Thursday, September 1, 2011

Do regulations have the same desired effect on a big business versus a small business?

Here is my point, Government tries to be fair, or at the least that is their claim. They usually seek out help from the larger companies to see what they can do to implement a new regulation. The problem is due to a business’s economies of scale, and a person’s self preservation instinct. These big businesses usually promote regulations, laws or taxes that give them market advantages. a small one person start up with little capitol cannot operate under a regulation that is designed for a multinational corporation, yet far too many times we do not make those concessions for small businesses. Instead of nurturing a business we tend to abuse small operations. Without a checks and balance system to make sure government is not being used by big business or big unions, I fear this jobs crisis that we find ourselves in will only continue. The only solution that I can see is let big business make the bench mark for regulatory compliance levels, but phase back compliance, fee, and tax issues for smaller operations. If we do not start to nurture business we will never regroup and grow this economy to bring back jobs.
The progressive wings of our political leadership in both parties use the key word of funding sources as a key part of raising taxes, to promote pet projects for personal gains. Without consideration for a business’s ability to pay and be compliant we are having a government that is out of control and destructive to job creation from the private sector. When I testified in Carson City against former Governor Guinn’s Gross receipts tax I mentioned that due to buying power and economies of scale a flat gross tax rate would have a negative effect on a small businesses ability to compete. The effective tax rate would not be flat but very regressive in nature due to the cost of goods sold.
 A case in point is a very simple example of a large companies buying power versus a small operations. Let’s say Wal-Mart buys milk for resale, they can buy in large quantities, thus since milk is a perishable item a distributor like Model Dairy wants to sell as much as possible to keep their product from being returned due to a date to remove product from shelves. A small business does not have that buying power and will not sell the volume that Wal-Mart sells. That is why a C store sells milk for let’s say $4.00 versus Wal-Mart being able to sell the same product for $2.89 a gallon. If we have a tax that is at 4% as the Guinn administration proposed the effective tax rate on gross receipts would have a negative and punitive tax rate of 40% on the small operations versus an effective tax rate for Wal-Mart.the Cost of the milk for the C store let’s say is $3.75 a gallon versus Wal-Mart having a cost of milk of $2.19 a gallon. That discount for large operations happens all the time, remember Milk is perishable; it will go bad and must be sold for the Dairy to make a profit. So many of you think the C store is overcharging you, well I am sorry to say you are wrong. In fact the Wal-Mart’s of the world have a greater profit per gallon due to that buying power, and potential to sell greater quantities. So if both stores sold 100 units, Wal-Mart would have gross sales of $289.00for that milk, the small operator would have gross sales of $400.00. The tax at 4% would be $11.56 for Wal-Mart for the small operator it would be $16.00. The profit for Wal-Mart would be $70.00 the small operations would have a profit of $25.00 on that same sale of 100 gallons of milk. Tell me what if far about that?
I had to point out to our legislature that the two states that they wanted to copy was Washington and Michigan, both started out with one rate and it had to grow into multiple rates per industry and the added cost and size of the staff needed to oversee this form of taxation negated any benefit this form of taxation would have brought in. That is why I am against many forms of funding sources that our leaderships are looking at. If we really want jobs to return we have to understand how the market place works and unfortunately we have hired far too many attorneys to act as our political leaders and they just do not understand market forces.
I have heard from some to say that the small operator should not be in business, well are we going to start selecting who should be in business and who should not. For all of those who were against big box stores are you telling me that is all there is. Whatever happened to the ability to grow oneself? At one time Wal-Mart was a small operation. We need small operations to grow new ideas, let’s not destroy that ability. For Big business needs that competition, it is how they change their product and guarantee that it does not become less competitive. We must be aware of the double edge part of any tax idea, and weigh it over the real need for the added revenue. Far too many times we have had public policy hurt the ability for business to grow. If we really want our economy to turn around we need new people in government that understands the economy.

Thursday, August 11, 2011

How can we lower the cost of living to help allow us all to regain personal capitol, a in-depth look at all the fees, taxes regulatory oversight and looking at the benefit, versus the social economic cost?

All we have to do is look at our monthly phone bill, or power bill. Look at all of the add-on cost that we have had to deal with, which have been put into place over that last decade or so. How about local small business, how many new permits, fees regulatory changes that have added cost to the operation. How about public works projects that close down streets in front of many small businesses, how many have closed down due to the interruption of business and the inability to downsize for 4 to 6 months. We have to ask where our priorities are, the Left will make the argument that these fees are needed to make us safer, or to provide a needed service. I would have to say that I feel that we have overreached. For the dollar for dollar benefit of a dollar in taxes does not bring in a dollar worth of benefit. Think about it, you cannot just build a program and not have cost associated with it. You have employees, they have cost associated with it, payroll, health, sick leave, retirement and so on. That takes some of this tax revenue away from the end benefit. Them where are these people working, they have buildings, which have power bills, upkeep cost repairs and maintenance, and well insurance cost and so on. The employee costs have vehicles, which have cost in fuels and maintenance. Plus we have waist whenever we have a system that can never attempts to save revenue that is a private sector trait. The end result is that the general population is lucky to achieve 10 cents on the dollar benefit from a dollar in tax paid.

