Tag Archives: Congress

Kyrsten Sinema

AzBA Brings Regulatory Burden to Sinema

Seldom will you find a Member of Congress spending his or her few days out of session at a community bank.  That’s just where freshman U.S. Representative Kyrsten Sinema spent Wednesday afternoon. “It’s our job in Congress to strike the appropriate balance between a secure banking industry and adequate access to capital for families and small businesses,” said Sinema.  “In order to fortify the banking community –a core component of Arizona’s economy – we must strengthen access to capital for middle class families as well as review the impacts of regulatory burdens.”

The Arizona Bankers Association brought Representative Sinema to Arizona Bank & Trust in Phoenix on Wednesday.  Bank President and CEO, Jerry Schwallier, said “[t]his was a great opportunity to demonstrate to Arizona’s only banking committee Member how the decisions made  in Congress impact the people we serve in Arizona.  I wish more public officials would take the time to do what Ms. Sinema did today.”

Community bank presidents Gail Grace, Sunrise Bank; Mike Thorell, Pinnacle Bank; and Ed Zito, Alliance Bank, all attended the briefing along with Paul Hickman, CEO of the Arizona Bankers Association.  Hickman commented, “[t]he community banking industry in Arizona today is facing increased pressure on all fronts.  Our association’s highest priority is to help both banks and entire communities by acting as their liaison to the government.”

The industry is working to grow the economy in the wake of the 2008 recession while also responding to the most comprehensive banking reform law of modern times.  The Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 is 2,319 pages long.  By comparison, the last major banking industry reform law – Gramm Leach Bliley – was 144 pages.  The Dodd Frank Act directs 398 separate rulemakings, of which 148 have been finalized, 121 are in some form of promulgation and 129 have yet to be even proposed.

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The Business of Girl Scouts

This will be a great year for women – and in part, you have the Girls Scouts to thank for that.

Right now we have two things to celebrate: The Girl Scouts’ wrapping up another successful year of cookie sales – last day of booth sales are March 30 – and a record number of women in the U.S. Senate. How do these relate?

Fourteen of the 20 female Senators sworn into Congress recently are former Girl Scouts. If you include those in the House of Representatives, 60 percent of females currently in Congress are Girl Scout alumnae. This number is especially impressive when you consider that only eight percent of women in the U.S. participate in Girl Scouts during adolescence.

I can go on with statistics – 80 percent of female business owners and 64 percent of females CEOs were Girl Scouts – but what is really important is how the Girl Scouts creates leaders.  Leaders who are sales executives, financial planners, economists or the managers of their household budget.

The answer:  It’s in the Cookies.

Probably the first thing that comes to most people’s minds when thinking about the Girl Scouts is the Cookies, most likely Thin Mints (one of my favorites). Many consider the Girl Scout Cookie Program a fundraiser, and, yes, with revenue of $715 million each year – 20 times that of membership dues – it is a major fundraiser. But it’s so much more than that. It’s the largest girl-run business in the world. It is also the largest financial literacy and entrepreneurial training program for girls in America.

The Girl Scout Cookie Program teaches girls the basics of running a business by emphasizing “The 5 Skills.” These are skills that I use every day as the CEO of the Girl Scouts–Arizona Cactus-Pine Council and are skills taught in every business school in the country. Businessmen and women making millions of dollars each year have based their success on these skills. And I, too, learned the “The 5 Skills” when I was a Girl Scout:

Goal setting: Setting concrete goals help develop strategies and measure success. Girl Scouts set individual goals as well as goals to reach as a Troop, much like a business leader sets personal and professional goals.

Decision making: Perhaps one of the biggest differences between a leader and a follower is the ability to make a smart decision quickly. During the Cookie Program, Girl Scouts make their own decisions as to how they approach each potential customer, the amount of effort they want to put into their cookie sales as well as what the aforementioned goals should be.

Money management: You can’t make money if you can’t manage it. The Cookie Program teaches something to every age group: Daisies and Brownies (our youngest members) add and subtract, Cadettes and Juniors practice multiplication, and Seniors and Ambassadors estimate how many boxes need to be purchased to be sufficient for their initial orders and booth sales.

People skills: The fact is, more confident individuals rise to the top. This confidence is gained through stepping out of your comfort zone – something each Girl Scout has to do in order to make a sale.

Business ethics: Sadly, not all business leaders are ethical – but the most successful are. Girl Scouts are taught the value of a promise and delivering on that promise. No business can last 101 years without a strong, ethical approach.

More than three million Girl Scouts are involved in the Cookie Program each year. That’s three million more girls who will grow up with skills to become business leaders. And while the statistics of women in business and politics are not equal to the opposite sex yet, you can bet on these three million to help close the gap.

So when you go to pick up your last batch of cookies for the year from that Girl Scout cookie booth set up outside a local business, don’t forget to ask her about her goals when she sells you those boxes of cookies!

