State Wants to Hear From You on How to Streamline Small Businesses Reporting

Cutting red tape for Indiana’s job creators is key to making our state a better place for small businesses to expand and hire more Hoosier workers. To that end, during the 2017 legislative session, the Indiana Chamber supported House Bill 1157, Small Business Duplicative Reporting, which was authored by Rep. Doug Miller (R-Elkhart). The law is simple, but hopefully effective in generating ideas to make early-stage and small business interactions with state government in Indiana even more business-friendly.

As a result of the successful legislation, the Indiana Economic Development Corporation has set up an online survey to gather feedback from employers and government officials on instances of duplicative reporting.

The Indiana Chamber is encouraging small business owners and local governments to take part in the survey. It only takes about five minutes to complete and asks participants to identify situations where they are required by state law, rule or guideline to submit similar information to at least two state agencies. Duplicative information can include notifications, tax reports, employment information and other statistical data.

By helping to identify these issues, the state can work to streamline reporting processes or even eliminate some – which should save business owners time and money.

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.

Report: American Manufacturing is Still Alive and Well

According to a report from Ball State’s Center for Business and Economic Research (CBER) and Conexus Indiana, the American manufacturing industry is hardly in the downward spiral that some have projected — and they anticipate openings for new manufacturing jobs will range from 80,000 to 150,000 per year over the next 10 years.

“There are major misunderstandings among the public and the media about the manufacturing sector,” said Michael Hicks, director of CBER and the George and Frances Ball Distinguished Professor of Economics at Ball State. “The U.S. manufacturing base is not in decline, and we have recovered from the recession. Nor are jobs being outsourced because American manufacturing can’t compete internationally. Moreover, new jobs in manufacturing pay well above the average wage.”

The study notes that the Great Recession had lost its stranglehold by 2014, when U.S. manufacturers attained record levels of production.

“Changes in productivity, domestic demand and foreign trade all impact manufacturing employment in the U.S.,” Hicks said, “and it’s important to clarify those impacts in order to understand what is happening in the manufacturing and logistics industries.”

The study also found that:
• More than 87 percent of manufacturing job losses are due to productivity gains, including better supply chains, more capital investment and advanced technology.
• Only 4 percent of manufacturing jobs have been lost to international trade (also known as outsourcing) since 2000.
• Since the end of the Great Recession in 2009, the economy has added 750,000 manufacturing jobs.
• The biggest job losses occurred in low productivity sectors with low transportation costs.

The report points out baby boom generation retirees are leaving behind good, well-paying jobs in those sectors, and younger workers are filling those jobs at an unprecedented rate. Recent new hire salaries averaged $20.06 per hour — almost $42,000 a year. As millennials move into the workforce, wage gaps between new and existing jobs are primarily age- and tenure-related, he said.

The report, “The Myth and the Reality of Manufacturing in America,” and the individual state report cards may be found online.

Economic Energy? Look to Local Leadership

I read a recent post from the CEO of Gallup, who provided a good reminder that, like politics, ultimate business success is often locally driven. Yes, policies from Washington and state capitals make a big difference — but so does leadership in communities and companies.

A few highlights from Jim Clifton:

Throughout this year’s long election season, I was often asked: “Who will be better for jobs and the economy, President Obama or Governor Romney?” My reply most surely disappointed partisans from both sides: The president of the United States doesn’t make as much difference in terms of creating economic energy as you’d think, according to Gallup data.

In fact, if the president mattered that much, why is it that cities and states have such extreme variation in their local GDP and job growth? Shouldn’t they all go up or down together with each president?

Instead, Austin, Texas, and Nashville, Tenn., are booming, while Albany, N.Y., and Stockton, Calif., are failing. Texas is prospering while California is almost surely going broke. Austin’s jobless rate is around 5%, while the unemployment rate in Stockton is above 13%.

The difference, in my view, is that Austin has deeply caring, highly engaged business, political, and philanthropic leaders with principles, policies, beliefs, and values about human nature that work. They understand how to build a thriving, growing economy — one that welcomes business and entrepreneurship. Albany has the opposite, as I see it: Leaders with principles, policies, values, and beliefs that discourage business and entrepreneurship, if not outright scaring them away.

Cities across the country with great leadership are filled with booming startup companies, and those cities have thriving economies that create authentic, organically grown good jobs. These cities are saving America, while the others are letting the country down.

Great city leadership has never been so needed. Nationally, business startups are currently growing at under 400,000 annually. If this rate doesn’t double soon, in my view, absolutely nothing will fix our current nightmare of joblessness.

Of course good policy for small businesses is better than bad policy, but in my opinion, the estimated 10,000 business, political, and philanthropic leaders of all shapes and sizes who drive the performance of America’s top 100 cities are the most important people in our country right now. 