 A government program needs to grow, for the net worth of a program is determined by the size of their budget. We have many examples of city, county and state departments that do not combine efforts and in the end work against each other over a battle for budgets. An example here is a parks department and a maintenance department that have different values in terms of their budgets. A city pool needs a pool cover for the winter months, the cost let’s say is around $10,000.00, each department does not want that to come out of their budget, yet the cost is still there. Instead of buying a cover for $10,000.00 that has a life span of 8 years, we have a maintenance department that spends $10,000.00 each year to clean and repair the pool. The losers are our city pools, and you the taxpayer. The fact that these departments work against each other just reaffirms the waist in our present tax and government service system.

The great disconnect is the battle of words coming from our elected officials. They say they want jobs but they are destroying careers. These cost that have been imposed on all of us need to come into question. Many on the left and a few on the right have pet projects and will fight this movement. Yet we are not trying to destroy services, we just want a better outcome, and realize the path we are on is leading us over a cliff. If you want social programs we need to focus on private sector careers, for people that have careers have a long term relationship with their communities. They are vested in a beneficial outcome of the society in general. They also hire individuals and have a shared goal to build and growth local economies. This is the growth that will reduce the need for social programs. This is the effort that we should be focused on, yet it is the discussion that is not being heard.

Tuesday, August 9, 2011

How do we create jobs, with the lack of capitol, is the answer big business or small business or some combination?

Job Creation, what is the answer? If you listen to the left they would say that we need more spending, more services to soften the effects of this recession. The problem goes back to the lack of capitol, not only for the government but for the everyday citizen. We have to start to look at not only the taxes that we pay but we have to look at the policies and regulations that these taxes and fees pay for. The main question to regain a healthy economy is to allow individuals, whether rich and poor to hold on to more of their money. This is the big capitol question, how do we balance service with a level of commerce that gives most of us the ability to not need the services. The most stable our nation is depends on more of us having the ability to take care of ourselves. This makes the human condition more comfortable and thus creates human activity. This activity creates commerce and creates capitol growth and personal wealth.

It would seem that every time we have a social agenda coming from the Federal government we have an uptick in the unemployed especially in the minority community. an example is during the George bush administration we had a black unemployment rate of 10% during the Carter and the Obama administrations we have a black unemployment rate of 14%-16%.Why then are the policies coming from the folks preaching the most about the poorest of us, deliver the least for us. Simply it is their policies. We have to ask ourselves does a federal policy of increasing taxes in an economic down turn increase human activity. I would say a very load No, it will continue to suppress activity. By having a public policy that says the rich need to pay more it negates that fact that we all hope one day to grow our own wealth and become rich ourselves. What we want is a system that allows us to grow, and far too often we now have a system that protects the rich and inhibits competition especially from the small start ups.

Many of you may not understand but if we need to have job growth and if that needs to come from small business then we need to live in the world of small capitol operations, where time is money. Our present system of governing puts a big priority on building a system that slows down the ability to build and create. We have a system of procedure, and regulation. Far too many times a small operation cannot wait, or will have difficulty passing these costs along. If you cannot start up a new operation in a couple of months, we have overreached and we need to rethink, how we govern at the lower end of this economy. If small business is the answer, we need to realize that there are limitations, and adjust our policies to help create job growth. Big businesses have purchasing power and other factors that mitigate some of these worries, but small operations need to be nurtured, and not penalized. Unfortunately when we have a system that is operated by individuals that do not take into consideration the abilities of an operation and its place in the economy we tend to have a system that rewards the big box stores at the cost of the small operation. In my humble opinion that is the main illness that has taken root in our system of government.

Tuesday, August 2, 2011

What are the strengths Nevada has in the market place and what are the weaknesses?