Tamara Woodbury is currently CEO of Girl Scouts–Arizona Cactus-Pine Council, Inc., one of the largest Girl Scout councils in the country serving more than 24,000 girls throughout central and northern Arizona. Her leadership and the success of the Girl Scouts in Arizona has been recognized nationally and locally for innovative programs and business practices. She can be reached at twoodbury@girlscoutsaz.org.

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ASU names Kyl Distinguished Fellow, Scholar

Former United States Senator Jon Kyl has accepted a part-time appointment at Arizona State University as Distinguished Fellow in Public Service in the ASU College of Public Programs and as O’Connor Distinguished Scholar of Law and Public Service in the Sandra Day O’Connor College of Law at ASU.

The Senate’s former No. 2 Republican leader will work primarily in Washington, D.C. and will begin this new role with ASU immediately.   Recognized in 2010 as one of the 100 most influential people in the world by Time magazine, Kyl was elected to the U.S. Senate in 1994 and retired at the end of his third term In January of this year.  Before serving the Senate, he was a member of the U.S. House of Representatives from 1987 to 1995 and earlier worked as a lawyer and lobbyist in Phoenix.

Kyl, who received his bachelor’s degree and law degree from the University of Arizona, recently joined Covington & Burling, the largest law firm in the nation’s capitol.

“Jon Kyl has long been one of the nation’s most important political leaders,” said ASU President Michael M. Crow.  “He has taken a thoughtful approach to important issues and has been a statesman at time when statesmanship was sometimes lacking.  ASU students will benefit greatly from his experience and perspective.”

At ASU he will teach classes and convene discussion groups on a range of issues, including immigration reform, sequestration and the debt ceiling, tax and entitlement reform, and national security and foreign policy.  Other topics will involve internal Congressional issues such as the role of politics and compromise, party discipline, lobbying and why Congress is so contentious.

“ASU has made tremendous progress in the last decade,” said Kyl. ”I am excited to work in such a dynamic environment. Twenty six years in Congress taught me a lot, and much of it is not quite what the textbooks teach.  Hopefully, I can impart some ‘real life’ lessons about our national government and major policy issues to students at ASU.”

“We are delighted that Senator Kyl will be joining us as O’Connor Distinguished Scholar of Law and Public Service,” said Douglas Sylvester, dean of the O’Connor College of Law.  “He is one of Arizona’s most respected and experienced public servants, and we are looking forward to the invaluable perspective he will bring our students and our law school community through his years of distinguished leadership and government service.”

Added Dean Jonathan Koppell, dean of the College of Public Programs, “What a great opportunity for ASU to learn from a legislator who has been a key player on issues that affect every Arizonan.

“At a time when the political process is widely disparaged, ASU students who already are drawn to public service will get the chance to see how one person can make a difference by following the path to elective office.  Senator Kyl has shown himself equally passionate about opening students’ eyes to the realities of policy making in Washington and the substantive issues, like water policy and immigration, that will shape the future of Arizona.”

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GPEC analyzes impact of potential defense cuts

The Greater Phoenix Economic Council today released findings and recommendations from its Aerospace and Defense Market Intelligence Program, a two-phase initiative that took an in-depth look at the region’s aerospace and defense companies to determine their strengths, weaknesses and readiness for the sequestration, federally-mandated automatic spending cuts scheduled to take place on March 1 unless Congress intervenes.

As a result of the sequestration, the Department of Defense (DoD) must cut $1 trillion from its budget. Arizona has the sixth largest share of DoD contracts, and stands to lose as much as $2.3 billion in annual revenue on account of sequestration-based cuts.  Until it happens, however, the size or effects of the cuts in Arizona remain ambiguous.

In anticipation of these massive cuts, the Greater Phoenix Economic Council (GPEC) – along with its Economic Development Directors Team and the Greater Phoenix Chamber of Commerce – last year undertook a major market intelligence initiative to determine the existing strengths and weaknesses of Arizona’s aerospace and defense companies. Based on this data snapshot, the analysis also sought to understand the potential impact of sequestration on our local companies, communities, workforce and innovation base.

“As part of GPEC’s program, I personally sat down with several aerospace and defense companies located in Phoenix. The message I heard from them was resoundingly clear – the uncertainty over the timing and severity of these cuts has many of them paralyzed, and they want guidance,” said Phoenix Mayor Greg Stanton. “With 49,000 Arizona aerospace and defense jobs at stake, it’s critical that our federal leaders work together to avert this crisis or at least provide a strategic direction for where we go on March 2 and beyond.”

“Sequestration is a bad way to budget. Local companies and individuals get caught up in a political game that does little to solve our nation’s long-term financial challenges,” Mesa Mayor Scott Smith said. “Washington should follow the example of cities and make smart cuts to fix the budget rather than making arbitrary cuts that do more harm than good.”

