Indiana Climbing in the Rankings

Yesterday’s post highlighted some very promising jobs numbers in Indiana. It’s no coincidence that others are recognizing the state’s continually improving business climate.

The Small Business & Entrepreneurship Council released its Small Business Tax Index 2014, rating states on 21 measures. Indiana placed 11th. And with personal income tax rates (positively impacting capital gains and dividends) and corporate income taxes decreasing further, the ranking just might improve.

Even more promising, the American Legislative Exchange Council unveiled its annual Rich States, Poor States report. Fifteen state policy variables are used to forecast economic outlook. The theory: states that spend less and tax less (particularly on productive activities such as working or investing) experience higher growth rates than states that spend and tax more. Indiana ranks third (14th in 2013 and 24th a year earlier), behind Utah and South Dakota.

We’ll take the good news, but won’t rest on any laurels or allow others to do the same. There are still too many challenges and too many goals to be reached in our Indiana Vision 2025 plan. But it’s nice to be moving in the right direction.

House GOP: We Have a Plan

House Republicans in Congress have a plan for their quickly-approaching fall/winter session. Will it be carried out? Based on recent experiences, one has to be skeptical. But a plan to tackle relief for small businesses and specific costly regulations is a good first step.

The Small Business & Entrepreneurship Council says the following was included in a memo from Majority Leader Eric Cantor of Virginia to caucus members:

The House GOP plans to repeal specific regulations, and advance broader regulatory reform bills such as the REINS Act and Regulatory Flexibility Improvements Act.  In addition, there will be forthcoming action on a bill to allow small business owners to take a tax deduction equal to 20% of their income. Hopefully, the House will move quickly on this pro-growth proposal.

The House GOP will move to repeal the 3% withholding mandate on government contractors. As SBE Council and its allies have argued, this withholding tax would especially burden small business contractors by worsening cash flow conditions and putting small firms at a competitive disadvantage in the government procurement marketplace. The mandate will also raise costs for taxpayers and state and local governments.      

The "top 10 job-destroying regulations" identified by the GOP leadership, and the time-table for congressional action follows:

NLRB’s Boeing Ruling (Action: Week of September 12): H.R. 2587, the Protecting Jobs From Government Interference Act, would take the common sense step of preventing the NLRB from restricting where an employer can create jobs in the United States.

Utility MACT and CSAPR (Action: Week of September 19): H.R. 2401, the Transparency in Regulatory Analysis of Impacts on the Nation (TRAIN) Act would require a cumulative economic analysis for specific EPA rules, and specifically delay the final date for both the utility MACT and CSAPR rules until the full impact of the Obama Administration’s regulatory agenda has been studied.

Boiler MACT (Action: Week of October 3):  H.R. 2250, the EPA Regulatory Relief Act would provide a legislative stay of four interrelated rules issued by the EPA in March of this year.  The legislation would also provide the EPA with at least 15 months to re-propose and finalize new, achievable rules that do not destroy jobs, and provide employers with an extended compliance period.

Cement MACT (Action: Week of October 3):  H.R. 2681, the Cement Sector Regulatory Relief Act would provide a legislative stay of these three rules and provide EPA with at least 15 months to re-propose and finalize new, achievable rules that do not destroy jobs, and provide employers with an extended compliance period.

Coal Ash (Action: October/November): H.R. 2273, the Coals Residuals Reuse and Management Act would create an enforceable minimum standard for the regulation of coal ash by the states, allowing their use in a safe manner that protects jobs.

Grandfathered Health Plans (Action: November/December): The Energy and Commerce, Ways and Means, and Education and Workforce committees will soon be working on legislation to repeal these ObamaCare restrictions. Small business owners and their employees will not be able to "keep the health care plans they currently have" as promised by President Obama and supporters of the health care law.

Ozone Rule (Action: Winter): This effective ban or restriction on construction and industrial growth for much of America is possibly the most harmful of all the currently anticipated Obama Administration regulations. Consequences would reach far across the U.S. economy, resulting in an estimated cost of $1 trillion or more over a decade and millions of jobs. 

Farm Dust (Action: Winter): The EPA is expected to issue revised standards for particulate matter (PM) in the near future. The House will act on H.R. 1633, the Farm Dust Regulation Prevention Act. H.R. 1633 would protect American farmers and jobs by establishing a one year prohibition against revising any national ambient air quality standard applicable to coarse PM and limiting federal regulation of dust where it is already regulated under state and local laws.

Greenhouse Gas (Action: Winter): The EPA’s upcoming greenhouse gas new source performance standards (NSPS) will affect new and existing oil, natural gas, and coal-fired power plants, as well as oil refineries, nationwide. 

