’re interested in purchasing the book as an ePub (online edition).

Indiana Chamber Presents Top Honors at 27th Annual Awards Dinner

Don Inmon and Matt Macbeth of pi Lab have taken flight with their creation, Edwin the Duck. The Carmel-based duo was named as the 2016 Indiana Vision 2025 Dynamic Leaders of the Year at last night’s 27th Annual Awards Dinner.

An agriculture titan, a small-business-owning state representative, the two minds behind a groundbreaking children’s tech toy and a bustling entrepreneurial city were awarded the highest honors tonight at the Indiana Chamber of Commerce’s 27th Annual Awards Dinner.

The winners are:

  • Business Leader of the Year: Sonny Beck, of Beck’s Hybrids in Atlanta
  • Government Leader of the Year: State Rep. Dan Leonard (R-Huntington)
  • Indiana Chamber Foundation’s Indiana Vision 2025 Dynamic Leaders of the Year: pi lab “Edwin the Duck” creators Matt MacBeth and Don Inmon
  • Lifeline Data Centers Community of the Year: Fishers

“Each of the award winners is working to enhance not only their industries or regions, but the entire state of Indiana. They are working to make Indiana a better place to work and live,” says Indiana Chamber President and CEO Kevin Brinegar. “The lasting achievements made by our honorees will impact our state far beyond 2016.”

(Stay tuned on this blog for videos and BizVoice stories about each of the winners.)

The Indiana Chamber’s annual dinner featured Pulitzer Prize-winning columnist George F. Will as keynote speaker to the crowd of nearly 1,500 at the Indiana Convention Center in downtown Indianapolis.

The event was presented in partnership with Anthem Blue Cross and Blue Shield. Lifeline Data Centers is the Community of the Year sponsor. Ivy Tech Community College served as the speaker sponsor, while the opening reception sponsor was Uzelac & Associates. The speaker reception sponsor was Hirons & Company Advertising + Public Relations.

The Indiana Chamber Foundation sponsored the Indiana Vision 2025 Dynamic Leader of the Year honor. Indiana Vision 2025 is the Indiana Chamber’s long-range economic development plan and the award emphasizes entrepreneurship and others facets of the plan’s Dynamic and Creative Culture driver.

The awards dinner followed the Indiana Chamber’s fall board of directors and annual membership meetings. Indiana Chamber Volunteers of the Year Stuart Buttrick (Faegre Baker Daniels, Indianapolis); Todd Miller (Myers Spring Company, Logansport); Mark Richards (Ice Miller, Indianapolis); were announced during a luncheon ceremony.

Ron Christian – executive vice president external affairs, and chief legal officer and corporate secretary at Vectren Corporation in Evansville – was formally elected the Indiana Chamber’s 2017 chair of the board of directors.

Business Leader of the Year: Sonny Beck, Beck’s Hybrids, Atlanta, IN
Stroll through the expansive Beck’s Hybrids operation in northern Hamilton County and one will find no shortage of inspirational messages. Speak to CEO Sonny Beck for any period of time and many of those same sayings seamlessly flow into the conversation.

In other words, the “words” are much more than terms or expressions that are placed on paper and forgotten. They are the driving force behind the largest family-owned seed company in the country – one that has
experienced tremendous growth over the past quarter century.

Beck: “I love the fields, the production side, but I’ve grown to love planning a lot. Your ability to analyze the whole problem and bring life experiences in – that can seem to not diminish. We’re growing fast enough that I keep giving jobs off to other people and my son now keeps giving jobs off to other people. But we keep thinking of new ideas we want to do. I’m always thinking about new projects.”

Government Leader of the Year: State Rep. Dan Leonard (R-Huntington)
Old habits die hard. And that’s a good thing – for Hoosier businesses and their employees – when linked to Dan Leonard’s propensity to serve others.

Leonard owns South Side Furniture of Huntington, a business he purchased from his father in 1978. Elected to the Indiana House of Representatives in 2002, he serves Huntington County, and portions of Wells and Allen counties.

His leadership, determination and common sense approach on unemployment compensation (UI) legislation and other business issues has benefited Indiana companies throughout the state. The savings from UI bills total billions of dollars.

Leonard: “I’m just finishing up 14 years and it’s been a real learning experience. Sometimes you come out on the good end, and sometimes you come out on the bad end. You have to learn how to work with people. That’s a big advantage for me because I’m in retail and I work with people on a regular basis – different people with different views and different thoughts.”

