Capital Commerce
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Why It Could Be More Expensive to Do Your Taxes
Continue reading… 1 CommentMany people expect 2010 to be the last year with current marginal income tax rates, because the Bush tax cuts are set to expire. I'll have more on what that means for filing your 2010 tax return soon, because I have an article in an upcoming U.S. News issue on that very topic. But that's not the only way doing your taxes in 2010 might be less of a drain on the wallet compared to doing them in 2011. The cost of paying someone to do your taxes could be going up next year.
The IRS has announced starting in 2011 it will be regulating the tax return preparers who work on over 80 percent of all federal income tax returns.
Starting with the 2011 tax season, the IRS plans to require paid preparers to register with the agency. Subsequently -- the timeline is not yet firm -- they will be required to pass competency tests and receive continuing professional education.
As we all know, making something more scarce also means making it more expensive. Requiring registration and testing will reduce the supply of tax return preparers, thus allowing those who remain to charge more for their services.
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Obama's Innovation Strategy: Behind the Curtain
Continue reading… 3 CommentsThe $64,000 question going into 2010 is: How can this economy create jobs? As one of many answers to that question, the Obama administration has championed giving loans and awards to innovative companies through programs such as the Department of Energy's ARPA-E. But it is not a simple journey from funding these programs to actually creating jobs. There are many hiccups along the way. For example, Darryl Siry recently wrote in Wired about how the Department of Energy can actually stifle innovation by making the cleantech sector and other innovative industries cater to its whims.
[See 5 Surprises in the Latest Jobs Report.]
One start-up that came to the OnDC conference (I blogged about that earlier this week) that is hoping not get left out of the cleantech investment shuffle is CFX Battery, a Southern California start-up founded in 2007 to develop and sell longer-lasting batteries based on Caltech research. Robert Grubbs, Caltech professor and 2005 Nobel Laureate in chemistry, helped found the company and provide it with brainpower. Next year CFX hopes to roll out everything from advanced lithium batteries for powering new electric cars to rechargeable batteries that could be used by soldiers in Iraq to reduce the amount of power supplies they need to carry.
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Why We Should Be Worried That Washington Is the New Job Creator
Continue reading… 1 CommentAt his jobs summit on Thursday, President Obama said, "…while I believe that government has a critical role in creating the conditions for economic growth, ultimately true economic recovery is only going to come from the private sector.”
[See 5 Surprises in the Latest Jobs Report.]
But when Obama says "the private sector," he seems to really mean "the private sector with significant prodding from the federal government." And indeed, his administration has already done much to change the relationship between government and the entrepreneurial sector. I use entrepreneurs as a stand-in for private-sector economic growth because empirically, small start-up companies are the most important drivers for job growth. A study from the Kauffman Foundation found that in 2007, companies less than five years old created two thirds of the new jobs.
[See 5 CEOs Who Are Worth Their Fat Paychecks.]
But while entrepreneurs have usually placed their business development first and foremost, there is some evidence that the increasing role of the federal government has forced many to emphasize lobbying, politicking, and jumping through administrative hurdles.
What got me thinking about this subject was a conference last October here in D.C., the AlwaysOn "Entrepreneurs' March on Washington" conference on October 20. One panelist, Jonathan Wolfson, CEO of South San Francisco biofuel firm Solazyme, was somewhat surprised he found himself in Washington, D.C. "In the 50, 60s, and 70s, entrepreneurs did not come to Washington," he said.
There was a clear reason why AlwaysOn, an online media company that promotes Silicon Valley businesses, held an event in D.C. in the first place: For entrepreneurs, this is where the money is. The difference in culture has been stark between the world of politics and the world of entrepreneurship. "Silicon Valley is a meritocracy. Best business strategy wins," said Wolfson, whose company Solazyme recently won a contract with the Department of Defense to develop clean biofuel produced from algae for the U.S. Navy, as well as a Department of Energy grant to build a biorefinery.
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Why Businesses Can't Create Jobs Even if the Recession Is Over
Continue reading… 8 CommentsSenator Byron Dorgan said he needed to get something off his chest, for "therapeutic reasons." "I'm so furious that the same institutions that we threw a lifeline, the same institutions whose selfishness and greed steered us into the ditch, have now decided that once they got their lifeline... they're going to turn their backs on lending needs to small businesses," Dorgan said at a Democratic Policy Committee hearing on Wednesday. This statement was in reaction to statistics Dorgan cited that over the past six months, the 22 banks that received the most money from TARP cut their small-business lending by a collective $10.5 billion.
[See 5 CEOs Who Are Worth Their Fat Paychecks]
At the hearing, several small-businesspeople testified that this lack of lending is putting their abilities to employ additional workers in jeopardy. The recession is supposed to be over, but unemployment is still high, and the freeze in small-business lending might be a big reason. Mark Zandi of Moody's Economy.com testified at the hearing that firms under 100 employee accounted for half of the net job loss since 2007. "Without small businesses, the job machine can't get going again," said Zandi.
