B is for Business's blog

http://www.chicagotribune.com/news/local/chi-070403obama-ballot,1,57567.story

"There they began the tedious process of challenging hundreds of signatures on the nominating petitions of state Sen. Alice Palmer, the longtime progressive activist from the city's South Side. And they kept challenging petitions until every one of Obama's four Democratic primary rivals was forced off the ballot.

Fresh from his work as a civil rights lawyer and head of a voter registration project that expanded access to the ballot box, Obama launched his first campaign for the Illinois Senate saying he wanted to empower disenfranchised citizens."

Same story. Different candidate.

http://weareillinois.org/connect/newsDetail.aspx?newsID=3482.

"But Mr. Obama has also said he's open to raising – indeed, nearly doubling to 28% – the current top capital gains tax rate of 15%, which would in fact be a tax hike on some 100 million Americans who own stock, including millions of people who fit Mr. Obama's definition of middle class."

Data suggests that when you lower the capital gains tax it raises revenue. It's a bit tricky to understand, but you can get some perspective by learning about the Laffer Curve (http://en.wikipedia.org/wiki/Laffer_curve).

But when logical rational fails and you still want to raise capital gains on middle class americans, you can reference CEOs/hedge fund managers and the sprinkle on a little health care and schools.

"Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "to make sure . . . that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free.""

Same story. Different candidate.

http://www.theindychannel.com/politics/15597167/detail.html

Lawmakers pass property tax plan in Indiana. Maybe we can borrow some of their ideas. At the very least, I am intrigued.

"No more will taxpayers be asked to adjust their tax bills to government's appetite," Daniels said. "Government will now ... need to adjust its spending to what taxpayers can reasonably afford."

Check out www.in.gov for more links about the property tax plan. Apparently, there is more than corn in Indiana.

http://www.cnn.com/2008/POLITICS/03/07/affirmative.action/index.html

"Ward Connerly, who heads the American Civil Rights Coalition -- a nonprofit organization working to end racial and gender preferences -- and the main backer of the ballot initiatives, says the 37 word initiative would read: "The state shall not discriminate against or grant preferential treatment to any individual or group on the basis of race, sex, color, ethnicity or national origin in the operation of public employment, public education or public contracting.""

Maybe one day NOBODY shall discriminate against or grant preferential treatment to any individual or group on the basis of race, sex, color, ethnicity or national origin for ANY REASON.

It was wrong then and it is wrong now.

http://www.urbanaparks.org/pdfs/QA_Referendum.pdf

I took the time to read through the urbana parks referendum. It outlines how the last tax rate increase in 1997 was used for and how it intends to use this proposed increase.

I had one major questions before I started read: Is this a proposal to maintain current level of services or is this a proposal to offer enhanced services and charge us accordingly. With money increasing steadily with new construction an increasing property values, are the proposed services something we should have expected anyways?

After reading this, something jumps out at me:

Without a rate increase, what will happen?

"Without a rate increase, the Commissioners will have to review the entire Park District program
of services and make decisions that likely will result in some of the following:

- New projects will not be possible at Crystal Lake Park
- Deteriorating features will be removed and not replaced
- The district will not be able to apply for grants because matching funds will not be available
- The district will not be able to improve neighborhood or community parks
- Crystal Lake Pool may need to close
- Natural areas will not be as protected from invasive species and deterioration
- Grass will not be mowed as often, flowers will not be planted, tree care will be reduced
- Recreation programs and services will be cut"

Of the eight drawbacks mentioned, 5 out 8 clearly show a failure to maintain current levels without a tax increase.

Something else jumped out at me after reading in the lengthly detail about the negative aspects of the tax caps:

"J. Even though the property tax rate keeps going down, doesn’t the park district get more
money each year?
Yes, even though the tax rate goes down every year, the park district gets more money each
year because property values increase and more properties get added to the tax rolls."

You really have to look close or you might miss the fact that the park district gets more money each year because property values increase and more properties get added to the tax rolls.

After my first round of analysis it looks as if the citizens of urbana will require a tax increase just to maintain levels of services previously expected, with the enticement of some new construction items that I feel are attractive and worth consideration independently.