The first question answered, Cut the red tape, cut the cost of fees, taxes, regulatory compliance, and speed up our ability to start a business along an economic scale, to allow small business to grow and give larger concerns more accountability. But what does Nevada have going for us and what are our detractions. Being a small business person for all these years I fully realize that there are two sides of the coin in everything. Our housing market is in terrible shape, yet that means we have a large inventory of homes that will be dropping in value. Inexpensive housing cost will give us a selling point in the region. Can we bring manufacturing into the area, Nevada has ore, Nevada has minerals, and we have the vacant land to build a manufacturing operation, we also have federal regulations stopping much of this asset from being used. We have the rail, and road system to deliver product to the coast, we have a large vacancy rate in our warehousing district, giving us a potential sales point to bring in business, but the vacancy rate does not give the area a vibrant appearance. The negatives are that we are losing population, thus we are losing local sales potential. So we have to lower cost to sweeten the pot to have someone take a gamble on this area. Yes this goes back to my first question. Our schools have been a large contention issue, for some stating that we do not have the educated workforce to bring in business. Our rankings and the quality and all are not large issues to me. For much of these arguments I find it is a justification to maintain or increase their budgets. The cost per student is only relative to the cost of living and the potential salaries that an area can expect. Our past dependence on Gaming has put a downward pressure on salaries and helped many college grads leave the area to find other work. The negative is also a positive. Gaming is greatly diminished, for many reasons we have to look outward to diversify and grow our economy in new and different ways. This should have a positive outcome on salaries and keeping more of our educated college students here in the area. Is our education expense too high, I say yes, we have given our universities a rate of growth that has greatly outpaced inflation? Hey I understand self preservation, I get it. But we need to lower rates to increase our volume of business activity; this will not only bring in the needed revenue but give the state a more stable economy that has fewer types of ebb and flows. Regionally we are lower than California, but I believe that we could lower our rates and bring
The argument from the left is that we are taking away needed revenue, I would argue that by building our economic engine and diversifying it we would achieve a more stable and long term revenue stream that would help us provide all these needed services. The problem is that we are out of balance. We have a big need for services yet we have burdened our economic jobs engine so that those of us that are working cannot provide the needed revenue that we need to generate. We need to reduce the need for these services, by reducing the cost of living by lower rates we achieve small business to feel confident enough to grow and expand, this will equate to new jobs, and this will reduce the need for services. It is all interrelated. I know that this means Government job loss, yet if the Goal is to reduce cost and shorten the time it takes to start up a business; this job loss would be minimized by new job growth.

Friday, July 29, 2011

How do we grow the economy?

As I have said, with a federal Government that is hell bent on lowering the value of our Dollar, and developed a policy to put everyone in a home has had a 180 degree effect. Our homes are being devalued, our money is being devalued. Our government is increasing regulatory oversight and regulations from health care to energy cost. And we are supposed to spend money and take a risk in this environment? I feel like Bill Engvall and saying here is your sign. We have had government officials looking for a home run, looking for a big business to come in and save the day, something to place their hats on. Call me a pessimist but those days are gone. I have played a lot of ball, and the ones who win are the ones who get people on base. The San Francisco Giants won the World Series after they got rid of Barry Bonds. Think about it. We need to get people on base to grow this economy.

If that is the case, then how do we get people to take the risks again in this economic climate? We have to lessen the stress of everyday cost. This is where our state and local governments come into play. We need to see a reversal of the fees, taxes, requirements, etc that has been put into place over the last decade. Don’t try to scare me about police, teachers, fire protection etc. I am tired of this scare tactic, and we need to know that ten years ago we had teachers, police and fire. So get off of this. What are in danger are all the increases we have had. In government staff, a salary, pensions, perks.

The first move is to retain our current job levels, to do that we need to get off the chest of every Nevadan and let us breath. Only then can we feel comfortable enough to take the risk that we will jump start this economy. This will mean that many of our attorneys that have spent the last ten Years building legal cases designed to limit competition protecting big business needs to sit down. Our elected officials that take a narrow focus designed to strengthen the bottom lines of their supporters and focus on the people that do not have the time or the money to kiss their asses. These individuals are the small business owners that for all these years you have taken for granted. Again we have a capitol problem, Big Business has moved to a global status, we need to turn our focus on the people living here and stop trying to use the money collected from taxes to provide service and return to a system whereby through hard work people can take care of themselves. The trick is to lower much of what has been raised over the past decade. This is as much a republican problem as much as it is a Democrat problem. Both parties have served their special interest and ignored the vast population; we cannot grow this economy from the extremes if the middle is in decay.

We currently have had to live with the effects of budget cuts, but where is the direction of these cuts. Far too many times we see a Cover your ass mentality come out of these government agencies, hey I don’t blame them, Self preservation has sunk in, and I get it. But we hear a lot about sacrifice coming from our current leadership, but we do not have a game plan. What we need is a game plan with both long and short term goals. Short term goal for me to stabilize capitol at the local level, lower cost to the everyday Nevadan and shorten the time and cost it takes to start a new business. This means red tape, and permits, licenses etc has to have a two week time line. Yes you heard me two weeks. From start to finish we need to get people back into the risk taking business.

Friday, July 22, 2011

How does Nevada go its economy with such a lack of capitol?