The program consisted of two main components. The first developed an in-depth profile and analysis of 114 local companies identified by GPEC using data from the Office of Management and Budget. The second was an extensive door-to-door outreach effort to these companies, conducted by mayors, local chambers of commerce, GPEC Ambassadors (volunteers from GEC’s member companies) and municipal economic development directors and their teams.

“As a top-ranked defense state, Arizona has much to lose with the budget cuts associated with the 2011 Budget Control Act. The West Valley, proud home to Luke Air Force Base, has worked tirelessly to protect the mission of the base and to secure the F-35 aircraft,” Avondale Mayor Marie Lopez Rogers said. “Sequestration and the drastic budget cuts to defense and aerospace will undermine the efforts of the communities in the West Valley and negatively impact our local economy, which is tied closely to Luke Air Force Base and the defense-related industry.”

It’s also important to note that nearly 75 percent of the state’s research and development expenditures are housed within Arizona’s corporate infrastructure – companies like Intel, Boeing, Raytheon and Honeywell. As such, drastic reductions in their DoD contracts could result in losses in some of the state’s most significant research programs, which affect Arizona’s science position, its universities, and opportunities for increased investments and exports.

“These looming cuts represent a crossroads for our region,” GPEC President and CEO Barry Broome said. “The region’s corporate, science, civic and government partners must convene to not only mitigate job loss but also to support and protect the region’s physical assets, workforce talent and innovation from being moved out of the market.”

The findings represent a snapshot of the Greater Phoenix region’s aerospace and defense industry for a specific period of time, from May through December 2012 when the data was collected. During this time period, sequestration was considered more of a threat and less of a reality.

Top-line analysis revealed that 76 percent of the companies reported to be either stable (52 percent) or expanding (24 percent). Twenty-six percent reported that their businesses were contracting – primarily companies and operations where DoD contracts represent the largest share of their revenue base. Those that were expanding focused on diversification, including commercial and international markets, or DoD growth areas like intelligence, surveillance and reconnaissance, cyber technology, space technology and counterterrorism.

Because 2,000 companies throughout Arizona were awarded $13 billion in defense contacts in 2012 – and the industry represents 43,000 direct jobs – even a 25 percent contraction could be detrimental to one of the state’s major employment bases. For larger, Tier 1 companies, the short-term outlook is more stable as many have expanded products and services in anticipation of the cuts. However, Tier 2 companies that generally represent the industry’s supply chain are less likely to withstand the cuts due to their reliance on Tier 1 companies for contracts and subcontracts. Some of these companies have neither the access to capital or the working capital to wait it out – meaning they could be forced to lay off workers or cease operations.

Based on the program’s findings, GPEC’s five recommendations include:

1. A federal-level strategy from Arizona’s congressional leadership to either fully reverse sequestration or provide a “go forward” strategy to ensure Arizona’s aerospace and defense assets – including R&D and skilled workforce – are retained and redeployed.
2. Public and bilateral support for Governor Brewer and the Arizona Commerce Authority in their efforts to secure an FAA-designated test site.
3. A major commitment to science and technology to ensure the aerospace and defense industry’s existing knowledge and technology assets are leveraged to generate new and higher-value economic growth opportunities for our existing workforce talent while also attracting new, skill ed workers to Greater Phoenix.
4. Increased support for regional export opportunities from state and regional leaders.
5. An ongoing commitment to business retention and expansion, particularly with regards to sequestration.

To view the Aerospace and Defense Market Intelligence Report in its entirety, as well as all five recommendations, please visit http://www.gpec.org/aerospace.

marketing budget

How could budget cuts impact Arizona?

The White House released a list of impacts to Arizona from automatic budget cuts that are set to take hold this week.

The White House compiled the numbers from federal agencies and its own budget office. The numbers reflect the impact of the cuts this year. Unless Congress acts by Friday, $85 billion in cuts are set to take effect from March-September.

As to whether states could move money around to cover shortfalls, the White House said that depends on state budget structures and the specific programs. The White House didn’t have a list of which states or programs might have flexibility.

The White House says the losses that Arizona would incur as a result of the automatic budget cuts include:

EDUCATION: $17.7 million in lost funding for K-12 schools. The lost funding could result in about 240 teaching and aide jobs being put at risk. Additionally, Arizona would lose about $10 million for 120 teachers and staff who help children with disabilities.

— Head Start services would be eliminated for about 1,000 children in Arizona.

— About 2,300 fewer low-income students in Arizona would receive aid to help them finance the costs of college and around 330 fewer students will get work-study jobs that help them pay for college.

ENVIRONMENT: Arizona would lose $2.1 million in funding for efforts to protect air and water and guard against pollution from pesticides and hazardous waste.

MILITARY: About 10,000 civilian employees for the Department of Defense would be furloughed. That would reduce gross pay by $52 million.