Because of their failure to meet expectations and live within their means, I doubt they are going to plan accordingly to live within their means after this tax increase. A failure to live within their means after a decade of phenomenal economic success and rising property values is yet another red flag. Then there is the possibility that property values will not continue to grow as fast, or grow at all....

http://www.fairtax.org/site/PageServer?pagename=calculator

This Fair Tax idea is relatively new to me. I was very intrigued after taking 5 minutes and working through this calculator. It's still preliminary, but I'm struggling to come up with a reason why this is not the BEST IDEA EVER.

http://www.portfolio.com/news-markets/national-news/portfolio/2007/11/19/Illegal-Immigration-Ruling

"Should the Department of Homeland Security be able to use Social Security records to crack down on illegal hiring? The department issued a new rule allowing it to do so; labor unions filed suit. A preliminary injunction, issued by a judge in October, means D.H.S. is stymied for now. No trial date has been set."

http://www.nytimes.com/2007/08/08/washington/08immig.html

"The expected regulations would give employers a fixed period, perhaps up to 90 days, to resolve any discrepancies between identity information provided by their workers and the records of the Social Security Administration. If workers’ documents cannot be verified, employers would be required to fire them or risk up to $10,000 in fines for knowingly hiring illegal immigrants.

Immigrant rights groups and labor unions, including the A.F.L.-C.I.O., predicted the rules would unleash discrimination against Hispanic workers. They said they were preparing legal challenges to try to stop them from taking effect."

I find this really interesting the the unions and the US Chamber of Commerce are on the same side on this one. It all seems straight-forward to me. If I am understanding this situation correctly, employers would be forced to fire employees if their records don’t check out.

Is anyone else surprised it didn’t work this way to begin with? In the current state, before this ruling, an employer must collect an acceptable form of of ID and collect their social security number. I’m very surprised that was the extent of their obligation...until now.

Portfolio’s analysis that this new ruling might tempt companies to pay workers off the books seems weak to me. My analysis is that this ruling closes a giant loophole in the system. Before, the employer only had to have the paperwork in good order to prove they collected the paperwork correctly. I would fight this if the employer is forced to manage the discrepancy during the 90 day window, other than confirming that the information was collected correctly. That burden should be on someone else besides the employer.

A recent example of how this plays: During the Florida debate we watched Rudy slam Romney because a contractor he used employed an illegal alien at his mansion. Romney came back and argued that he has to assume the company has done their diligence. It would be unrealistic and inappropriate for the consumer to have to check papers off all the employees of a contractor that you hired. Romney was correct and Rudy lost my vote that day.

How do you determine the area of a circle?

Area = Pi * radius squared

Medium Pizza = 14”
Large Pizza = 16”

Let’s go though an exercise and use a real-life example of how this formula can come in handy:

Johnny agreed to share a medium pizza with four people equally (25% each). Billy offered to get a large pizza and split it with everyone (20% each). In an effort to preserve “his peice of the pie”, he declined the offer because he ended up with smaller percentage of the pie. Was he correct?

Answer: No. If the pie increases from a 14” to a 16”, everyone gets more pie, including Johnny so long as he is promised more than 19%. In fact, Johnny would have enjoyed even more pizza.

Work:
Pi = 3.14 (rounded).
Medium Pizza = 3.14 * 7 * 7 * 25% = 38.5 square inches of pizza.
Large Pizza B/E calculation = 3.14*8*8*?= 38.5. ? = 38.5/(3.14*8*8) = 19%

Why am I posting this exercise? This example comes in handy when some passionate and creative thinker starts talking about percentages and self preservation. I have created some 15 minute republicans leveraging this example. Most of the time, however, the conversation doesn’t go much further because it is usually followed by a long pause and a quick change in subject.

Don't hire former union. That was message sent out this past fall after news of the upcoming Rantoul plant closings. I of course will not disclose my sources on this, but there were companies who would not even interview laid off workers because they were former union.

As the Chamber of Commerce was sponsoring job fairs for these employees, those employees never would have had a chance at some places. I thought this was bold and admit this union busting effort was fighting dirty. I'm sure this is some form of discrimination. After thinking about this for some time, it makes sense to use this as tactic in the long-term fight against collective extortion. I believe firmly in doing the right thing, but how long can that logic last while the other side is fighting dirty.

