Tag Archives: president obama

taxes

Tax reform aims to help small businesses

During the State of the Union address, President Obama said that tax reform is a key issue for small businesses today. Specifically, the president stressed that many small businesses are overwhelmed with administrative tasks associated with tax filing and deserve the opportunity to focus on strategic areas of their business that could help them grow and hire more workers.

“For many businesses, the complexity of the tax code is challenging,” said Ron Butler, partner at Ernst & Young in Phoenix. “Small businesses and entrepreneurs incur significant costs to interpret and apply federal tax rules and regulations and to produce the required information necessary to prepare accurate returns. They would benefit from a system that modernizes and simplifies their tax compliance and reporting obligations.”

According to the National Federation of Independent Business, tax compliance costs are 65 percent higher for small businesses than for big businesses, costing small business owners $18 billion to $19 billion per year.  In addition, nearly nine out of ten small businesses rely on outside tax preparers. With about half of the private sector workforce employed by a small business — a total of nearly 60 million Americans — these costs, along with tax rates as high as 44.6 percent, carry a heavy burden for small businesses.

“Record keeping and record retention are probably the most overwhelming administrative tasks (for small businesses),” said Donna Witherwax, tax partner at Grant Thornton in Phoenix. “Not only do they contribute to unproductive costs, they also divert attention from the more important tasks a small business owner should focus on. Small businesses often lack the resources to fully understand how the tax law affects their business.”

To put the need for reform succinctly: “Tax reform presents an opportunity to achieve tax code simplification and improve our nation’s present fiscal path,” Butler said.

To help put us on a better path, the House Ways and Means Committee released a set of proposals in March that are aimed at reforming tax laws for small businesses. As part of a broader, comprehensive tax reform package that would significantly lower rates for small businesses, the proposal would reform and try to simplify tax compliance for small businesses and provide certainty with respect to the ability of small businesses to recover certain costs immediately. These include widely supported reforms such as permanent Section 179 expensing and expansion of the “cash accounting” method, amongst other provisions.

“The most important thing for lawmakers to focus on in this tax reform is re-establishing rate equality,” Witherwax said. “That is, making sure that the current tax rate applied to income earned by an active small business that is organized as a partnership, S corporation or sole proprietorship is no higher than the rate applied to income earned by a normal C corporation. Normally, I would say they should focus on making it easier for small businesses to comply by providing simple and direct rules and additional safe harbors, as well as focusing on minimizing the record keeping burden. But this is not a normal tax reform process.”

Witherwax said the tax reform that is currently being discussed in Washington began as a quest to reduce the statutory corporate tax rate in order to address the disadvantage U.S multinationals face in competing with the multinationals of other nations as a result of the U.S. rate.

“There are good reasons to do that,” she said. “But reducing corporate rates alone would disadvantage those active small businesses that operate as partnerships, S corporations or sole proprietorships. Leaving their rate where it is while reducing the rate of their larger C corporation competitors would put these small businesses at a competitive disadvantage. A disadvantage that would be exacerbated  if the revenue lost by reducing the corporate rate is offset by changes that eliminate some of the business tax benefits that small businesses rely on. For these reasons, in this tax reform, rate equality is the most important thing.”

The good new is that the discussion draft released by the House Ways and Means Committee is designed to provide more uniform tax treatment for pass-through businesses such as sole proprietorships, partnerships and S corporations. The draft also includes proposals that would spur investment in equipment needed to grow business operations by providing permanent expensing of investments and property; would simplify tax and accounting practices by expanding the use of the simpler “cash accounting” method to businesses with gross receipts of $10 million or less; would provide relief for start-up and organizational costs by establishing a unified deduction for these expenses; and make tax compliance easier for partners and S corporation shareholders by reordering and simplifying the due dates of tax returns for partners and S corporations.

To create reform that’s going to work, experts say, it’s vital that they solicit first-hand feedback.

“Lawmakers should ask small business owners and their tax advisors what changes they want,” said John Hanson, a tax attorney with Sacks Tierney in Phoenix. “ They are best suited to propose worthwhile changes because they are dealing with these issues daily.”

Dave Camp, R-Mich., chairman of the tax-writing House Ways and Means Committee that released the set of proposals aimed at reforming the tax laws for small businesses, said he encourages small business owners and stakeholders to review the discussion draft and to share feedback with their lawmakers and the Ways and Means Committee.