LAW ENFORCEMENT: Arizona would lose $298,000 in grants for law enforcement.

JOBS: Arizona would lose $781,000 in funding for job-search assistance. That translates to 26,000 fewer people getting help to find jobs.

CHILDREN: Up to 500 disadvantaged and vulnerable children could lose access to child care.

HEALTH: About 2,500 fewer children will receive vaccines for measles, mumps, rubella, tetanus, whooping cough, influenza and Hepatitis B.

— The state will lose $611,000 for improving its ability to respond to public health threats, such as infectious diseases, natural disasters and other events. In addition, Arizona will lose about $1.9 million in grants to help prevent and treat substance abuse. The state also will lose $186,000 resulting in around 4,600 fewer HIV tests.

WOMEN: Arizona could lose up to $132,000 for services to victims of domestic violence, meaning 500 fewer victims could be served.

SENIORS: More than $1 million for providing meals to seniors could be lost.

BORDER: U.S. Customs and Border Protection will not be able to keep the same staffing levels of Border Patrol agents and CBP officers. Funding and staffing reductions would increase wait times at airports and weaken security between ports of entry. The White House didn’t provide specific financial figures on how the budget cuts will affect ports of entry in Arizona.

Three Things Building Owners Need To Know To Reduce Their Taxes - AZ Business Magazine June 2010

Despite Fiscal Cliff deal, taxes will rise for most

While the tax package that Congress passed New Year’s Day will protect 99 percent of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013.

That’s because the legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year.

The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent of American households will face higher federal taxes in 2013 under the agreement negotiated between President Barack Obama and Senate Republicans. High-income families will feel the biggest tax increases, but many middle- and low-income families will pay higher taxes too.

Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center’s analysis. Households making between $50,000 and $75,000 will face an average tax increase of $822.

“For most people, it’s just the payroll tax,” said Roberton Williams, a senior fellow at the Tax Policy Center.

The tax increases could be a lot higher. A huge package of tax cuts first enacted under President George W. Bush was scheduled to expire Tuesday as part of the “fiscal cliff.” The Bush-era tax cuts lowered taxes for families at every income level, reduced investment taxes and the estate tax, and enhanced a number of tax credits, including a $1,000-per-child credit.

The package passed Tuesday by the Senate and House extends most the Bush-era tax cuts for individuals making less than $400,000 and married couples making less than $450,000.

Obama said the deal “protects 98 percent of Americans and 97 percent of small business owners from a middle-class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country.”

The income threshold covers more than 99 percent of all households, exceeding Obama’s claim, according to the Tax Policy Center. However, the increase in payroll taxes will hit nearly every wage earner.

Social Security is financed by a 12.4 percent tax on wages up to $113,700, with employers paying half and workers paying the other half. Obama and Congress reduced the share paid by workers from 6.2 percent to 4.2 percent for 2011 and 2012, saving a typical family about $1,000 a year.

Obama pushed hard to enact the payroll tax cut for 2011 and to extend it through 2012. But it was never fully embraced by either party, and this time around, there was general agreement to let it expire.

The new tax package would increase the income tax rate from 35 percent to 39.6 percent on income above $400,000 for individuals and $450,000 for married couples. Investment taxes would increase for people who fall in the new top tax bracket.

High-income families will also pay higher taxes this year as part of Obama’s 2010 health care law. As part of that law, a new 3.8 percent tax is being imposed on investment income for individuals making more than $200,000 a year and couples making more than $250,000.

Together, the new tax package and Obama’s health care law will produce significant tax increases for many high-income families.

For 2013, households making between $500,000 and $1 million would get an average tax increase of $14,812, according to the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341.

“If you’re rich, you’re almost certain to get a big tax increase,” Williams said.

Small Businesses getting help in down economy

Senate strikes fiscal cliff deal

The Senate has passed legislation to block the impact of across-the-board tax increases and spending cuts that make up the fiscal cliff.

The vote was an overwhelming 89-8 and came well after midnight on New Year’s Day.

A House vote is expected before Wednesday.

The White House-backed legislation would prevent middle-class taxes from rising, and raise rates on incomes over $400,000 for individuals and $450,000 for couples.

It also blocks spending cuts for two months, extends unemployment benefits for the long-term jobless, prevents a 27 percent cut in fees for doctors who treat Medicare patients and prevents a spike in milk prices.

A last-minute addition would also prevent a $900 pay raise for members of Congress from taking effect in March.

Kyrsten Sinema

Sinema wins Arizona congressional seat

Former Democratic state Sen. Kyrsten Sinema has been elected to represent a new Phoenix-area congressional district, emerging victorious after a bitterly fought race that featured millions of dollars in attack ads.