Let's look at some union tactics:

1. Hurt businesses that do not use union labor and picket them to force them to pay higher wage rates.
2. Lobby for laws that make it illegal to hire replacement workers when a worker goes on strike.
3. Lobby for laws that make it illegal to sue service providers who do not honor contracts because their employees will not cross picket lines.
3. Leverage the lop-sided laws and mandate the wage that must be paid to workers.
4. Once the premium wage has been "collectively bargained", sabotage any effort for streamlining because it might costs jobs.
5. Once the premium wage has been "collectively bargained", sabotage any effort to promote accountability because it might costs jobs and raise expectations.
6. Setup the system to eliminate competition and limit the number of choices, driving prices up.
7. Once competition is eliminated, stick it to em. (Ask someone in the city manager's office what the fire union was asking for)

What if the tables were turned:
1. Harassing business to extort money out of them could be illegal and recognized as harassment.
2. The term bargaining might become legitimate because the employer could decline an offer and look for offers elsewhere.
3. As a result of a true collectively bargaining process, employers paid market price that was passed on the taxpayers and consumers. For better or worse, it would be a fair price.
4. "Bad Management" was not forced to deal with unproductive systems such as grievances and could fire bad employees.
5. More productivity and accountability would increase the probably the employer will do well and can pay wages for the long-term.
6. An individual can voluntarily choose to be paying member of the union and voluntary choose to negotiate their own compensation.

Now...we know it isn't likely that table will be turned anytime soon. The unions don't play fair so what are employers fight back by busting union activity.

Now imagine you are interviewing someone that came from a union. Do you want that culture in your workplace or in your business? Be careful, you cannot choose not to employ them based on union status.

What if you wanted to start hiring a non-union contractor onto a non-union worksite. Nope, they'd try and put you out of business.

Unions have taken "voluntary" out of the equation. Businesses work to keep "voluntary" as part of the equation. Since the playing field is not level, everyone can start analyzing any remaining voluntary choices and fight to protect their choice. Apparently, some employers are being very proactive. There are few remaining voluntary choices for consumers anymore and lawmakers take full advantage of it by taxing those involuntary choices to death. Tom Bruno's question asking us what services we can do without pretty much sums it up.

If consumers thought the Gross Receipts Tax was shady and manipulative.... Take a closer look at the current state of "collective bargaining" and you might appreciate the artificial nature of the game. In this game, the consumer and taxpayer pay because service rates, taxes, and govt fees must keep pace by injecting more and more money.

After analyzing the state of our government financing and realizing the ability to manage costs is being taken away from the taxpayer at every opportunity, I think it's time that we all get a little more proactive. In the meantime, we can only hope that policy makers will not allow the situation to get further out-of-control.

Does it surprise me that Illinois in a worst-of top 10 list when it comes to stealth taxes?

http://www.mywireless.org/issuestaxes/

I was surprised to see my cell phone taxes so ridiculous high as a portion of my bill so I happened to look into a bit. I thought it must have been a mistake. Who was I kidding?

We listen to the pro-spending and anti-saving bureaucrats argue for higher fees because the cost of performing a service is higher than the actual cost they charge for the service. It sounds good to the city council and they raise taxes and fees. Ok....so what services are they providing me when they tax the hell out of my cell phone?

Laura Weis, President and CEO of the Champaign County Chamber of Commerce, sent a mailing talking about Business Empowered.

I could not find a link anywhere about it on the Chamber's website. From the postcard:

"Its purpose is to provide the Champaign County business community with a powerful new way to shape good policy for business at the local and state level.

Through Business Empowered, we will help identify candidates for elected positions who will promote an agenda for healthy business and a healthy economy."

The Chamber has formed a PAC and is asking contributions from its members to support the PAC. I've enquired about this to some Chamber insiders and apparently there are several influential members of the Chamber who have pledged financial support to get the PAC off the ground.

I'm going to keep a close on on the PAC and see what candidates it determines "promote an agenda for healthy business and healthy economy." This sounds like a very exciting development. If done correctly, the business community will have a stronger voice.