Two main solutions emerged that the Democrats in Congress may be putting forth as job creation tools:
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Obama at the Jobs Summit: Public Works Programs on the Table
Continue reading… 2 CommentsNearly a decade ago, Washington turned to tax cuts as the solution to unemployment in the economic recession following the September 11th attacks. But at President Obama's jobs summit this Thursday, he will be getting advice to go down a different route--direct federal spending through public works programs to create jobs. Economist Paul Krugman, who will be attending the summit, wrote in the New York Times on Sunday that "it’s time for at least a small-scale version of the New Deal’s Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment."
[See 4 Economic Moves the Government Got Right]
Tax credits will still be on the table, of course--a $3,000 to $5,000 per-employee credit is likely to be offered to businesses. But Obama has also come under pressure to spend billions on public works. Last month AFL-CIO President Richard Trumka gave a speech calling for the federal government to "directly create jobs that put people to work in our communities." A pro-public works stance would fit in with previous comments Obama has made in speeches about a greater federal government role in infrastructure and jumpstarting the green economy.
[See This Is What Happens When Free Markets Fail]
But while public works spending would be a break from the Bush administration, many American presidents have launched ambitious jobs programs in the past. Decades after their passage, economists and historians are still divided in many cases over the effectiveness of these job creation plans. Expect any plans that might come out of this summit to be divisive as well.
A look at two of the most significant federal public works programs illustrates why:
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Cyber Monday Is a Fake Holiday
Continue reading… 10 CommentsI know, as a journalist, I'm supposed to write about how today is Cyber Monday, the biggest online shopping day of the year, and how it's the latest rival to Black Friday, and about all the amazing deals that are coming your way. While it's true that there are deals out there today, let's put the charade aside: Cyber Monday is a made-up marketing term that has been promulgated by journalists looking for an easy way to write about online retail. Yes, the subject of the growth of online retail versus the decline of traditional retail is an interesting one and should be tackled, but let's not pretend that there is some online shopping day equivalent to Black Friday.
Here is the best breakdown of everything you need to know about Cyber Monday—as a marketing term, not an actual event. The key fact is that since 2005 (the year "Cyber Monday" was first widely promulgated), the first Monday after Thanksgiving has never been the biggest online shopping day. Instead, consumers seem to buy more in roughly mid-December. Last year, the Monday after Thanksgiving was only the third-biggest online shopping day.
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China: The Collapse of an Economic Model
Continue reading… 3 CommentsThe housing bubble's pop led to a lot of Americans fundamentally questioning capitalism as an economic system, from Michael Moore's most recent flick to a poll that found that many Americans prefer socialism.
But despite these misgivings, I don't think anyone has seriously thought that capitalism is on the way out in this country. Free enterprise, in one shape or another, is a tradition that has been with Americans since before the nation was founded.
What about a country that does not have those same traditions? Tyler Cowen asked that question in regards to China and the possible popping of an economic bubble there:
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Healthcare Reform: The Industries That Might Have To Pay
Continue reading… 1 CommentThe version of healthcare reform passed by the House would tax employers that fail to offer health insurance to employees if they are above a certain size—$500,000 in annual payroll (the Senate version takes a less aggressive approach.) That range covers about 13 percent of all firms in the country. What kinds of businesses are these?
The Small Business Administration just released some data that provides some answers to that question by revealing which industries have the most businesses with over $500,000 in annual payroll. These statistics show the number of firms within different industries grouped by payroll size. I crunched some numbers and found out the industries with the highest percentage of firms that would be susceptible to the employer mandate if the House bill's provision makes it into the final version of healthcare reform.
Click for the list after the jump.
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Big Box Retailers Continue To Perform Relatively Well In Recession
Continue reading… 3 CommentsOnline shopping is expected to grow this holiday season—impressive for such a weak consumer market. Might big box stores get a similar boost in the next month as consumers look for the cheapest way to shop?
The data gurus at Sageworks Inc. imply as much in a release today. Their evidence is that big box retailers have held up much better than other retailers in 2009:
Because people feel they can do more one-stop shopping and bargain finding at big retail stores, sales at publicly-traded retailers have fared better in 2009 (-.7% in 2009) than at smaller, privately-held retailers (-5.8% in 2009).
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Schumer Criticizes Outsourcing of NBA Uniforms to Thailand
Continue reading… 9 CommentsAdidas recently announced it is moving its NBA uniform factory from upstate New York to Thailand. The sportswear company has an exclusive contract with the NBA to make its uniforms.
But now, noted Adidas executive Chuck Schumer reversed the company's move, and decided that, based on his close, personal knowledge of the inner workings of the company, it would be best to keep the factory in the U.S.
Actually, that's not what happened. NBA commissioner Chuck Schumer decided to cancel Adidas's contract because he no longer wanted the NBA associating with a company that outsources U.S. jobs, and, through the powers invested in him by the league's owners, has the power to make that call.
Nope, that's stiill not what happened. The truth is, New York Senator Chuck Schumer became to the NBA what Arlen Specter is to the NFL and John McCain is to Major League Baseball. Read his office's announcement.