Indiana Vision 2025 Dynamic Leaders of the Year: Matt MacBeth and Don Inmon, pi lab, Carmel
If it looks like a duck, walks like a duck … it’s likely a duck – as the idiom conveys.

However, if it syncs with mobile apps, teaches life lessons and takes the Internet of Things to a whole new level, it might be better described as revolutionary in the children’s toy industry.

That was the hope when Matt MacBeth and Don Inmon developed pi lab and its flagship product – Edwin the Duck.

MacBeth: “In Old English, Edwin means ‘faithful friend.’ We wanted a personality, a name and a product that would go through life with you. Edwin shares life from the same angle as you. He’s an aspirational character.”

Inmon: “I had a light bulb moment in Hong Kong. I saw a rubber duck that had a speaker in it that was for sale. It was very poorly done. But it hit me: What if we took something that was nostalgic and put modern day technology in it?”

Community of the Year: Fishers
No matter who you talk to – business leaders, local officials or longtime residents – they all cite adopting the vision in recent years to become a “smart, vibrant, entrepreneurial city” as the turning point for Fishers. They credit Mayor Scott Fadness and the city council.

What’s followed is quite the transformation. Major economic announcements are the new norm, not the exception. Innovation is now synonymous with the fast-growing city.

That speaks to how dominant a player Fishers has become in business attraction and expansion. It boasts an impressive entrepreneurial spirit thanks to Launch Fishers, the largest collaborative co-working space in the state (if not the Midwest). Collaboration and embracing change have been crucial.

Mayor Fadness: “They (residents) recognize for the most part that change is inevitable and if you can articulate to them why that change makes sense, they’re apt to go along with that. That positions us well to move our community forward.”

2016 Annual Dinner corporate sponsors: AT&T; French Lick Resort; Hoosier Park Racing & Casino and Indiana Grand Racing & Casino; NIPSCO; Ogletree Deakins; OneAmerica Financial Partners, Inc.; Tilson; Wellness Council of Indiana; and Zimmer Biomet.
Contributing sponsors: Allison Transmission; City Securities Corporation; Community Health Network; FedEx; Fineline Printing Group; Hunt Construction Group, An AECOM Company; Inside INdiana Business with Gerry Dick; Indiana Soybean Alliance/Indiana Corn Marketing Council; JPMorgan Chase & Co.; KERAMIDA Inc.; Keystone Realty Group; Markey’s Rental & Staging; Pacers Sports & Entertainment; Roche Diagnostics Corporation; Subaru of Indiana Automotive, Inc.; The Kroger Co.; Vectren; WFYI Productions; and WGU Indiana.

RECENT INDIANA CHAMBER ANNUAL AWARD WINNERS:

Business Leader of the Year
Mike Packnett, Parkview Health, Fort Wayne – 2015
Mike Kubacki, Lake City Bank, Warsaw – 2014
Steve Ferguson, Cook Group, Inc., Bloomington – 2013
Scott Dorsey, ExactTarget, Indianapolis – 2012
Jean Wojtowicz, Cambridge Capital Management Corp., Indianapolis – 2011
Mike Wells, REI Real Estate Services, Indianapolis – 2010

Government Leader of the Year
State Sen. Brandt Hershman (R-Buck Creek) – 2015
Congresswoman Susan Brooks – 2014
Former U.S. Sen. Richard Lugar – 2013
Sen. Carlin Yoder and Rep. Jerry Torr – 2012
Speaker of the House Brian Bosma and Senate President Pro Tem David Long – 2011
Tony Bennett, state superintendent of public instruction – 2010

Community of the Year
Carmel – 2015
Bloomington – 2014
Bedford – 2013
Indianapolis – 2012
Kokomo – 2011
Terre Haute – 2010

Indiana Vision 2025 Dynamic Leader of the Year
Dustin Sapp, TinderBox, Indianapolis – 2015

Update on the Way for Indiana Government Book

HereIsYourIndianaGov15Here Is Your Indiana Government: 2015-16 Edition is the most comprehensive guide to governance in the Hoosier state.

Since its development in 1942, this book has been used by the community and hundreds of thousands of students (from sixth grade to college level) to learn about Indiana and how Hoosiers govern themselves. A variety of local government and agency updates will be included in the new edition.