You’re Not Done Voting Yet

Yes, we’re the first to admit that the poll questions on this page definitely fall into the "unscientific" category. But the latest proved to be very close to reality — sort of.

In the week preceeding Tuesday’s election, we asked not who you wanted to be the next president but who you thought would be the winner. Your votes turned out to be nearly identical to how the Indiana vote for president played out.

  • President Obama: 44% of the Indiana vote; 40% in our poll
  • Mitt Romney: 54% of the Indiana vote: 52% in our poll
  • The third poll option of "we won’t know the outcome on Election Night, similar to 2000" drew 8% of the vote. The outcome, of course, was decided early without the drama that some national experts were predicting

The new poll question is not a direct follow-up, although the responses of some will certainly be a result of their pleasure or displeasure with Tuesday’s results. The new question (top right of this page): What’s your outlook for Indiana’s economy in 2013?

Columbus Earns Big Economic Honor

Columbus is known for its unique architecture, and for housing national headquarters for Cummins. But a national site selection magazine has given the city major kudos as the"Top Small City" in the U.S. for its economic attributes. Yet another asset for our great state.

Area Development, a national publication covering site selection and facility planning, today named Columbus, Indiana, the #1 U.S. city in its 2012 Leading Locations report. The publication ranked all 365 Metropolitan Statistical Areas (MSAs) across 23 economic and work force indicators supplied by the Bureau of Labor Statistics, Bureau of Economic Analysis, and the U.S. Census American Community Survey.

Each MSA earned a best-to-lowest ranking, 1-365, within each of the 23 indicators, and the Columbus, Indiana MSA (which includes the city and surrounding Bartholomew County) realized the best overall performance across all indicators. Columbus also ranked as the #1 “Top Small City” in the U.S. (population under 160,000), the #1 “Top 20 Midwest City”, and received two top five and one top ten overall rankings in three sub-categories of Prime Work Force, Economic Strength, and Recession-Busting Cities.

“Accolades such as this are a very welcome acknowledgement of the type of business-friendly environment that we are working to provide in Columbus,” said Mayor Kristen Brown. “Even more important to us than national rankings, however, are the opinions of our local employers who ‘rank’ us each day by their continued investment and job creation activities.”

In its description of the local economy, the report referenced the sizable corporate headquarters of Cummins Inc., R&D and technology centers of Faurecia and Dorel Juvenile Group, and advanced manufacturing strengths exhibited by other leading employers such as NTN and Sunright America, both having announced hiring expansions in the last twelve months. Area Development highlighted the success this Midwestern community has had with local company expansions, noting that the community “has averaged one corporate expansion announcement a month since 2010, creating 1,840 jobs, and current employment figures there are the third-highest on record.”

“We are exceptionally strong in engineering talent, design expertise, and STEM-based education resources from grades K-16,” said Jason Hester, Executive Director of the Columbus Economic Development Board. “Combine those traits with our favorable business policies, a nationally recognized quality of life, and our central Midwestern location along I-65, and we like to think that we offer companies an ‘unexpected’ and ‘unforgettable’ place to do business.”

Area Development also announced the winners of its 2012 Gold & Silver Shovel Awards in recognition of projects undertaken in 2011 that are creating a significant number of high-value-added new jobs as well as investment. The ongoing Cummins headquarters office expansion in downtown Columbus, Indiana, was the state’s largest job-creation project cited in the report, helping Indiana win its fifth Shovel award in as many years. Once the new 130,000 s.f. office building is filled, Cummins will employ nearly 3,000 engineers, technicians, and professionals in a two-block area of downtown Columbus and more than 7,000 in total locally.

Other companies with recent expansions and hiring plans supported locally include Toyota Material Handling USA and Toyota Industrial Equipment Manufacturing, Enkei, LHP Software, Analytical Engineering, Rightway Fasteners, Nagakura Engineering, CAPCO, KAMIC, and several other Columbus-based enterprises.
 

Paul vs. Paul: Popular Economic Minds Debate on Bloomberg TV

Ok economic enthusiasts (I’m careful not to say "geeks" here), here is your Super Bowl. Famed libertarian Rep. Ron Paul against popular economist, author and left-leaner Paul Krugman on Bloomberg TV yesterday. In the comments section, let us know who you think wins this debate (and why) on the Federal Reserve and government’s role in the American economy.

Adviser: Get Ready to Run with Bull Market in Near Future

Steven T. Goldberg, a Washington, D.C.-based investment banker, has a positive outlook for the American economy. Though I’ve heard other guesses that we shouldn’t expect a positive turnaround until 2015, he’s a bit more bullish. He recently authored a column for Kiplinger noting six reasons why he sees a "major bull market" in the next year or two:

1. The long decline in housing prices is nearing an end. The excess supply in housing is dwindling. When home prices finally bottom, it will mean more employment for construction workers, real estate agents and people in related industries. It will also staunch the bleeding in the mortgage and banking industries. Plus, it will help revive consumer confidence.