The system needs to be changed if we're going to address wasteful spending in govt. I laugh when republicans claim to be fiscal conservatives after their spending record. The dems start talking about putting a stop to pork spending? That can't be true, can it? No, it is absolutely not true.

From http://www.heritage.org/Research/Budget/bg2081.cfm:

"In addition to fiscal restraint, the Democratic majority pledged to rein in the use of pork-barrel projects, which had skyrocketed under the Repub lican majority and had prompted numerous crimi nal investigations of congressional corruption.

First, congressional Democrats pledged to clean up the earmark process. While the ethics bill signed by President Bush contained some reforms, such as required disclosure of the congressional sponsors of each earmark, lawmakers significantly weakened the rest of bill by:

Removing a provision to ban the trading of pork-barrel projects for votes,

Weakening provisions aimed at stopping ear marks that financially benefit lawmakers

Transferring Senate earmark enforcement powers from the neutral Senate parliamentarian to the par tisan Senate Majority Leader

Permitting votes onbills before disclosing ear marks

Weakening a provision requiring that earmarks be listed on the Internet before congressional votes.[24]

In addition to reversing earlier pledges, Congress limited these new earmarking rules solely to appropriation bills, choosing to ignore earmarks in tax, entitlement, and authorization bills.[25] Earlier this year, House Appropriations Committee Chairman David Obey (D-WI) tried to conceal all earmarks until after most of the spending bills had passed the House of Representatives, but he was eventually forced to back down after a public backlash. The Congressional Research Service recently announced that it will no longer track earmarks.[26] Thus, the Democratic majority's actions have fallen notably short of their reform rhetoric."

Pension obligations are killing budgets. This is no secret. We cannot pull back on promises to those we have already committed pensions to. We CAN stop promising them to new government employees we have not hired yet. This is a no brainer. Yet, I am not aware of the state, county, university, and cities do a single thing about it.

We do not budget appropriately for pension obligations and we counting on our grandchildren to deal with the problem.

In my last post, I demonstrated the frustration that I have with the city's phenomenal growth and our ability to only break even. We cannot maintain this level of growth because it is unrealistic. The city only so big and we're pushing for in-fill development.

What we can do is start addressing one of the major cost drivers on every budget and start doing it TODAY. Unions have mopped the floor with our tax dollars for longer than I can remember. Someone has to guts to stand up and tell government employees that you're to have get a 401(k) just like all the rest of us.

Just like all the rest of they should be encourage to hold back 2-3% of their earning into a retirement account. Check out http://www.retireearlyhomepage.com/pension.html. If we replace the words "large companies" with "government". We can change the assumptions, but the debt obligation that our grand children could avoid would be STAGGERING and avoided by simply requiring govt employees to behave like the rest of us.

From the website:
"While they're becoming less and less common, many large companies still offer "defined benefit" pension plans. Defined benefit plans are arrangments where your annual pension benefit is determined by years of service. Typically, you would multiply the annual salary in your final year of employment by the number of years of service times 1%. For example, if you worked for a company for 40 years, your pension would be equal to 40% of your final salary. Just about everyone who's been able to weather the mind-numbing boredom of working in a large bureacracy long enough to collect a pension thinks it's a fabulous deal.

But is it? Suprisingly, you could fund a pension equal to those offered by big, blue chip companies (i.e. General Motors, General Electric, Exxon, etc.) by saving and investing just 2% to 3% of your salary. And if you do it yourself, you don't have to worry about getting "downsized" six months before your pension vests. The money already belongs to you."

WE HAVE REPUBLICANS ON THE CHAMPAIGN CITY COUNCIL. ARE THEY GOING TO APPROVE ANOTHER AGREEMENT WITH A UNION WHO PAYS AN 18 YO KID A PENSION RIGHT OUT OF THE GATE EVEN THOUGH NOBODY ELSE IN THE PRIVATE SECTOR GETS THEM? If we have any fiscal conservatives left in this world who are serious about managing spending, it would be nice if they actually did something about the biggest problem staring us in the face.

I know that I'm dreaming, but maybe one day smart spending will be an influential election issue like the smoking ban was.

I have a business background and think I have a respectable grasp on economic principles. There is a problem I can't solve.

