Owner's Manual

2012 Statewide Political Contests Take Shape

While most eyes are focused on the ongoing Republican presidential nominating process and the general election, all eyes should be focused on Wisconsin this spring. The recall election effort against Gov. Scott Walker, led predominantly by unions, may prove to be the biggest momentum push of the 2012 election cycle and will likely have implications on other races across the country.

Among governors’ races, North Carolina’s open seat will be one of the most competitive and one of the best opportunities to elect a pro-small business governor. Open seats in Indiana, Montana, New Hampshire and Washington are also expected to be very competitive this year.

The outcomes of the 2012 races will determine whether there is a pro-small business majority in the U.S. Senate, which is essential to changing the climate in Washington and across the nation. NFIB Guardian winners Sens. Scott Brown (Mass.) and Dean Heller (Nev.) will face tough first-time  re-election races. Open-seat races in Hawaii, New Mexico, North Dakota, Virginia and Wisconsin are all expected to be highly competitive.

For more information throughout the year, please visit www.NFIB.com/elections.
– NFIB Staff

States With Low Tax Rates Experience High Job Creation

Call it the taxes two-step.

As the uncertain economic recovery unfolds, one trend is clear: Businesses and jobs are booming in states with lower tax rates—and policymakers are taking notice.

In its latest report issued Jan. 25, the nonpartisan Tax Foundation in Washington, D.C., ranked Florida and Texas among the best business climates in the country. Those same states, according to data from the Bureau of Labor Statistics, added 7,300 and 20,200 jobs, respectively, in December alone. 

Meanwhile, states that ranked among the worstbusiness climates shed jobs, including New York (14,000 jobs) and Vermont (700). “Even in our global economy, a state’s stiffest and most direct competition often comes from other states,” said Tax Foundation economist Mark Robyn in a statement announcing the rankings. “State lawmakers need to be aware of how their state’s business climates match up to their immediate neighbors and to other states in their region.”

As 2012 state legislative sessions convened in January, it was clear that many state policymakers have taken that message to heart. Arizona Gov. Jan Brewer pushed for a reduction in tax rates on capital gains. Kansas Gov. Sam Brownback called for eliminating income taxes for the state’s 191,000 small businesses. Michigan lawmakers unveiled plans to phase out taxes paid on business equipment. And in Oklahoma, a task force assembled by Gov. Mary Fallin is weighing how to reform the state’s tax code.

“We have a really good crop of governors who are figuring out a competitive business climate is the best way for job growth,” said Jonathan Williams, director of the Tax and Fiscal Policy Task Force for the American Legislative Exchange Council, a nonpartisan network of state lawmakers and private-sector members in Washington, D.C. “We’ll see a very good year for taxpayers and small business owners across the country.”
–  Adam Wren
 

Ready to File? Apply These Last-Minute Tax Tips

With tax time just around the corner, use these last-minute reminders to help you get the best return.

Review all of your credit card statements. “When you charge tax-related items on a credit card, they are deductible on the date the charges are incurred,” said Dewey Martin, an NFIB member and certified public accountant in Hampden, Maine. “Therefore, review your January 2012 statements for December 2011 transactions that might save you income taxes.”

Martin also advised that the contributions made to an IRA up to April 15, 2012, can be deducted on your 2011 return. “Also, if you are eligible to have a Simplified Employee Pension [a retirement plan for the self-employed], deposits can be made up to the extended due date of your 2011 return, and still be deducted on that return,” he said.

Since you can deduct the fair market value of most property donated to a qualified charitable organization, Martin said to tally up the donations of property, such as clothing or furniture, you made to charities in 2011.

Lastly, if you made energy improvements to your home, now is the time to claim those credits because you might not get another opportunity. “If Congress doesn’t extend it, this deduction expires in 2011, so be sure to claim those credits on your 2011 return," Martin said.
– Heidi Hjerpe

Get organized for 2012! Watch our tax planning webinar at www.NFIB.com/tax_webinar

Microsoft Office Finally Comes to the iPad

Life just got brighter for iPad users bemoaning the tablet’s limited word processing potential. A new app called OnLive Desktop provides free access to Word, Excel and PowerPoint on the iPad, provided there’s a Wi-Fi connection nearby.