I know I sound like a broken record; we need lower taxes and regulatory oversight. I know those who have read my blog it is the same message. The problem is that we are going through a change, and that change is one of a personal matter. I believe that Our Government has not yet caught up with this change; they are too busy trying to place fingers in the leaking dyke.

With the Housing problems Nevada has, Capitol for small start ups will be hard to come by. With our Federal Government borrowing monies at the rate it is, Money is harder to come by to Borrow for all Nevadans. The federal Government printing money at the rate it is, our money in our wallets has decreased 20%, limiting our buying power. Finally with a Government that has seen itself the solution to our problems we have increased the numbers and scope in which our public sector has operated, this has had an effect to increase the cost on everyone. It is not hard to understand why we have a private sector that is paralyzed.

The Questions at hand is how do we grow our economy? What are the strengths Nevada has in the market place and what are the weaknesses? How do we create jobs, with the lack of capitol, is the answer big business or small business or some combination? How can we lower the cost of living to help allow us all to regain personal capitol, a in-depth look at all the fees, taxes regulatory oversight and looking at the benefit, versus the social economic cost? And how to we improve the situation? I will try to answer these. Some of these answers come from the past, and some from the future. I am going to try to answer each of these questions in the next couple of Blogs, each question in each blog, tackling each question and looking for the answers in depth. These are just my answers, I will make an attempt to weigh to lefts arguments versus the rights, and see where we go from here.

Wednesday, July 13, 2011

Where are the jobs?

Can the State of Nevada create Jobs? That one question will take some real change, and it may include renewable resources but this is not a one trick pony. The answer will require a degree of self reliance to again resurface. With over 66% of the homes underwater available capitol for small business is hard to find. The other aspect of a small business is the big question is your profit margin, how much can you realistically expect. You have to look at the market, the customer pool, you going after. You have to look at the scalability, and what growth potential does it have. An entrepreneur has to look at this entire venture, and weigh the cost involved.

Unfortunately we have a bureaucratic system the ads cost to these concerns of all Nevada Business, as well as a political system that has done nothing but promise items to the populace that the system can no longer afford. President Obama is calling out Small business for not hiring, Well Mr. President How about lowering our cost, and Stop increasing our cost. Unfortunately He complains but his actions are to destroy business activity. He has said it himself he wants to redistribute income. Well he is doing just that, he is out to destroy our economic system and to undermine the constitution in which he pledged to protect and defend.

Mr. Obama’s Cap in trade system as he put it will necessarily increase the cost of energy and gasoline. Mr. Obama’s Health care Plan will drive down supply to health care and increase the cost on every American business. His policy Czar is developing more and more regulatory oversight that is making business unbearable, yet this man blames us. Mr. Reid and the other progressives in our government need to be stopped, and this is coming from a former democratic candidate for Nevada Governor. I left the Democratic Party once I realized that small business issues were not a part of the Democratic platform. There is no understanding of commerce and no respect toward those who make their own way.

Again here in Nevada we have some serious issues, there are solutions, but I do not believe that we have the leadership that understands how to fix the system. It will take a revolutionary at heart, someone who can buck the system and the current power structure. We can survive but we have to reset this system and bring back the checks and balance system that has been so diligent in slowing down change. For without reflection on policy we have had change sped up to a point that many of these changes have brought far too much destruction to our economy.

We have to lower cost, from the cost of living to the cost of doing business, this is where we share sacrifice and share in the benefit. Not in a belief system that wishes to increase the cost of power but lower the cost of power, lower the cost and scope of regulatory oversight, and limit the power of these too big to fail industries. We used to have restrictions to limit monopolies, we have had our government do a complete 180 and build monopolies. We need to regulate on an economic of scale basis that would have higher oversight the bigger the company is, and allow small startups the room to grow. This is not to hurt the big operations, but to prioritize where our regulatory oversight and Government needs to focus. Big Business has the economic advantage to hire lobbyist to give them favorable regulations, small operations do not have the monies to fight back and typically looses that battle. If employment begins at Small business then we need to change our priorities on not only taxation, but more importantly regulatory oversight. Taxes are only a part of a cost structure that has become punitive in the business model of much of Nevada.

The battle over the debt ceiling is a part of the economic mess we are in, for the government is sucking potential investment monies toward paying off our national debt service. I hate to be the one to break this to you, but I do not think anyone 60 or under will ever see our Social security checks, and Right now I am willing to let that go, if and only if the government gets out of the way to allow me with the limited time left to make my own way. The solution will mean that we reduce the size of Government, in the past the leaders tend to want to scare you, but this time we need to look at each of us and say that I will be fine and we can get through this period. Smaller government is not scary, we have had it before, it does mean that we need to work together, and not continue this debate designed to separate us.