Thursday, September 5, 2013

How Business Can Help Us Avoid the Looming Retirement Crisis

Posted by American Forum at 7:05 AM



By Denise Bowyer 

I am a business leader, a baby boomer, and a consumer. In each of these roles, I am concerned about retirement security -- or should I say, the lack of it? But it is in my role as a business leader that I have the most concern. In business when vision and business plans collide, disaster normally follows.
Like me, many hard-working Americans hold a vision of retirement based in financial security. I imagined a comfortable seat in a comfortable home on a sturdy three-legged financial stool. For most Americans today however, that sturdy three-legged stool, made up of social security, employer pensions and private savings, is broken, wobbly and missing a leg or two.
Business leaders, working Americans and the policy makers who represent us are faced with a choice. We can either change our vision, or fix the problem.
Business is driven by confidence that a consumer will want to -- and be able to -- to purchase a good or service. A survey of small business owners recently released by the American Sustainable Business Council (ASBC) showed that 70 percent believe that the lack of retirement security is a threat to business and the overall economy. They understand that business cannot be sustained unless it has a sustainable customer base, including older Americans.
The solution should be a combination of public policies that strengthen social security, ease the path for employers to offer and administer transparent defined benefits or defined contribution plans, promotes personal responsibility and financial literacy. Here's how to do it one leg a time.
The first leg is Social security. It touches the lives of most Americans, and today for many working families it is the only leg of their retirement stool. At its founding it was not meant to be the only source of income, but to replace only about 40 percent of a workers income for retirement. That's a little more than half of the 70 percent of pre-retirement income that research suggests for a decent sustainable retirement. The mechanism of social security, equal employer and employee contributions coupled with payroll deduction, have proven to be a winning combination for 57 million Americans currently receiving benefits to the tune of $1,200 per month. Strengthening social security should be the single issue that all business people agree on.
There is no longer a universal second leg on the retirement stool. Employer-sponsored defined and contributed benefit plans are weak and/or broken. It is business' interest to protect the last bastion of defined benefits still in existence.
It is also in business interest to find cost effective solutions in implementing and executing employer sponsored plans. In the ASBC survey of small business owners, cost not values was cited as the single biggest obstacle to offering a retirement plan. There needs to be a way for public policy to reward small business who would offer a portable, universal, transparent, retirement supplement to their workers. America's future retirees and older business customers are the 50 percent of workers without an employer sponsored retirement plan. The average balance in a 401K today, hovers around $80,000. Half of Americans don't even have that option. A sound second leg option would go a long way towards helping the 67 percent of small business owners who do not currently offer a retirement plan.
The third leg of the retirement stool is supposed to be personal savings. Unfortunately, for most workers, savings amounts to three percent of their retirement needs at best. Today, most workers use savings for emergencies not retirement. In a time of flat and declining wages, saving for retirement is not realistic.
The solution to the lack of financial resources for retirement chosen by many who can is simply to work longer. For some of course, that is not an option. And even those who do often wind up being laid off from career jobs and forced to take low-wage jobs.
Business leaders are some of the best voices offering solutions to real life issues that affect our communities and impact our bottom line. We should listen to them. A wobbly, one-legged stool simply cannot support business or our customers for the long haul.
Bowyer is Vice President of American Income Life Insurance Company, based in Waco, TX

 

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Obama's Tax Plan a Bad Bargain for Small Business