The app allows you to create and upload documents, edit them on your iPad, and sync files between OnLive and your computer. Depending on your preference, you can type using an on-screen or wireless keyboard.

Despite their reputation as toys for Web surfers, tablets are increasingly used by small business owners and employees. But users have been relying on other apps to create documents, spreadsheets or presentations. Possible downside: Despite 2 GB of free, cloud-based storage, users may experience a brief lag in service, and access isn’t guaranteed.

An OnLive version with more storage space (starting at $9.99 per month) may appeal to heavy iPad users. Android and iPhone versions are also in the works.     
– Clare Curley

Minimum Wage Battles Remain on Legislative Agendas

As of Jan. 1, eight states increased their minimum wage, in line with state laws that require wage floors to keep up with inflation. Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington workers’ minimum wages increased between 28 cents to 30 cents an hour, equating to an extra $582 to $770 a year for a full-time worker.

Additionally, legislation to increase the minimum wage has been introduced in several Democratic-controlled states—where it would have the best chance of passing—including California, Massachusetts, Maryland and Illinois. Massachusetts legislation, for example, outlines a phased approach to raising the state’s minimum wage from $8 to $10 an hour by 2013, with annual cost-of-living adjustments.

Labor groups are launching minimum wage campaigns in additional states, including Missouri, New Mexico and New York. The Give Missourians a Raise Coalition is soliciting signatures now for a statewide ballot initiative in November, which would let voters approve a $1-per-hour raise for minimum-wage workers.

Raising the minimum wage can actually hurt low-wage workers because employers will ultimately choose to hire fewer people, said NFIB chief economist Bill Dunkelberg. Other economists, however, believe the increased spending power of these workers will create jobs to support the additional demand.

“That’s a myth,” Dunkelberg said. “Every dollar raised for the minimum wage comes out of the customer’s pocket or the owner’s pocket. This money doesn’t just appear out of thin air.”             
– H.H.

Sow the Seeds of Free Enterprise With YEF Curriculum

Students must be prepared for rapid change in a dynamic, entrepreneurial work environment. The Entrepreneur-in-the-Classroom curriculum, developed by NFIB’s Young Entrepreneur Foundation, can help by focusing on what entrepreneurship is, why it’s important to the American economy, how to write a business plan, and the nuts and bolts of running a business.

More than 3,100 high-school teachers have accessed this free curriculum. Encourage teachers in your community to use the curriculum or use it to start a conversation about free enterprise with the young people in your own life.

Find out more at www.NFIB.com/yef/yef-programs/entrepreneur-in-the-classroom.             
– NFIB Staff

E-Verify Gains Ground
Despite E-Verify’s high error rate, many states are requiring businesses to use the system.

In an attempt to curb the hiring of illegal workers, 10 states passed legislation in 2011 that require employers to use E-Verify, a free Internet system that allows employers to verify electronically that an individual is authorized to work in the United States. Those states were Alabama, Florida (through executive order), Georgia, Indiana, Louisiana, North Carolina, South Carolina, Tennessee, Utah and Virginia.

Currently, 17 states mandate the use of E-Verify. While some states only require state agencies to comply, others require public and private employers, contractors and subcontractors to use the system.

Most states fine or temporarily suspend business licenses for noncompliance, but states like Alabama and South Carolina revoke them after multiple violations. On the other end of the spectrum, California passed a law in 2011 that prohibits localities from mandating the use of E-Verify.

The legislation comes on the heels of a 2007 U.S. Supreme Court decision that upheld an Arizona law mandating the use of E-Verify, thus setting a precedent for other states to follow suit.

The new laws haven’t come without opposition. Opponents point to E-Verify’s high error rate, which some say is as high as 50 percent. The system not only fails to identify undocumented workers, according to critics, but has also incorrectly marked some legal U.S. citizens as unauthorized, leaving small businesses with a lot of paperwork that doesn’t accomplish the task.

There’s also economic impact. In Alabama, farmers are planting fewer crops that require handpicking—work that’s often done by migrant workers, said NFIB/AL State Director Rosemary Elebash. That will likely raise the cost of those foods. “It’s having a tremendous impact,” she said. According to Bloomberg Government, if E-Verify had been mandatory in all states in 2010, small businesses would have spent $2.6 billion to participate.                     
– Elizabeth Cotner