Saturday, September 17, 2011

Six Changes to the President's Jobs Bill

The talking heads on my TV are yelling at each other as I write this.  The beautiful women who are in favor of the President’s jobs bill are being laughed at by the handsome men who are against it.  The more average looking economists are generally appearing to be thoughtful, and seem to take a middle of the road view, but the President and his jobs bill seems to misunderstand what a small business is.

I’m from a family of small businesspeople.  And notwithstanding my forays into the world of big business most of my career has been made in smallish retail locations with less than 2000 square feet of space.  There’s something very comforting about having your own business.  (For starters, you rarely get fired…)

My wife and I have owned a number of small businesses, most recently a real estate brokerage of medium size.  We had variously 5 to 15 agents, depending on the market, and we were faced with all the regulations that are assessed on small business.  A quick list of all that would include the quarterly taxes that were required, the employee documentation, the forms and posters we had to display, the fees and dues that were collected by the Feds, the State, the Real Estate Commission, the National Association of Realtors, the State Association of Realtors, the local Board of Realtors, and the franchise company whose name we used (EXIT Real Estate) the real estate insurance companies (errors and omissions), the marketing companies, and the rest.

I suppose about half our day (my wife and mine) was spent dealing with non-business related work.  By that I mean government compliance, mandatory reporting, and banking and documentation, license updates, and then promotion of future business by buying ads, signs, internet and web sites, phone lists, and the like.  The other half of our day was meeting with agents and clients, and maybe doing a little something toward earning a living.  And this was a little company.

The President’s jobs bill was apparently designed by people who have never owned or worked in a small business, and had no idea how or why a small business runs. So I have a few suggestions for their new bill.

First of all, the new bill should not extend unemployment payments.  If it works at all, the 10% unemployment problem will take care of itself.  Unemployment compensation is really a disincentive to find a job.  It takes the hurry out of the concept.  I was at the dump this week and a guy was telling me he was having a hard time making his mortgage payments.  He’s been on unemployment for almost 2 years and he said, “I may have to go find a job if I want to stay in my house…”

A jobs bill should provide an incentive for employers to create jobs.  And should offer an incentive for qualified employees to take the job.  Meaning the job should pay more than unemployment, and should provide an ongoing meaningful financial incentive for the employer to increase the number of employees.  I would propose a 10% tax cut on profits if a company could achieve a 10% increase in employees.  This would be on-going and measured on a quarterly basis, when the company reports sales and quarterly taxes anyway.  This method would require the employer to keep their employees for the long term, and for the employees to be “employable” and qualified

The bill should have a penalty for companies that have excess “idle cash”.  I would identify idle cash as funds that are held for no apparent reason.  To hear that Apple has 90 Billion dollars in cash makes me smile, but I recognize this as a problem for our economy which depends on the ebb and flow of funds. And of course to opportunity to tax the flow each time it is spent.  So I would require these large pools of idle funds should be spent on growth, building infrastructure, hiring new people and developing new ideas, donated to a charity or invested in Government bonds. (I think most businessmen would take the hint here and spend down the money in ways that would add assets to their balance sheet, and create more jobs)

Thirdly, here is the perfect place to insert and pass a balanced budget amendment. As a part of the bill, and to give businesses a level of confidence that the government is no longer going to tax and spend until we have to declare bankruptcy, we should insert the Amendment, and ask the American public to approve it ASAP.

Finally I would address the compliance regulations, If a small businessman has to spend ½ his time on paperwork to comply with government regulations, that’s just too much bureaucracy.  It would be time for the Department of Redundancy Department to step up and cut some of the regulations and paperwork.

To kick this economy into the 21st Century, the best thing this Congress and President could do is pass a flat tax, with few if any deductions. 

Dane Hahn is a real estate professional in NH and Florida.  The Gove Group in NH and Tarpon Coast Realty in Boca Grande, Englewood and Sarasota.  He can be reached at or through his web site at

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