Topics include:

  • Interesting facts about Indiana (demographics, state song, motto, origin of county names, notable natives, etc.)
  • Historical highlights of Indiana government development
  • State government (explanation of its departments/agencies and their functions, updated budget information, contact information including phone numbers and web addresses)
  • County government (origins of the counties, the elective county administrative officials and their function, council function, powers of the counties, services)
  • Cities and towns (creation, city classifications, incorporated towns, municipal government, public works)
  • Township government (divisions, schools, boards)

Large quantity discount pricing is available as follows:

  • 1 to 9 copies: $19.50 each
  • 10 to 25 copies: $12.50 each
  • 26 to 50 copies: $10.00 each
  • 51 to 75 copies: $8.50 each
  • 76 to 100 copies: $7.50 each
  • 101 or more: $7.00 each

To place your order, call (800) 824-6885, order online or email publications@indianachamber.com.

Harmonizing Music History with Worker Productivity

19188345Technology improvements are generally associated with getting the same amount of productivity with fewer workers. But something called the “quartet effect” – with links back to the lyrics of the Grateful Dead – instead emphasizes enhancing what people do with their time. Governing reports:

In the foreword to David Dodd’s The Complete Annotated Grateful Dead Lyrics, Robert Hunter, the band’s “lyricist in residence,” wrote that the song “Uncle John’s Band” represented “the first lyric I wrote with the aid of that newfangled gadget, the cassette tape recorder. I taped the band playing the arrangement and was able to score lyrics at leisure rather than scratch away hurriedly at rehearsals, waiting for particular sections to come around again.”

What Hunter was describing, of course, was an improvement in productivity resulting from the application of new technology. Productivity is usually measured in terms of the labor cost per unit of production, and in most cases improvement is achieved by using new technology to reduce head count. For instance, a steel mill that once employed 10,000 workers produces the same tonnage with only a thousand employees, bank tellers are replaced by ATMs and elevator operators become a thing of the past. But in Hunter’s application of new technology, no one’s position was eliminated. It’s an example of what has been called “the quartet effect” at work.

When you reduce the head count of a musical quartet, you have not improved its productivity. If what you wanted was the music of a quartet, you have destroyed the product. The technology Hunter employed is the kind that, rather than eliminating jobs, allows existing staff to make better use of their time and gives them the opportunity to create higher-quality products.

How is this relevant to government? For most local governments, public safety constitutes the largest single category of expenditures, typically accounting for about 60 percent of total costs. For states and for some local governments, education is the dominant cost category. But it’s important to remember that within these areas, personnel costs — the salaries and benefits of police officers, firefighters and school teachers — are the real cost drivers. Personnel costs typically represent 80 percent or more of the total cost of a police department, for example. Few would argue that taking cops off the streets or teachers out of classrooms improves productivity.

Toll Road Tales: Good News for Taxpayers, Motorists

TReactions were varied recently when the company operating the Indiana Toll Road filed for bankruptcy. A researcher at the Harvard Kennedy School emphasizes the positive aspects of how that deal was structured and focuses on the continually evolving role of each party in such an agreement. Governing reports:

n 2005, two companies came together to form the Indiana Toll Road Concession Co. (ITRCC), which won the right to operate the toll road in exchange for a $3.8 billion up-front payment. The deal limited how much tolls could rise and included a trigger requiring the consortium to expand the roadway if certain congestion benchmarks were reached. The $3.8 billion threw off about $250 million that was used to fund other state transportation priorities.

Like so many other enterprises, ITRCC was done in by the Great Recession. Its financing structure called for large debt payments at the end of the first decade, which proved overwhelming in the face of revenues that didn’t meet projections when the downturn hit and traffic volume fell.

But what’s reassuring is that motorists will see no interruption in service or toll increases as a result of the bankruptcy. The roadway is still subject to the same performance metrics, and there will be no taxpayer bailout. State officials will first try to find a new operator to take on the remainder of the concession deal. If that doesn’t work out, the ITRCC will likely be recapitalized with an altered debt schedule.

In either case, customers will retain the benefits from the $458 million ITRCC has invested since 2006 in road, bridge and pavement improvements and a new electronic tolling system.

While it appears that the Indiana Toll Road deal has succeeded at protecting taxpayers and motorists, that doesn’t mean there aren’t lessons to be learned from the bankruptcy. To maintain a true public-private partnership, governments might want to avoid taking the entire concession payment up front.

Chicago completed a similar deal just before the Indiana Toll Road agreement and couldn’t resist the temptation to use the upfront windfall to plug other holes in the city budget instead of using interest from the concession payment to maintain transportation infrastructure. More recently, public-private partnerships for Virginia’s Pocahontas 895 parkway and Colorado’s Northwest Parkway featured smaller upfront payments but give taxpayers a cut of the ongoing toll revenue.

Throwback Thursday: What Decides a Legislator’s Vote?