Sinema becomes the first openly bisexual member of Congress. Her victory came in a year when three states approved gay marriage, and at least five openly gay Democrats were elected to House seats. A Wisconsin congresswoman also became the first openly gay person elected to the Senate.

Sinema had a narrow lead on election night that made the race too close to call. But she slowly improved that advantage as more ballots were tallied in recent days, and now has a nearly 6,000-vote edge that is too much for Republican Vernon Parker to overcome.

Sinema, 36, was on an airplane to Washington on Monday for freshman orientation and not immediately available to comment on her victory.

During the race, Parker, who took the national stage briefly in September when he gave the GOP weekly address, was criticized by Democrats as a tea party radical who would hurt children by cutting the federal education department.

Republicans countered saying Sinema was too liberal for the newly created district and doesn’t understand stay-at-home moms.

One other congressional race remains undecided in Arizona. Rep. Ron Barber, the hand-picked successor to Gabrielle Giffords, had a lead of a few hundred votes over Republican Martha McSally in the Tucson-area district.

The Sinema victory ensures that Democrats will gain at least one seat in the Arizona congressional delegation.

Republicans entered the election with a 5-3 advantage, and the new census added a ninth seat in the state. The delegation is now split 4-4, with the Barber-McSally race still up for grabs.

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Tips for dealing with cap gains tax hike

The impending jump in capital gains taxes has prompted a flood of nervous calls to financial advisers in recent months.

Less than three months remain until the maximum rate of 15 percent on long-term gains rises to 20 percent unless Congress extends the Bush-era tax cuts.

On top of that, the health care reform package imposes a new 3.8 percent Medicare tax on the investment income of high-income earners. That means their tax bill will increase by more than half to 23.8 percent for single filers with incomes of more than $200,000 and couples who make over $250,000.

The looming increase poses a tempting reason to sell now for anyone who’s sitting on large unrealized gains in stocks, property or other assets. But pulling the trigger on a sale hastily could be a mistake.

A couple of Joe Heider’s clients were in “almost a Chicken Little mode” over the much steeper tax bills they could face, says the regional managing principal of Rehmann Financial Group in Cleveland. One, a corporate executive with stock holdings worth several million dollars, wanted to sell all his shares until Heider talked him out of it.

It’s not just millionaires with money at stake. Plenty of retirees who regularly sell off some of their portfolio for living expenses could face heftier bills on stocks, mutual funds or bonds that have grown appreciably in value over the years.

Those inclined to overreact by selling now without analyzing their situation would be wise to heed the old Wall Street adage: “Don’t let the tax tail wag the investment dog.” In other words, don’t become preoccupied with taxes at the expense of the ultimate objective.

“Keep in mind that first and foremost it’s about making a gain,” says Heider. “The key is making money.”

With that caveat in mind, here are five tips for approaching the possible capital gains tax hike:

1. DON’T HOLD A FIRE SALE.

Do some basic math, or have a financial adviser do it for you.

“If you’re selling just because rates are going up, think twice,” says Rande Spiegelman, vice president of financial planning in the Schwab Center for Financial Research. “I don’t see selling just to lock in a lower capital gains rate.”

Start by reviewing your portfolio to determine which investments have risen significantly in value since you purchased them. Think about when you are likely to sell. Then crunch the numbers on how much tax you’d pay by selling now or later. Refer as needed to an online capital gains calculator such as http://www.moneychimp.com/features/capgain.htm .

Selling now means you’d be left with a smaller sum of money or other assets to grow. So factor in lost opportunities for the assets to appreciate in years ahead. Plus there’s the out-of-pocket cost.

2. KEEP IT IN PERSPECTIVE.

Remember that the past decade has been an era of very low taxation by historical standards. A long-term capital gains rate of 20 percent starting in 2013 would still be relatively modest. Even the likely worst-case scenario of 23.8 percent for high earners would hardly be dire in comparison with many recent years.

The maximum long-term capital gains rate was as high as 39.9 percent in the 1970s and 28 percent for a good chunk of the ’80s and ’90s.

3. ACCELERATE A SALE YOU ALREADY WERE PLANNING.

Assuming the price is right, go ahead and sell this year if you were going to do so soon anyway. That’s particularly the case with property or real estate, where the rate increase for capital gains is slightly different but the same principle applies.

A South Dakota man who had been planning to sell the family ranch he inherited from his parents is pushing the transaction through this fall. Rick Kahler, a certified financial planner in Rapid City, advised him he would likely pay at least $90,000 less in taxes by doing so than by waiting until next year.

Kahler is telling clients they should consider moving up any sale that they were expecting to make in the next 12 to 24 months. PwC, the U.S. arm of professional services company PricewaterhouseCoopers, goes even further, recommending selling any asset now that you might otherwise in the next 10 years.

It’s OK to hold off until after November elections to see if Congress and President Obama can work out a deal to put off the capital gains hike and other automatic tax increases and spending cuts.