“More Americans get their paycheck from small businesses than any other type of business or government,” Camp said in a statement. “If we really want to strengthen our economy and put more money in the pockets of American workers, we must fix the Tax Code and how it treats small businesses. In addition to all the complexity these Main Street businesses face, Washington currently taxes them at top rates nearly 10 percentage points higher than their corporate counterparts. That’s simply unfair to small businesses … These are the businesses we see every day, where so many of our friends, family and neighbors work … They need and deserve a Tax Code that works for them.”

THE IMPACT OF REFORM

Ron Butler, partner, Ernst & Young: “A broader, comprehensive tax reform package that lowers rates and simplifies tax rules for individuals, small businesses and corporations could be a driving force for economic growth and job creation in the American economy.”
John Hanson, tax attorney, Sacks Tierney: “Tax reform that reduces the compliance burden on small business owners will allow them to invest more resources in their businesses, become more profitable and create more jobs.”
Donna Witherwax, tax partner, Grant Thornton: “It depends on the tax reform we get.  If business rate equivalency can be restored, and a more efficient tax code adopted, small business could be a winner.”

Curtis A. Hildt, tax managing partner, Deloitte Tax LLP: “Small businesses will be able to focus their efforts toward business operations instead of weaving their way through a complex tax system.”

health care

High Court Upholds Key Part Of Obama Health Care Law

WASHINGTON — The Supreme Court on Thursday upheld the vast majority of President Barack Obama’s historic health care overhaul, including the hotly debated core requirement that virtually all Americans have health insurance.

The 5-4 decision means the huge overhaul, still taking effect, will proceed and pick up momentum over the next several years, affecting the way that countless Americans receive and pay for their personal medical care.

The ruling hands Obama a campaign-season victory in rejecting arguments that Congress went too far in approving the plan. However, Republicans quickly indicated they will try to use the decision to rally their supporters against what they call “Obamacare.”

“While no legislation is perfect, more people will now have access to affordable health insurance, and that is a good development for patients and the hospitals that serve them,” said Arizona Hospital and Healthcare Association President and Chief Executive Officer Laurie Liles. “This is a pivotal time in our history, and hospitals are transforming the way healthcare is delivered, making care safer and more affordable for patients,” she said. “Arizona hospital leaders look forward to partnering with policymakers to achieve the goals of better care, better health and lower costs.”

Stocks of hospital companies rose sharply, and insurance companies fell immediately after the decision was announced that Americans must carry health insurance or pay a penalty.

Breaking with the court’s other conservative justices, Chief Justice John Roberts announced the judgment that allows the law to go forward with its aim of covering more than 30 million uninsured Americans.

The justices rejected two of the administration’s three arguments in support of the insurance requirement. But the court said the mandate can be construed as a tax. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” Roberts said.

The court found problems with the law’s expansion of Medicaid, but even there said the expansion could proceed as long as the federal government does not threaten to withhold states’ entire Medicaid allotment if they don’t take part in the law’s extension.

“Now that the Supreme Court has removed the uncertainty surrounding the constitutionality of the Affordable Care Act, it’s time for employers to get to work,” said Sheldon Blumling, an attorney with Fisher & Phillips, a national labor and employment law firm that represents employers. Blumling, an employee benefits attorney who counsels clients on how to comply with the law, continued by saying: “Employers must focus on how the employer “play or pay” mandate and other aspects of the law will impact their plan design and costs beginning in 2014. In addition to the long-term strategic concerns for employers, there are numerous new compliance obligations that must be addressed immediately. In the next 18 to 24 months, employers will be extremely busy getting their healthcare houses in order.”

The court’s four liberal justices, Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor, joined Roberts in the outcome.

Justices Samuel Alito, Anthony Kennedy, Antonin Scalia and Clarence Thomas dissented.

Kennedy summarized the dissent in court. “In our view, the act before us is invalid in its entirety,” he said.

The dissenters said in a joint statement that the law “exceeds federal power both in mandating the purchase of health insurance and in denying non-consenting states all Medicaid funding.”

In all, the justices spelled out their views in six opinions totaling 187 pages. Roberts, Kennedy and Ginsburg spent 57 minutes summarizing their views in the packed courtroom.

The legislation passed Congress in early 2010 after a monumental struggle in which all Republicans voted against it. House Majority Leader Eric Cantor, R-Va., said Thursday the House will vote the week of July 9 on whether to repeal the law, though such efforts have virtually no chance in the Democratic-controlled Senate.

GOP presidential candidate Mitt Romney has joined in calls for complete repeal.

After the ruling, Republican campaign strategists said Romney will use it to continue campaigning against “Obamacare” and attacking the president’s signature health care program as a tax increase.