2. The U.S. is undergoing a manufacturing rebirth. Higher wages in China are prompting some companies to relocate factories to the U.S. Ford and Emerson Electric recently brought back some manufacturing to the U.S., and Intel is building three new plants here. Boston Consulting Group sees China’s edge eroding because many Chinese workers this year received wage increases of 15% to 20% and because of high transportation costs to the U.S.

3. The "echo" baby boom is ready to invest. The children of the baby-boomers will soon enter the 35-39 age bracket — the time in life when, Levkovich says, they get serious about investing. He has studied actions of that group from 1900 to the present and finds a strong correlation between the size of that cohort and the direction of the S&P 500. He says the echo boom will more than make up for the pressure their parents put on stocks by selling investments to pay for their retirement.

4. Technological innovation is still spreading. Increased adoption of smart phones by individuals and companies in developed and emerging countries will lead to increased spending on these products, as well as on technology infrastructure, including better security software, faster chips, longer-lasting batteries and more broadband spectrum. The U.S. still dominates tech.

5. The U.S. is becoming less dependent on foreign energy sources. New discoveries of oil mean a near-tripling of production in the Gulf of Mexico by the end of the decade. Meanwhile, fracking and other advanced drilling techniques are dramatically increasing natural gas production and lowering its price. Also helping are tougher standards for auto fuel economy, which means we’re using less gasoline. What little oil the U.S. will have to import, Levkovich says, will come from Canada and Mexico. Energy independence would help our trade balance.

6. A solution to our fiscal crisis is on the horizon. In 2013, Levkovich thinks, Democrats and Republicans will overcome their bitter differences and adopt a debt reduction plan that will include both higher taxes and cuts in entitlement programs. If that doesn’t happen, he thinks bond investors will force a resolution in 2014 by selling Treasury debt and forcing up bond yields. "We continue to think that investors are unwilling to pay up for equities while the continuation of budget deficits and growth of national debt erodes the foundation of economic progress," Levkovich says.

Levkovich finds a lot of skeptics among individual investors, who continue to yank money out of stock funds, as well as professional investors, many of whom have decreased their allocation to stocks. But that’s just dry powder for the next raging bull market.

Small Business Owners Send Clear Message in Poll

Small business owners are confident, but economic growth is not following due to too many regulations and concerns about energy prices. Those are among the results in the latest U.S. Chamber small business survey. More than eight in 10 respondents want Washington to "get out of the way."

Concerns about regulations and energy prices continue to impede growth for small businesses, according to a recent poll commissioned by the U.S. Chamber of Commerce. The survey, conducted by Harris Interactive between March 27 and April 2, 2012, found that while small business confidence grew in the first quarter of 2012, small businesses continue to lose employees. 30% of small businesses reported laying off employees in the last year.

“This survey confirms that slow gains in economic growth are being undermined by uncertainty over rising gas prices, an onslaught of pending regulations, and stalled pro-growth bills in Congress,”  said Dr. Martin Regalia, the Chamber’s chief economist. “To deliver long-term confidence to small businesses, Washington should act to provide certainty and enact regulatory reform that will boost their ability to grow.”

The poll of 1,339 small business executives found that eight out of ten of small business owners cite higher energy prices as an immediate threat to the success of their business. Concern about gas prices has more than doubled in the last three months, increasing from 10% to 24%. The majority of small businesses (78%) do not think the administration is doing enough to keep prices low, increase domestic sources of energy, or support American job creation. Additionally, three out of four (73%) say the new health care law is an obstacle to hiring new employees.

Overall small businesses see Washington as the problem instead of the solution, with 81% asking Washington to get out of the way and 92% believing the business community is the best entity to lead the economic recovery.

Almost all small business owners (97%) say it is important to vote for a candidate who is a strong supporter of free enterprise; 84% say it is very important. Only 9% of small business owners approve of the job the Democratic Senate Majority is doing on the economy; 87% disapprove. The House Republican majority’s approval rating on handling the economy has increased from 40% approval in January to 46% in April.

“Small business owners are increasingly demanding accountability from members of Congress on how they vote on the issues that impact their operations,” said the Chamber’s Senior Vice President and National Political Director Rob Engstrom. “We’re seeing small businesses unable to hire, or worse, forced to let employees go because of the Senate’s refusal to take up job-creating measures like domestic energy exploration and regulatory reform.”

The survey defined a small business as a company with fewer than 500 employees and annual revenues of less than $25 million.  To read a complete copy of the Q1 Small Business Outlook Survey, please visit: http://www.uschambersmallbusinessnation.com/community/small-business-outlook-survey—march-2012