Summary of 2011 Tax Hikes

Where are tax rates going in 2011? If you guessed “up”, you’re absolutely correct. If Congress doesn’t do anything about the Bush tax cuts which are slated to expire in 2011 here’s what happens.

The estate tax, 0% this year, will go to 55% on assets above a million dollars. Now, your estate has already been taxed. You’ve paid income taxes, property taxes, dividend taxes, capital gains taxes and you’re sitting on what’s left over and the government still wants over half of what you own when you die.

George Steinbrenner’s heirs saved $500 million dollars – that’s $500 million they wouldn’t have if George had died 6 months later.

The income tax rates, which Democrats keep insisting are “tax breaks for the wealthiest Americans” will change as follows:

• 10% goes to 15% – If you pay a 10% tax rate you are not one the “wealthiest Americans” and your tax rate is going up 50%!
• 25% goes to 28% – a 12% increase
• 28% goes to 31% – a 10.7% increase
• 33% goes to 36% – a 9% increase
• 35% goes to 39.6% – a 13% increase

Because most small business owners in America pay personal income tax rates on their business profits, this affects your bottom line. And that’s just for starters… Read more.
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Senate Wants To Grant Emergency Internet Power

Here they go again. For the third time recently the U.S. Senate, this time in the form of Senator ??Joe Lieberman (I-CT) is proposing a bill that would grant the President the power to seize control of or even shut down parts of the Internet in the event of a cybersecurity emergency.

Previous attempts by Jay Rockefeller (D-WV) and Olympia Snowe (R-ME) didn’t get too far. But Lieberman’s new attempt has been endorsed by Rockefeller and co-sponsored by Snowe according to a cnet article.

Now there’s bipartisanship for you… A Democrat, Independent and Republican all wanting more power for the government – power over the private parts of Internet. Read more.
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Obamacare Adds A Flood Of 1099′s

This got my attention. In a column by Deroy Murdoch he explained one of the many consequences of Obamacare. More paperwork for us small business owners.

Specifically, ANY vendor you spend more than $600 a year on will require an IRS form 1099 starting in 2012. Whether it’s a graphics artist or Best Buy, it doesn’t matter.

According to Rep. Dan Lungren (R, Calif.)

They will have additional accounting costs that will consume time and money,” Lungren tells [Murdoch]. “They will be required to keep a running tab with every vendor, all the way from restaurants to anything they buy — a piece of equipment, an airline ticket, or a hotel room. And when they reach the $600 threshold, they will be required to file 1099s for each of those vendors.

What is Home Depot going to do with the million 1099′s it receives from all those contractors out there?

Lungren also points out that small business owners will likely do more business with big box stores rather than local businesses to alleviate the paperwork.

My question is what the hell does this have to do with health care? Now we’re starting to find out what was in those 2600 pages.

You know what else is in there?

Atop this, the Galen Institute’s Grace-Marie Turner reports that Obamacare will require employers to evaluate their health plans’ affordability by calculating each employee’s household income, not just that worker’s individual wages. This likely will involve, at a minimum, collecting income declarations from every staff member.

You’ll also have to find out whether they have an 18-26 year old at home and whether they need health care from your company.

Can the government be a bigger pain in the ass of small businesses?

“YES, WE CAN”.
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CT Latest To Attack Amazon Through Affiliates

Connecticut is not quite there yet, but they’re considering it. They’re the latest in a growing number of states attempting to force Amazon.com and other large Internet retailers to collect state sales tax due to a “nexus” in their states composed of affiliate marketers.

Connecticut, like several other states, is trying to find its way around a 1992 U.S. Supreme Court decision that held a state cannot force businesses to collect sales taxes unless they have a physical presence within that state.

So, the poor Connectcuttian(?) sitting in his home office that puts an affiliate link on his web site means that Amazon has a physical presence in their state? Read more.
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The Need To Outsource

Most small business owners start out doing everything themselves. If you continue doing everything, your business can’t grow. That leaves two options: outsource or hire local employees.