“Obama might have his law, but the GOP has a cause,” said veteran campaign adviser Terry Holt. “This promises to galvanize Republican support around a repeal of what could well be called the largest tax increase in American history.”

Democrats said Romney, who backed an individual health insurance mandate when he was Massachusetts governor, will have a hard time exploiting the ruling.

“Mitt Romney is the intellectual godfather of Obamacare,” said Democratic consultant Jim Manley. “The bigger issue is the rising cost of health care, and this bill is designed to deal with it.”

More than eight in 10 Americans already have health insurance. But for most of the 50 million who are uninsured, the ruling offers the promise of guaranteed coverage at affordable prices. Lower-income and many middle-class families will be eligible for subsidies to help pay premiums starting in 2014.

There’s also an added safety net for all Americans, insured and uninsured. Starting in 2014, insurance companies will not be able to deny coverage for medical treatment, nor can they charge more to people with health problems. Those protections, now standard in most big employer plans, will be available to all, including people who get laid off, or leave a corporate job to launch their own small business.

Seniors also benefit from the law through better Medicare coverage for those with high prescription costs, and no copayments for preventive care. But hospitals, nursing homes, and many other service providers may struggle once the Medicare cuts used to finance the law really start to bite.

Illegal immigrants are not entitled to the new insurance coverage under the law, and will remain one of the biggest groups uninsured.

Obama’s law is by no means the last word on health care. Experts expect costs to keep rising, meaning that lawmakers will have to revisit the issue perhaps as early as next year, when federal budget woes will force them to confront painful options for Medicare and Medicaid, the giant federal programs that cover seniors, the disabled, and low-income people.

The health care overhaul focus will now quickly shift from Washington to state capitals. Only 14 states, plus Washington, D.C., have adopted plans to set up the new health insurance markets called for under the law. Called exchanges, the new markets are supposed to be up and running on Jan. 1, 2014. People buying coverage individually, as well as small businesses, will be able to shop for private coverage from a range of competing insurers.

Most Republican-led states, including large ones such as Texas and Florida, have been counting on the law to be overturned and have failed to do the considerable spade work needed to set up exchanges. There’s a real question about whether they can meet the deadline, and if they don’t, Washington will step in and run their exchanges for them.

In contrast to the states, health insurance companies, major employers, and big hospital systems are among the best prepared. Many of the changes called for in the law were already being demanded by employers trying to get better value for their private health insurance dollars.

“The main driver here is financial,” said Dr. Toby Cosgrove, CEO of the Cleveland Clinic, which has pioneered some of the changes. “The factors driving health care reform are not new, and they are not going to go away.”

Justice Ginsburg said the court should have upheld the entire law as written without forcing any changes in the Medicaid provision. She said Congress’ constitutional authority to regulate interstate commerce supports the individual mandate. She warned that the legal reasoning, even though the law was upheld, could cause trouble in future cases.

“So in the end, the Affordable Health Care Act survives largely unscathed. But the court’s commerce clause and spending clause jurisprudence has been set awry. My expectation is that the setbacks will be temporary blips, not permanent obstructions,” Ginsburg said in a statement she, too, read from the bench.

For more information on the new health care law, visit The White House’ website at whitehouse.gov/healthreform.

Republican Presidential Debate at Mesa Arts Center

The Republican Presidential Debate Viewing Party

On Wednesday, February 22, the Republican party held their primary debate here in Arizona. I ventured out into deep Mesa to cover the debate, but since I couldn’t actually get into the building, I decided to walk around outside the Mesa Arts Center, where a large, outdoor viewing party was being held. There were plenty of journalists there reporting on the debate, so instead of writing a conventional news story, I decided to record a running diary of my time at the event. Pics are at the end of the post.

5:02 pm – Paul supporters out in full force today.

5:12 pm – Political events have the best people watching.

5:16 pm – About 50 percent of the crowd is vocal Ron Paul supporters. So far I have only seen a small number of people #SpreadingSantorum or showing support for the other two candidates.

5:21 pm – There is a large number of protesters here to support the DREAM Act, a legislative proposal that would provide amnesty for illegal immigrants. For the rest of this piece, I will refer to these protestors as “the DREAM Actors.”

5:25 pm – The city of Mesa hired a band to perform on stage before the debate starts. They’re trying really hard, but no one is listening.

5:40 pm –The DREAM Actors are now marching, while chanting “Sí se puede” and “We’re not afraid.” I have a feeling that immigration is going to be a hot topic at tonight’s debate.