Just be wary of waiting until the last few days of the year or you could get stuck selling at a market low. Investment guru Jeremy Siegel, finance professor at the University of Pennsylvania’s Wharton School, says stock prices could fall as much as 20 percent by year-end if Congress does nothing to keep the economy from falling over the fiscal cliff.

4. WATCH YOUR BRACKET.

Carefully consider the consequences of any sale on your adjusted gross income.

Selling a substantial amount of assets could drive you into a higher tax bracket than you would have been otherwise, and this would skew your math on tax savings. And you don’t want to trigger the additional 3.8 percent surplus tax on a big chunk of investment income.

5. PRESERVE YOUR CAPITAL LOSSES.

Don’t rush to sell if you have capital tax losses carried over from earlier sales.

The technique known as tax-loss harvesting is generally a savvy way to reduce your tax burden. If you have sold shares of a stock or mutual fund for less than you paid, that created a capital loss for tax purposes. It can be used to offset a capital gain that you incurred by selling another stock or fund.

Taxpayers who have more losses than gains can carry them over to subsequent years indefinitely and apply as much as $3,000 per year against their regular income.

But using the tax losses this year wouldn’t go as far as they would in 2013 and beyond when you’d likely have more capital gains taxes to offset. So, no need to sell shares now just to have a gain to offset in 2012. Better to hang onto those losses and use them in later years, advises Jeff Saccacio, partner in PwC’s private company services practice.

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Politics and Social Security

The issue:

Unless Congress acts, the trust funds that support Social Security will run out of money in 2033, according to the trustees who oversee the retirement and disability program. At that point, Social Security would collect only enough tax revenue each year to pay about 75 percent of benefits. That benefit cut wouldn’t sit well with the millions of older Americans who rely on Social Security for most of their income.

Where they stand:

President Barack Obama hasn’t laid out a detailed plan for addressing Social Security. He’s called for bipartisan talks on strengthening the program but he didn’t embrace the plan produced by a bipartisan deficit reduction panel he created in 2010.

Republican challenger Mitt Romney proposes a gradual increase in the retirement age to account for growing life expectancy. For future generations, Romney would slow the growth of benefits “for those with higher incomes.”

Why it matters:

For millions of retired and disabled workers, Social Security is pretty much all they have to live on, even though monthly benefits are barely enough to keep them out of poverty. Monthly payments average $1,237 for retired workers and $1,111 for disabled workers. Most older Americans rely on Social Security for a majority of their income; many rely on it for 90 percent or more, according to the Social Security Administration.

Social Security is already the largest federal program and it’s getting bigger as millions of baby boomers reach retirement. More than 56 million retirees, disabled workers, spouses and children get Social Security benefits. That number that will grow to 91 million by 2035, according to congressional estimates.

Social Security could handle the growing number of beneficiaries if there were more workers paying payroll taxes. But most baby boomers didn’t have as many children as their parents did, leaving relatively fewer workers to pay into the system.

In 1960, there were 4.9 workers for each person getting benefits. Today, there are about 2.8 workers for each beneficiary, and that ratio will drop to 1.9 workers by 2035.

Nevertheless, Social Security is ripe for congressional action in the next year or two, if lawmakers get serious about addressing the nation’s long-term financial problems. Why? Because Social Security is fixable.

Despite the program’s long-term problems, Social Security could be preserved for generations to come with modest but politically difficult changes to benefits or taxes, or a combination of both.

Some options could affect people quickly, such as increasing payroll taxes or reducing annual cost-of-living adjustments for those who already get benefits. Others options, such as gradually raising the retirement age, wouldn’t be felt for years but would affect millions of younger workers.

Fixing Social Security won’t be easy. All the options carry political risks because they have the potential to affect nearly every U.S. family while angering powerful interest groups. Liberal advocates and some Democrats oppose all benefit cuts; conservative activists and some Republicans say tax increases are out of the question.

But Social Security is easier to fix than Medicare or Medicaid, the other two big government benefit programs. Unlike Medicare and Medicaid, policymakers don’t have to figure out how to tame the rising costs of health care to fix Social Security.

Social Security’s problems seem far off. After all, the program has enough money to pay full benefits for 20 more years. But the program’s financial problems get harder to fix with each passing year. The sooner Congress acts, the more subtle the changes can be because they can be phased in slowly.

Arizona Flag

Arizona Politics 2010: The Year That Was SB 1070

It’s the start of 2011. This is usually when everyone writes top 10 lists for the year just past. I was going to write a “top 10 political stories of 2010 column,” when it occurred to me that was the year of one main significant political story.

Oh, there were plenty of important political happenings. President Obama and the Democrats were crushed nationally in the midterm elections. Arizona said goodbye to Congressman John Shadegg, Congressman Harry Mitchell, and Congresswoman Ann Kirkpatrick, and hello to newly elected Congressmen Paul Gosar, Ben Quayle and David Schweikert.