As Walmart increases in scale, the prices come down to reflect economies of scale. The logic is understandable and straight-forward.

With the City of Champaign, the economic development over the past 10 years has been staggering and there looks to be no end in sight. I'm looking at all this believing it is a good thing. At the same time, I only see increases in taxes and fees. I don't understand this. For many, the average increase in property tax liability is MUCH great than the inflation rate. MUCH greater.

Can someone explain where all the economic development proceeds are going? I would think that by now, the city would be able to subsidize infrastructure like parking without having to charge $.75/hr. I would think that property taxes would go down with such growth if we are seeing any benefit to all this development. Maybe a decrease in sales tax? Not even discounted parking? With all that development, the tax rate is pretty much the same as Urbana? That's good?

I feel confident stating that the local Republican Party is unified and am very pleased to see the positive and constructive energy.  Given this, it doesn’t make much sense how candidates could fail to gain party support before announcing a campaign.   There have even been recent candidates who have failed to gain any real party support during a campaign.  
 
If you look at the Central Committee, there is a very talented core with diverse backgrounds and talents.   Any prospective candidate would be ill-advised not to tap this pool of resources during the diligence period before announcing a candidacy.   The party is a great resource to assess strengths and weaknesses, analyze races, share experiences, gain perspective and discuss strategy.  
 
Oddly enough, I am compelled to share this because I’m afraid that lack of party support will discourage future quality candidates from stepping forward.   At the same time, I’m not going to blindly support any candidate just because they have an R next to their name.   Anyone can put their name on a ballot.   Fewer can get the support of the party.   Even fewer can win elections.  
 
I know this sounds very simplistic, but how hard could it really be to rally the support of the party who are eagerly looking for people step forward?    Failure to accomplish this given the positive culture of the central committee definitely tells me something.  

I have always felt that teachers could be more effective by spending less time on lesson plans and grading papers and instead leveraging technology (as businesses do) to analyze results and give one-on-one coaching to students.    I would not want my kids getting their education from an online-only source, but it would be nice if web-based content and analytics could empower teachers to be more effective.  

I read an article that gives me some hope for our education system in the July edition of Business 2.0 magazine.   I could not pull this online, but here the jist:

Insight, based in Portland, OR just wrapped up its first year of online-only secondary education.   Cost $4500/yr per student paid by Qiollayute Valley School District in the State of Washington.   Purchased by the parent company of the University of Phoenix.    Had 3000 applications the first year.    Opening offices in Southern California and Wisconsin. 

http://www.go2ischool.net/  (The Company)

A Bill and Melinda Gates study reports that 5 million high school-age students aren't enrolled in classes; about 80 percent of them dropped out not because of disinterest but to earn money or provide care for a family member.   The online-only option is a great option for this group.

I wish a for-profit company would introduce a hybrid approach to web and brick-and-mortar education.   Imagine kids could learn at their own pace and still get one-on-attention without holding everyone else back.   If popular enough, content providers would be competing to deliver the best learning modules.    What a nice thought.

• the past 33 months the size of America's entire economy has increased by 20%--or, as National Review Online's Larry Kudlow put it, "In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy."
• According to the government's establishment survey, in the 36 months since the tax cuts became law, 5.3 million new jobs have been added to the economy. According to its employment survey, 288,000 jobs were added in May and 387,000 in June. The unemployment rate dropped from 6.1% when the bills were signed to 5.4% at the end of 2004 and 4.6% today, and the rate has gone down for men, women, blacks and Hispanics.
• Federal tax receipts increased by 15%-- $274 billion--last year and 13%-- $206 billion--in the first nine months of this fiscal year, which, as the Journal points out, means the nine-month increases for the past two years represent the highest growth rates in 25 years. Looking ahead to the end of this fiscal year, total inflation-adjusted government receipts will likely be 23% above 2003 when the Bush tax cuts were signed into law.
• Reducing the capital gains tax rate from 20% to 15% increased capital gains tax receipts by 79% from 2000 to 2004. Cutting the dividend tax rate by more than half--from 39.6% to 15%--increased dividend tax receipts by 35% from 2002 to 2004. And corporate tax receipts have nearly tripled since 2003, reaching $250 billion for the past nine months, 26% higher than the same period last year.