Posted by American Forum at 7:01 AM



By Frank Knapp 

President Obama is right to address the urgent need to modernize our once grand infrastructure. Unfortunately, the president's corporate tax reforms would leave us in a deeper hole down the road.
The President's plan to cut corporate tax rates responds to the tireless mantra of U.S. multinational corporations that America's tax rates hurt their global competitiveness. In reality, American corporations are enjoying their highest level of profits in 60 years while their federal income taxes are close to the lowest level. The Government Accountability Office recently reported that large profitable U.S. corporations paid an effective federal tax rate of just 12.6 percent in 2010, a rate lower than many small businesses and middle-class families.
Large corporations like Pfizer, Bank of America and Google have avoided paying their fair share of U.S. taxes by abusing offshore tax havens and using accounting gimmicks to disguise U.S. profits as foreign profits. U.S. corporations are holding about $2 trillion offshore to shield it from U.S. taxation. These corporations have gamed the tax system, contributing mightily to the deficit while leaving small businesses and households to pick up a greater share of the cost of public services and infrastructure -- from schools and police to roads and safe drinking water.
While the details aren't clear, the President's plan includes a one-time fee on offshore profits -- much lower than the regular corporate tax rate -- that he wants to use for investing in our country's aging infrastructure and other priorities. Small businesses applaud increased investment in bridges, ports and other needed infrastructure that will also create jobs and put money on Main Street. However, history shows that rewarding corporate tax dodgers with hundreds of billions of dollars in tax breaks -- as happened with the 2004 tax holiday that promised job creation and delivered a windfall to CEOs and shareholders instead -- only accelerates tax haven abuse in the future. It would incentivize the armies of corporate accountants and lobbyists to create and exploit new loopholes even as old ones may be closed.
Ending corporate tax dodging is not a Republican issue or a Democratic issue; it's an American issue. In a nationally representative poll, in which Republicans outnumbered Democrats, more than 90 percent of small business owners said it is a problem when large corporations use accounting gimmicks to shift their U.S. profits to foreign tax havens in order to avoid taxes pay. Whether called a one-time fee or a tax holiday, a corporate tax amnesty policy is completely unacceptable to small businesses.
The President could close offshore tax loopholes without temporarily or permanently cutting corporate tax rates through a number of bills currently pending in Congress. These include bills to end deferral of taxes on corporate profits held offshore so that corporate income is taxed as it is earned and requiring offshore transactions to have an economic purpose beyond simply avoiding taxes.
Moreover, lobbyists who could not prevent the top-bracket Bush tax cuts from being reversed are saying that the President's plan for reducing corporate tax rates to 28 percent, with a lower 25 percent rate for manufacturers, should be accompanied by a reduction in top tax rates for individuals in order to be fair to small business owners -- most of whom report their business profits on their personal tax returns. This is another effort to use middle-class small business owners as a foil to help hedge fund managers, wealthy lawyers and big businesses like Bechtel, the nation's largest engineering firm, that are formed as pass-through income organizations. These are the two to three percent of high-income "small business" owners who would reap a big windfall if income tax rates for those at the top were reduced; the rest of the real small business owners would not be affected.
The reality is that what small businesses really need is dependable modern infrastructure and more demand for their goods and services, not tax breaks for big corporations and wealthy individuals. We can strengthen this demand by making big corporations pay their fair share of taxes and investing the new revenue in economic development.
Tax reform should be about building a vibrant 21st century economy for all businesses, not rewarding big corporations for free loading on the rest of us.
Knapp is the president and CEO of the South Carolina Small Business Chamber of Commerce and Co-Chair of the American Sustainable Business Council Action Fund.
 


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Wednesday, May 1, 2013

A Tax Day Message

Posted by American Forum at 11:51 AM

American Forum 

By Sandy Pappas

April 15 is Tax Day. As we race to get our taxes filed, lets consider what we actually get for our tax dollars. In Minnesota, we are putting together our state budget for 2014 which we intend to reflect our values as a state.
While every state faces its own budget challenges, we share a common challenge: crafting state budgets as our nation struggles with economic challenges and federal budgeting uncertainties. The roller coaster ride of fiscal cliffs, indiscriminate automatic cuts, debt ceilings, and other Washington shenanigans has been distinctly unhelpful.
In Minnesota, we cut back on crucial investments in education and infrastructure as tax revenues plummeted during the recession. Now with a slow recovery, we need to re-invest in our priorities around safety, security and productivity. Looming uncertainty makes it more difficult to commit to those investments. Here are a few suggestions for how Congress can reshape the federal budget to help the states continue to pull through the recession and emerge stronger and more economically competitive than ever.
First, Congress must find a way to bring more certainty back to the budget process. No more phony "fiscal cliffs" that get solved at the last moment. No more threats of government shutdowns.
Second, Congress needs to learn to make strategic budget priorities just as we have to do in our states. Each year over half of the discretionary spending Congress appropriates goes to Pentagon and war spending. Meanwhile the Pentagon is the only governmental agency that cannot pass an audit to show how it uses our tax dollars. Congress cannot continue to exempt the Pentagon budget from scrutiny while making deep cuts to other programs. About one-third of non-defense discretionary spending (the spending Congress votes on every year) goes to the states, so overspending at the Pentagon inevitably squeezes funding for programs on which our states rely.
Third, Congress continues to fund out-of-date weapons systems that we may never need or use. The F-35 is a perfect example. It is over budget, behind schedule, and plagued with technical problems. The future of America's security will not be determined by aerial combat between fleets of opposing aircraft, but by things like cyber security, counterterrorism and investing in economic competitiveness.
Fourth, we are scheduled to spend billions of dollars over the next 10 years for nuclear weapons that were designed to fight the wars of the last century. For the cost of just one new nuclear submarine, we could provide body armor and bomb-resistant Humvees to all our troops overseas, house and treat every homeless U.S. veteran, and still have $2.2 billion left over to pay down our debt. Congress should focus on protecting the nation from 21st century threats and rebuilding our nation's economy, not paying for pork barrel nuclear weapons projects.
Finally, many Pentagon contractors have successfully lobbied for generous tax breaks. We all use our nation's roads, count on schools to educate our future workforce, and rely on public safety workers like firefighters, so why should Pentagon contractors get a break on their taxes? Citizens for Tax Justice found that aerospace and defense firms paid an effective tax rate of 17 percent from 2008 to 2010, lower than the average of 18.5 percent paid by all industries. It's especially galling when these same contractors are seeing big profits and executive pay on par with Wall Street executives.
We all do our part by paying our taxes every April. As Supreme Court Justice Oliver Wendell Holmes remarked, "Taxes are what we pay for civilized society." Now we need Congress to do its part by putting together a civilized budget for our society that invests our tax dollars wisely and reflects our values as a nation. We cannot afford to keep spending on out-of-date, unnecessary Pentagon programs. We must reshape the Pentagon budget to respond to 21st century threats, we must repair our economy, and we must start investing in the future. Let's send this message to our representatives in Congress!
Pappas is the President of the Minnesota Senate and vice president of the Women Legislators' Lobby, a program of Womens Action for New Directions.
 