In the today’s look back, we feature an Indiana Chamber-produced cartoon from 1954 titled, “What Factors Decide a Legislator’s Vote?”

It’s a good question, even today. Here are the influencing factors it lists as possibilities:

  • Conscience: What are the facts? What’s right? What’s wrong?
  • Affected by : (A) Personal background and experiences; (B) Knowledge (or lack of knowledge) of the facts
  • The Party “Line”: Party caucus decisions and party discipline
  • “Lobbies”
  • Opinions of the folks “back home”: (A) Whose judgment the legislator respects and/or (B) Who he believes can help him be re-elected

While these are all pretty much the same conditions as today, we’d likely change the reference to legislators from “he” to “he/she” considering state government is no longer just a “boys club.” In fact, you can see that topic addressed in this old Throwback Thursday post.

Throwback Thursday: Our Government Book, Then and Now!

Many students are familiar with our book, Here Is Your Indiana Government. Used in classrooms throughout the state at many levels, this publication outlines the functions of Indiana state agencies, as well as our political and legislative structures. The book also includes many historical facts about our state and people.

What many may not know is that we've been printing this book since 1942. So here's a photo of the new edition (which just arrived today), and the 1951-52 version!

Chamber Scores Hoosier Legislators on 2013 Voting Records

The Indiana Chamber of Commerce handed out scores today to all 150 state legislators for their voting records on pro-economy, pro-jobs legislation during the 2013 General Assembly. The numbers, released in the organization’s annual Legislative Vote Analysis, also contain a two-year total for each legislator.

The 2013 scores range from 44% to 100%. House Speaker Brian Bosma (R-District 88 of Indianapolis), who votes at his discretion and therefore was scored on fewer bills, was the lone perfect mark. The highest full-time voting record for 2013 was Rep. Ed Clere (R-District 72 of New Albany) at 97%. The top senator was Joe Zakas (R-District 11 of Granger) at 87%. Last year, there were 15 legislators with 100%.

The reason for the slightly lower vote scores overall is the type of public policies on the docket, observes Indiana Chamber President and CEO Kevin Brinegar.

“The issues in 2013 were more complex and less partisan in nature. Two examples involved the Common Core academic standards and the ratepayer protection for the Rockport synthetic natural gas plant. Both were highly complicated – containing various provisions – and had significant supporters and opponents in both parties. This could very well be a sign of things to come.”

All scores and the full report are available at the Indiana Chamber’s web site at www.indianachamber.com/lva.

Brinegar also points out that the Senate scores, on average, were notably lower than in recent years. “That happened because the Senate watered down several crucial bills or simply refused to move other pro-jobs bills altogether.

“What’s more, the gap between the top (87%) and bottom (60%) scores in the Senate was closer this year, as Democrat scores increased overall while Republicans went down,” he notes.

“All in all, however, it was another successful session for Hoosier businesses and their workers. Legislators, for the most part, voted to grow jobs and move our state forward – and the results show it.”

A total of 19 legislators also received a star designation for their significant efforts on issues deemed of critical importance or their overall leadership. Among them: Speaker Bosma and first-term House Minority Leader Scott Pelath (D-District 9 of Michigan City) who together championed the Indiana Career Council legislation.

Says Brinegar of Pelath: “He brought a breath of fresh air to the House and it was noticeable. From our perspective, things were much more focused on policy issues than political issues.”

New this year in the vote descriptions is a 2025 icon next to those bills that directly reflect the goals contained in the Indiana Chamber’s long-term economic development plan, Indiana Vision 2025.

“We do the Legislative Vote Analysis to keep Hoosier employers and citizens informed about what’s going on at the Indiana Statehouse and how their legislators are voting on issues vital to Indiana’s economic future. This report makes it clear which legislators support pro-job growth and pro-business issues, and which legislators do not,” Brinegar explains.

Legislators who score 70% or greater for the most recent two-year voting period are eligible for endorsement by the Indiana Chamber’s political action committee, Indiana Business for Responsive Government.

Bills used in the report were selected based on their significant impact to the state’s economic climate and workforce. Lawmakers are notified of the Indiana Chamber position and reasoning on these bills through various communications during the legislative session – and prior to key votes being taken. Only floor votes for which there is a public record are used in the Legislative Vote Analysis.

Copies of the Legislative Vote Analysis report are sent to all legislators and Indiana Chamber board members, and made available online for all businesspersons, community leaders and citizens.

This marks the 29th year the Indiana Chamber has measured state legislators’ voting performance on bills that reflect the organization’s public policy positions.