NLRB’s Ambush Elections (Action: Winter): This summer, the NLRB issued a notice of proposed rulemaking that could significantly alter current union representation election procedures, giving both employers and employees little time to react to union formations in the future. The result will increase labor costs and uncertainty for nearly all private employers in the U.S. The House will soon consider legislation that will bring common sense to union organizing procedures to protect the interests of both employers and their workers.

Let’s Get This TRAIN Rolling

A recent post of mine railed about an overabundance of acronyms. But if it’s just one acronym and it offers some (maybe a little) clarity to an important federal piece of legislation, I can live with it.

Applause is in order when Transparency in Regulatory Analysis of Impacts on the Nation can be shortened to TRAIN. And I’ll translate the explanation below from the Small Business & Entrepreneurship Council to say it is meant to require thorough analysis before EPA regulations can be put into place.

SBE Council delivered a letter to Congressman Jim Matheson (D-Utah) in support of the Transparency in Regulatory Analysis of Impacts on the Nation (TRAIN) Act of 2011, H.R. 1705.  The Act would provide valuable information by mandating analysis of the cumulative costs and benefits to consumers, businesses and the economy of a variety of regulations due to be imposed by the EPA over the coming two years.

"This is vital," said SBE Council President & CEO Karen Kerrigan in the letter, "given our weak economy and the concerns small business owners continue to express about their ability to compete, create jobs and even survive."

As Kerrigan pointed out in the letter, the costs of environmental regulation hit small businesses particularly hard.  The SBA’s Office of Advocacy reports that the per-employee costs of environmental regulations are 364 percent higher for firms with less than 20 employees compared to businesses with 500 or more workers.

The TRAIN Act proposes that the cost analysis be comprehensive, including the impact these regulations would have on U.S. competitiveness, employment, electricity prices, fuel prices, and the reliability of the power supply.  Regulatory costs can impose both direct and indirect costs on small businesses – as consumers, and as suppliers to those businesses targeted by the regulation.

Census Facts About American Businesses

The Small Business & Entrepreneurship Council has gleaned 10 interesting bullet points about U.S. businesses from the most recent census. Most likely, No. 11 would have been, "It’s now documented that Donald Trump has the most creative hair of all American business owners."

Consider the following "Ten Fascinating Facts about Business" based on the Census findings:

  • 51.6 percent of businesses were operated primarily from someone’s home.
  • 23.8 percent of employer firms operated out of a home.
  • 62.9 percent of non-employer businesses were home-based.
  • 20.8 percent of new businesses used no start-up capital.
  • "Roughly three in 10 (30.6 percent) of the respondent firms that required start-up capital launched their business with less than $5,000. Of the firms that needed start-up capital, 17.5 percent of employer firms needed less than $5,000; for nonemployer firms, the figure was 35.8 percent. At the other end of the spectrum, 1.5 percent of the firms needing start-up capital required $1 million or more for this purpose."
  • "One in 10 businesses (10.4 percent) was started or acquired by owners who used a credit card to finance the start-up or acquisition of their business. A similar percentage (10.7 percent) financed their start-up or acquisition with a business loan from a bank or financial institution."
  • Surprisingly, "e-commerce sales were reported by only 6.6 percent of firms."
  • "About 28.2 percent of firms were family-owned. These family-owned firms accounted for 42.0 percent of all firms’ receipts."
  • "Business owners were well-educated: 50.8 percent of owners of respondent firms had a college degree."
  • And 13.6 percent of business owners were foreign born.

UPDATED: Our Congressmen Agree on Something! (Paperwork is Terrible)

Any time eight members of a nine-person Congressional delegation can agree on something these days, it must be a good thing. That is the case with the Small Business Paperwork Mandate Elimination Act of 2011.

H.R. 4 is expected to be considered on the House floor today and the subject of a vote on Thursday. The 273 co-sponsors include all six Indiana Republicans (Larry Buschon, Dan Burton, Mike Pence, Todd Rokita, Marlin Stutzman and Todd Young) as well as Democrats Andre Carson and Joe Donnelly. Only Pete Visclosky is missing from the co-sponsor list, which, of course, doesn’t disqualify him from supporting the bill.

For those who don’t recall the provision or prefer to block it out in order to try and get a good night’s sleep, a section of the Patient Protection and Affordable Care Act mandates that small business owners file a 1099-MISC with the IRS for all payments of $600 or more to a vendor in a tax year. In other words, just about everything. In a regulatory world gone awry, this might be the biggest nightmare of all if allowed to proceed.

The repeal earlier passed the Senate 81-17. Let’s hope common sense prevails in the House this week. The Small Business & Entrepreneurship Council has additional background and facts.