Our state struggled to balance the budget, and almost every city in Arizona made major cuts in order to balance theirs. Gov. Jan. Brewer’s re-election faced an early challenge from within her own party. During the general election campaign she froze in a televised debate and didn’t seem to offer any tangible evidence of headless bodies in the desert. Then of course she sailed to an easy victory at the polls.

Voters even decided that marijuana should be legal in Arizona (as medicine that is).

None of these other stories came anywhere close to being as significant as the firestorm created by the Support Our Law Enforcement and Safe Neighborhoods Act, more commonly known by its Senate bill number, SB 1070. At one point in the 2010 legislative session, SB 1070 seemed to lack support and was close to being dead. Then tragically, on March 27, southeastern Arizona rancher Robert Krentz was found shot to death alongside of his dog. His ranch sits 12 miles away from the U.S.-Mexico border. SB 1070 found new life and was signed into law on April 23.  Suddenly the nation was abuzz about Arizona. It even became a headline internationally.

Those first few weeks were a little surreal. Almost daily, you could find our local elected officials on national talk shows speaking out in favor or against it. Supporters justified that action was needed to deal with illegal immigration, an issue the federal government was ignoring. Opponents claimed SB 1070 would violate civil rights and lead to racial profiling.

SB 1070 was a little vague, so on April 30, HB 2162 was passed to amend and clarify it.

A boycott was called against Arizona and numerous lawsuits were filed, including one by the U. S. Department of Justice. The day before SB 1070 was to go into effect, a federal judge issued an injunction against a portion of the law that effectively killed it.

You might think that this is where the SB 1070 story ends, but it doesn’t — and that is what makes it such a huge event. Although nationally, numerous jurisdictions and high-profile people were passionate in their opposition, polling showed that it was more popular with the masses. A number of states are discussing similar legislation for 2011.

In the New Year, Russell Pearce, the Arizona Senate president and major sponsor of SB 1070, is continuing to focus on the same issue. With the start of the next Arizona Legislative session, he intends to take on the U.S. Constitution’s 14th amendment dealing with citizenship being granted to anyone born in the U.S. He is trying to prevent illegal immigrants from getting citizenship for their children by fleeing to America and having a baby on U.S. soil.

Although SB 1070 didn’t get enacted, it did serve part of the purpose it supporters intended. Illegal immigrants now recognize Arizona as the least friendly state to homestead in.

I still believe that SB 1070 would not have really fixed the problems it was intended to fix. However, it was successful in driving a complicated issue into the mainstream of discussion on the national level.

Arizona Business Magazine's Editor-in-Chief Janet Perez

The Buzz on AZNow.Biz – September 20, 2010

It’s another exciting week at AZNow.Biz. Arizona’s credit unions are asking Congress to allow them to make more loans to more small businesses. This week also marks the debut of our workforce columnist, Marcia Rhodes, from the recruitment firm WorldatWork. Rhodes asks the question, are you a good boss?  Find all this and more at AZNow.Biz.

How To Grow Green Jobs

How To Grow Green Jobs

I’m no economist but Nancy Folbre’s post on the Economix blog from the NY Times sure makes a lot of sense to me. Folbre is an economics professor at the University of Massachusetts Amherst and offers a compelling argument for growing green jobs.

She questions why a major public program hasn’t gotten any traction in Congress or the White House. So what’s the problem? Despite the fact that according to a recent Pew Foundation report that green jobs grew at a much faster rate (nearly two and a half times faster) than overall jobs and an increase of green jobs in the United States and in other countries, “more green job-creation proposals have gotten stuck in the mud,” Folbre writes. Her colleague at the University of Massachusetts, Robert Pollin, offered some insights, with a suggestion of a public-private program platform and a commitment from the Obama administration to create 18 million new jobs over the remaining three years of the presidential term among several other points. But is this realistic? And more importantly is this affordable?

Well Folbre quickly answers that later in her post stating:

“But Professor Pollin makes a persuasive case for affordability. His plan would mobilize private as well as public capital by expanding federal loan guarantees to encourage banks to invest in energy-saving projects.

The potential benefits are huge: the direct and indirect effects of his proposed initiative could add up to 18 million jobs over the next three years.

Even if national political will is lacking, a strong state or regional pilot project should be undertaken — a serious experiment in public job creation.”

Read Pollin’s full argument for reaching the goal of 18 million jobs by 2012 here.

I’m not quite sure about the economics but one thing I do know is that more jobs are definitely needed to truly help our nation recover. Working to enable green jobs, jobs that will help sustain not only our economy but our planet as well would be icing on the cake.