 

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Women Are Tired of Waiting for Equal Pay

Posted by American Forum at 11:48 AM

 American Forum 
By Lisa Maatz 

As someone who has spent the better part of my life fighting for fair pay for women, I believe it s always a good time to talk about the pay gap. But the topic is especially important now -- and the timing has little to do with Equal Pay Day on April 9.
Equal Pay Day is the symbolic date when women's wages finally catch up to men's from the year before -- this year, it just happens to fall amid sequestration and passage of Rep. Paul Ryan's (R-Wisc.) budget in the House. Both disproportionately slash programs that help women and their families. Women already earn less on average than men, and now programs they depend on to help make ends meet are being cut. These seemingly never-ending budget battles are compounding what is already a pernicious problem.
Yet somehow the pay gap went largely overlooked as the dramatic spending cuts known as sequestration went into effect. Sequestration harms women and girls through cuts to K 12 funding, higher-education programs, work-force training, funding for agencies that enforce civil rights protections like equal pay, women's health programs, and programs that promote getting more women into high-wage science, technology, engineering and mathematics careers -- just to name a few.
How is the average woman who loses out on thousands of dollars in wages each year due to the gap supposed to make up for cuts to these programs? Easy answer: She can't. And neither can her family. Make no mistake, equal pay is a family issue.
And then we have the Ryan budget, which slashes nondefense spending by trillions of dollars, mostly by cutting programs that benefit women, students and families. Ryan's budget cuts Pell Grants and other college aid, Head Start, job training, Medicare, Medicaid, and funding for civil-rights enforcement. And it repeals the Affordable Care Act, which provides critical, no-cost preventive benefits for women.
I recognize that Congress is grappling with tough budgetary tradeoffs, but our ability to access basic education and health care cannot be sacrificed. As American Association of University Women research shows, women already have a harder time paying back student loans because of the pay gap. Now the aid they depend on to go to college is in jeopardy.
We mark Equal Pay Day as an opportunity to educate the public and demand action. This year, Congress took action on policies that exacerbate the pay gap's impact and put the economic security of American families at risk. Thankfully, Sen. Patty Murray s (D-Wash.) budget blueprint took the Senate in a more moderate direction, sharing the sacrifice and working to help the most vulnerable among us. Sen. Barbara Mikulski's (D-Md.) budget amendment insists we make equal pay a budgetary priority, but we still need stronger laws to fulfill that promise -- laws like the still un-passed Paycheck Fairness Act.
I can't state it more plainly: The pay gap hasn't budged in 10 years. And when you compare women and men in the same job doing the same work, we still find a gap. This inequality affects women's wages today and their retirements tomorrow, and it weakens our national economy. It's past time for real change.
This Equal Pay Day, ask your politicians one question: Will you finally take action to fix a problem that affects women and their families every day?
Make the answer good. Women are watching, and we're tired of waiting.
Maatz has served as AAUW's director of public policy and government relations since 2003.
 

 

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