5:45 pm – I just came across some demonstrators imploring the candidates to, “Please free Syria.” Sorry bros, maybe if you guys had more oil …

5:41 pm – There are also a small number of people here to support the #Occupy movement. I wonder if they know that Warner Brothers (a major corporation, man!) gets a cut from every single Guy Fawkes mask they buy.

5:50 pm – Governor Jan Brewer is now on stage getting the folks fired up! #ScorpionsForBreakfast

5:51 pm – “Tonight we will get clear and concise answers from the candidates…” HAHAHA! Good one, J.Brew!

5:53 pm – Arizona Republican Party Chairman Tom Morrissey comes up on stage to ask us if we love our country, and then to lead us through the Pledge of Allegiance.  But before we begin, he reminds us that there is no pause between the words “one nation” and “under God.” Thanks for the tip, Tom!

5:55 pm – The MC for the outside crowd instructs us to cheer wildly whenever they point the camera at us. “Get up, cheer, jump around, send gang signs… I mean, no, HAHA, don’t do that!” Are you sure you don’t want to see my gang sings, CNN outside party MC? I want to represent my crew. #westside

6:00 pm – “This is CNN.” LET’S DO THIS.

6:01 pm – THIS DEBATE COULD CHANGE EVERYTHING!!!! At least that’s what CNN says could happen.  CNN gives all the candidates a pro-wrestling style intro. Ron Paul’s is by far the lamest.

6:01 pm – During the introductions, Newt gets some polite applause; Romney and Santorum get a few cheers from the crowd outside. Paul has the loudest supporters.

6:04 pm – In the first answer of the debate, Rick Santorum says that he would cut Medicaid and food stamps, but not military spending. But hey, don’t criticize him. Rick is a good Christian man, and I’m pretty sure he’s just following what it says to do in the Gospel.

6:11 pm – Right now, Santorum is getting hammered on his voting record. It must be hard to get elected president after spending many years in Congress. Even the smallest and most routine votes can come back to haunt you.

6:12 pm – People outside keep applauding the comments like the candidates can hear them.  Inside the Mesa Arts Center, Newt Gingrich has just informed the crowd that today is the 280th birthday of President George Washington. #historian #knowledgeBombs

6:14 pm – Gingrich’s big stumping point for this debate seems to be energy and gas prices; he has already mentioned it a few times. Also, there is a large man in a chicken suit standing right behind me. I don’t know what he wants.

6:16 pm – The chicken man is standing so close I can feel his breath on the back of my neck. #veryuncomfortable

6:17 pm – Ron Paul continues to get the loudest cheers. He tells the audience that we need to stop all foreign aid because it is a waste of money and it helps our enemies. But what about programs like the Peace Corps, or emergency food/medical services? That might make a good follow-up question, John King.

6:21 pm– Romney is bragging about deporting illegal immigrants while he was Governor of Massachusetts. The DREAM Actors protesting outside do not like this. Also, I have to wonder why the moderators allow the crowd inside the Mesa Arts Center to cheer/applaud during the debate. This has happened at every single Republican debate. It makes the candidates to pander to the crowd and it wastes time.

6:37 pm – Wow, a good follow-up question about the managed bankruptcies and the auto industry by John King. See I knew you had it in you! Still, I’m pretty disappointed with the types of questions I’ve been hearing throughout the Republican Primary. <rant> It seems like the reporters/journalists are covering the campaign like it’s a horse race; they’re not concerned with the actual issues. The news media is only searching for buzz-worthy, marketable, thirty-second soundbites; they let the presidential candidates spout of the same talking points, over and over again, unchallenged. No one ever asks the candidates about how that will actually make their plans happen, or speculates about the possible ramifications if the Republicans succeed </rant>.

6:42 pm – We’re still on the topic of the auto bailouts. Ron Paul is insisting that politicians shouldn’t meddle in corporate bankruptcies, because they can’t figure that kind of stuff out. Are politicians stupid? Does that mean we should start electing smarter people?

6:50 pm – All the Republican challengers seem to agree that President Obama has launched a vicious attack on religious freedoms in America (via contraception). Is Obama the next Maximilien Robespierre? #reignofterror

7:03 pm – Santorum and Romney keep blaming each other for causing Obamacare. Santorum says that Obamacare was based on Romney’s state healthcare plan in Massachusetts, while Mitt claims that Obama’s bill never would have passed through Congress if Santorum hadn’t indorsed Senator Arlen Spector (who voted for the bill after he was re-elected). Which Republican presidential candidate do you think deserves the credit for overhauling the American healthcare system?