Sources:
economix.blogs.nytimes.com
www.thenation.com
www.pewtrusts.org

40th Anniversary of Earth Day

40th Anniversary Of Earth Day – Then & Now

As April 22nd draws near, sustainability-minded folks around the world are preparing to commemorate the 40th anniversary of the event. It’s hard to imagine that before Senator Gaylord Nelson created the event as a way to “force this issue onto the national agenda” there was no real concentrated efforts to do anything for the environment.

A lot has changed since 1970, when President Richard Nixon and Congress authorized the creation of a new federal agency — the Environmental Protection Agency — in response to the growing public demand for increased environmental awareness. Now, sustainability and being “green” is a hot topic across the globe and Earth Day is a worldwide movement.

The Environmental Protection Agency also has evolved greatly since its inception and is doing its part to raise awareness about the 40th anniversary of Earth Day. The agency has numerous incentives and programs that you can learn more about on their website www.epa.gov/earthday/. The Pick5 initiative lists simple things you can do to help the environment. Just click on a category, for example “Waste” and a list of tips pop open to show you what you can do to help! An interactive map lets you see what Earth Day activities will be going on in your area and much, much more.

This Earth Day, as we reflect on the history of this worldwide event, lets join together to create a successful future of continued environmental awareness.

Wall Street Rescue 2010

Wall Street’s Rescue Package Is Changing Tax Laws For Businesses

The recent financial rescue package signed into law by President Bush on Oct. 3 contains not just $700 billion in federal assistance, but also a number of tax measures that are significant for Arizona businesses.

Renewable energy tax incentives
The renewable energy tax incentives extension was widely anticipated by the industry. Many states, including Arizona, are adopting or expanding their renewable energy standards, and these provisions are designed to make the conversion to renewable energy more tax-efficient.

The 30 percent investment tax credit, particularly the eight-year extension of the Section 48 credit for solar energy, is especially important given Arizona’s potential for solar and alternative energy-related businesses. These incentives are expected to not only continue current investment levels, but also to attract new business investment in Arizona’s alternative energy efforts.

It’s key to note that the energy tax incentives apply to businesses that use them — not to solar energy manufacturers. For example, mixed-use developments adding solar panels to parking garages, construction firms building LEED (Leadership in Energy Efficient Design)-certified structures, and retail centers adding solar roof panels will benefit from the incentive.

Another aspect of the energy credit changes is the elimination of the public utility exception. Two years ago, the Arizona Corporation Commission ruled that regulated electric utilities must generate 15 percent of their energy from renewable resources by 2025. However, utilities have been unable to benefit from this incentive. Regulated utilities may now obtain a 30 percent investment tax credit from their investment in qualifying property.

For instance, if APS purchases solar panels and installs them on your property to provide your electricity, APS will be allowed to take the credit. This provision allows public utilities to own and operate solar and other energy tax credit facilities and include them in their rate base for rate-making purposes.

Research and development credit
The bill extends the research and development tax credit through the end of 2009, increases the alternative simplified research credit from 12 percent to 14 percent for the 2009 tax year, and repeals the alternative incremental research credit for the 2009 tax year.

Given the current economic conditions, this retroactive extension potentially creates both cash benefits and earnings-per-share benefits. Businesses will need to consider the financial statement effect of the research credit now available for 2008, as well as the effect of the retroactive extension on their estimated tax payments for the 2008 tax year. Fiscal-year taxpayers who have already filed their 2007 tax year returns should consider filing amended returns to claim research credits for the period for which the credit had expired. In light of increasing IRS scrutiny, consider your approach and your documentation for the research credits you take. This retroactive extension also provides the opportunity to consider a pre-filing agreement with the IRS for the research credit for the 2008 tax year and beyond.

Alternative minimum tax (AMT)
The AMT is a separately computed tax that eliminates many deductions and credits that are allowed in computing regular tax liability for individuals, estates and trusts. In recent years, Congress has repeatedly enacted a temporary “patch” that significantly raised the applicable AMT exemption amounts. The AMT exemption amounts are phased out for higher-income taxpayers.

The AMT patch for 2008, without which more than 20 million taxpayers would have been hit with AMT liability early next year when filing their 2008 returns, was included in the financial rescue legislation. The legislation also increases the AMT refundable credit amount for individuals with long-term unused credits for prior year minimum tax liability, eliminates the income phase-out, and abates any underpayment of tax (including interest) outstanding on Oct. 3 related to AMT that was generated from the exercise of incentive stock options.

Changing tax law, increased IRS audits and the direct negative ramifications that follow from financial statement restatements mean that achieving certainty in tax positions is more important than ever. Many taxpayers are planning upfront and substantiating all their positions. As companies experience flat or negative results, tax considerations become more important to the bottom line. Tax departments are being asked to find efficient ways to maximize cash and strengthen balance sheets. The new legislation can benefit businesses in this challenging time.

Wayne Hoeing is a partner with Ernst & Young LLP in the firm’s Phoenix office.