UPDATED: Thankfully, the U.S. House has voted to repeal this ridiculous measure. Surprisingly, despite being listed as a co-sponsor, Indiana Rep. Andre Carson voted against the measure. All eight other Hoosiers representatives sided with the majority in a 314-112 vote. The Senate has passed a slightly different version, so a compromise will need to be reached. Journal of Accountancy has the story.

Business Owners Tell It Like It Is

Earlier this week, we shared a fictional video that depicted the uncertain regulatory climate and its impact on business. Now, two groups – Public Notice and the Small Business & Entrepreneurship Council – have a series of stories from actual small business owners who are in the position of wondering about their ability to survive.

"Moving Forward in Uncertain Times," begins a four-part series called "The Story of Business." The first video features Wes Garner, President of Great Lakes Calcium Corp. in Green Bay, Wisconsin. 

"Like families across America, business owners are having to make tough choices.  They’ve cut hours, costs, and even laid off dedicated employees. These entrepreneurs are heavily invested in their businesses and have everything to lose-but they don’t see Washington making the same tough choices," said Gretchen Hamel, executive director of Public Notice.

In order to survive and thrive, business owners need pro-growth policies that provide clarity and certainty. Without these, business investment, expansion, and job creation suffer. Unfortunately, Washington has produced new laws and regulations that have added to business costs and widespread confusion among business owners.  In addition, unresolved issues – like what the tax rates will be next year, and whether certain tax incentives will be available – are keeping entrepreneurs on the sidelines, and general business confidence in the tank.

"Small business owners do not have it easy, even in good economic times.  They’ve certainly been put to the test during the last two years.  Unfortunately, Washington only made matters worse — imposing mandates businesses can’t interpret and threatening to raise taxes to make up for years of overspending. Entrepreneurs face an uncertain future and they simply can’t afford what government is currently dishing out," said Karen Kerrigan, President & CEO of the SBE Council.

Election Prosperity for All

Raymond J. Keating is a highly respected economist with the Small Business & Entrepreneurship Council. His article, “Entrepreneurs and Election Year Activism,” makes some very good points with one important omission.

His submissions are right on target.
Politics and public policy matter a great deal to businesses and their future success. The business community absolutely must be involved in the political process and be actively engaged with their elected officials, particularly those elected officials close to home like your state senators and representatives. Does anyone think for one second that labor and teacher unions are not involved? If a business owner and his or her employees are not engaged in the process, then the decisions affecting them will be left to those who are involved.
Quite possibly the best option for engaging your employees was not mentioned – educating and providing your workforce with information on business issues that affect your company, candidates running for office and the electoral process in a non-partisan manner. This works AND employees want this information. Tell them why an issue is important to the company they work for, and their job, and they will usually put the pieces together.
We know that the number one trusted source of political information for employees is their employer. Using a resource like the Indiana Prosperity Project  (a joint program of the Indiana Chamber and Indiana Manufacturers Association) accomplishes this. Provide employees with non-partisan information on issues and candidates – and everyone wins.

Should Government be in Charge of Cleaning Internet Pipes?

Is your Internet running slowly due to all the video content and advanced applications straining your provider? Does it have you angrier than a surly fishgator? Well calm down, fella. The government might be here to help.

But is that a good thing? The Small Business & Entrepreneurship Council says they’d rather let the private sector handle this one.

Robert McDowell:

"If we choose regulation over collaboration, we will be setting a precedent by thrusting politicians and bureaucrats into engineering decisions. Another concern is that as an institution, the FCC is incapable of deciding any issue in the nanoseconds that make up Internet time. And asking government to make these decisions could mean that every few years the ground rules would change based on election results. The Internet might grind to a halt in such a climate. It would certainly die of clogged arteries if network owners had to seek government permission before serving their customers by managing surges of information flow."

Energy by the Numbers

How many trillion Btu of coal did Indiana produce in 2005? If we told you 769.1, would you be impressed — or just confused? How about if we said that was more than all but five other states? A little more impressive.

Indiana’s coal capabilities and reliance on the fossil fuel for energy needs is not a secret. The state now has an opportunity to be a clean coal technology leader as development of a Duke Energy coal gasification plant in Edwardsport moves closer to reality.

The Energy Information Association has released additional data on energy production in 2005. Indiana ranked 24th in natural gas and 23rd in crude oil, far behind national leaders Texas and Louisiana in both categories.

Our state is not a participant in nuclear production, but the coal prowess puts the state 20th in overall production at 836.8 Btu.

The Small Business & Entrepreneurship Council provides the full story and tables.