The do-gooder government has made hiring local employees a real hassle. pay requirements, Equal Opportunity, payroll taxes, and the possibility of getting sued if you try and fire someone, just to name a few.

Your other option is outsourcing. It’s just like hiring the services of an independent contractor and in the new digital age that contractor can be local, national or international. Contractors can by hired for a specific project or for continuing operations.

Here are the advantages of outsourcing: Read more.
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New FTC Guidelines On Endorsements and Testimonials

The Federal Trade Commission has just released guidelines (pdf) concerning the use of endorsements and testimonials in advertising, including Internet ads.

Here are a few excerpts:

“Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser.”

“Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers”

“If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.”

In the last quote the FTC is trying to quash the “Results not typical” or “Results may vary” caveat that some advertisers use. The FTC says you should include what typical results really are. It goes on in an example about a weight-loss product:

…if consumers cannot generally expect to achieve such results, the ad should clearly and conspicuously disclose what they can expect to lose in the depicted circumstances

The guidelines contain a ton of examples and hypothetical situations and covers customer, expert and organizational endorsements. Read more.
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Make Money Or Create Wealth?

As a small business owner or entrepreneur is your objective to make money or to create wealth? There’s a difference.

Bernie Madoff made money. The investment bankers on Wall Street made money. A construction worker who built a road paid for with government stimulus money made money. The Federal Reserve printing 2 trillion dollars out of thin air literally made money. They didn’t create wealth.

Capitalism is starting to get a bad name. But, if you are a small business owner you are a capitalist. Whether it’s a bread slicer, an ebook or a wedding cake, you are creating a product. You are adding value.

Steve Forbes wrote a recent editorial called Capitalism: A True Love Story. He decries the theory that

capitalism is fundamentally based on greed and is immoral; that it enables the rich to get richer at the expense of the poor; that free markets are Darwinian places where the most ruthless operators unfairly crush smaller competitors and where the cost of vital products and services, such as health care and energy, are almost beyond the reach of those who need them; and that capitalism unchecked breeds corruption à la Bernie Madoff and Enron and encourages obscene bonuses, excessive pay packages and unwarranted golden parachutes. Capitalism is also being blamed with renewed vigor for a range of social ills, from air pollution to obesity.

He goes on to say that if it weren’t for capitalism there would be no personal computers, no cell phones, no Internet. People of all income levels have benefited from capitalism. Read more.
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Affiliate Marketing Trade Firm Helps Amazon

Who knew affiliate marketers had a lobbying firm?

I’m not sure they’re registered Lobbyists in Congress yet, but the Performance Marketing Alliance has weighed in on the ‘Amazon.com v. New York’ Appeals Court by filing an amicus brief on the side of Amazon.

If you’re no sure what’s going on I’ll give you a little background. In early July I posted about Amazon terminating affiliates in certain states.

New York State had passed a law saying that an “affiliate” in New York (some poor guy like you with an affiliate product link on his web site) of Amazon.com, Overstock.com, etc. constituted a “physical presence” in their state and was subject to New York State sales taxes that the companies had to collect and pay.

Incredibly, Amazon lost the court case against this in New York. While waiting for the Appeals Court, several other states jumped in with the same kind of laws, causing Amazon to simply terminate affiliates in those states.

Who loses? The affiliates. Also, the states no longer collect income taxes from the profits of those affiliate sales. And of course, the online retailers lose marketers who drive their sales.

Who wins? No one.

Which brings me back to the Performance Marketing Alliance. It’s a not-for-profit trade association that attempts “to connect, inform and advocate” on behalf of affiliate marketers, which they estimate at about 200,000 people.

If you are an affiliate marketer take a look at the Performance Marketing Alliance site. They’re just getting off the ground, but have some basic information and a fall special on memberships..
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