7:04 pm – The crowd outside lustily boos Maricopa County Sherriff Joe Arpaio when he is introduced during the debate. They must have had a bad experience at tent city or something.

7:13 pm – Newt Gingrich loves Ronald Reagan. He loves Ronald Reagan more than you ever could. He wants you to know that.

7:14 pm – During commercial breaks, the CNN crew keeps asking us to cheer when they put us up on the big screen. Why do they need our cheers so badly? Are they terribly insecure, to the point where they need constant reassurance that they are doing a good job?

7:20 pm –The DREAM Actors and Ron Paul supporters have crowded around the CNN cameras. Their signs are partially obscuring the big screen, which is angering other people in the crowd.

7:26 pm – We are now on the topic of Iran and nuclear weapons. If you listen, you can hear the drums of war beginning to beat. This is getting the Ron Paul supporters and traditional Republicans fired up, but for very different reasons.

7:31 pm – You can tell people are into the debate when they loudly muttering their own personal commentary. It isn’t the least bit annoying. #sarcasm

7:47 pm – During the last commercial break, two men start chanting Romney’s name. No one else joins in and they quickly stop.

7:52 pm – Gingrich and Romney refuse to answer John King’s final question. They instead use the time for a closing argument about why they should be president. When John King tries to protest, Romney slaps him back down #WHO’SYOURDADDY

7:55 pm – It’s over. Time to get out of here.

Final Take: During the debate, new frontrunner Rick Santorum boxed himself in by pointing out that he voted for large bills and packages that he didn’t believe in, such as Title X, which is not popular among the Republican electorate. He portrays himself as a principled Washington outsider, but by admitting and trying to defend the fact that he played the political game, Santorum lost a lot of his credibility. Honesty gets you nowhere in these debates. I expect Mitt Romney will get a boost over the next several days.

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Rider Levett Bucknall, LEED

Is ‘Green’ The Whole Answer?

Our natural resources are limited and they are fast becoming scarcer and more costly. Thankfully, in recent years, awareness of this issue has heightened and individuals, companies and governments are making efforts towards more responsible usage of our depleting natural resources. Unarguably, we’re in the Age of Environmental Thrift, when ‘going green’ is just good practice—for the planet and for the pocketbook. The question remains, are we doing enough to minimize the use of scarce resources?

In the construction industry, environmentally responsible practices are being promoted by the US Green Building Council and others through programs like the Leadership in Energy and Environmental Design (LEED™) rating system. Overall, 26 state and local governments—the state of Arizona among them—are mandating LEED™ certification for new construction, and President Obama is currently seeking LEED™ certification for improvements made to the White House.

Despite the rapid acceptance of sustainable design and its application on a variety of both new-build and renovation projects, the practice is limited in its ability to reduce whole earth impacts. Why? Because even though continual improvements are being made in the ways in which we use natural resources—sustainably harvested lumber, energy-efficient building systems, recycled building products—we’re still consuming! Only if the scale of resource usage stabilizes will the efficiency of how they are delivered result in reducing the net environmental impact. We need to be asking how and where we can use existing assets instead of consuming more of the earth’s limited resources to construct new assets.

Significant natural resources can be saved by capturing the remaining value and extending the life of a building rather than demolishing and replacing it. But how does one know if it is viable to extend the life of a building? The state of Arizona addressed this question in 2004 by implementing a process in which consideration must be given to ‘relifing’ existing buildings before a new government building can be procured. Rider Levett Bucknall worked with government officials to develop the legislation which, in the first six months, saved the state $26 million. The legislation has since been endorsed by the American Legislative Exchange Council as model legislation for all 50 states.



Through a relifing study on an existing Arizona state medical laboratory building, including an inspection of the current condition of various building components and their life expectancies, Rider Levett Bucknall determined that investment of approximately $4.9 million would allow continued use of the building for an additional 25 years.


‘Relifing’ is mathematically-based analysis which helps building owners and managers capture the remaining value of and extend the life of their buildings after years of service. It improves the decision making process when considering whether to renovate a building versus demolish it and build new and can be used during the design of a new building to optimize the building’s design life. Throughout the development process, it helps to minimize the use of scarce natural resources.

The Age of Environmental Thrift provides an ideal time for people to reconsider the traditional approaches to green practices, especially in the construction industry. Building owners, designers and contractors should be open to new ways of approaching old problems and be willing to implement tools to help them get the most out of our shrinking resources.


Rider Levett Bucknall is an international property and construction consultancy headquartered in Phoenix, Arizona. www.rlb.com/life