Presentation on theme: "The Stephen J. Sylvain 2014 Business Stabilization, Investment & Growth Press ESC to Exit the Presentation. / Press & Hold ALT+Tab to Pause. CLICK HERE."— Presentation transcript:
The Stephen J. Sylvain 2014 Business Stabilization, Investment & Growth Press ESC to Exit the Presentation. / Press & Hold ALT+Tab to Pause. CLICK HERE 1 Operation Accelerated U.S. Economic Recovery For Employment Protection & Jobs Stimulus Social Security Tax Amendment
So many businesses in the United States today are in survival mode or on life support principally due to massive failures on the part of our elected officials and TRILLIONS in resulting debt with contributing factors of: Inaction to properly regulate the mortgage market, which led to banking, auto, insurance industry bailouts and housing + construction plunge. Extreme taxation and over-regulation of other industries forcing jobs overseas + layoffs stateside. Increased government funding of health care and entitlements expansion. The invasion of Iraq based on faulty or manipulated intelligence. The TRILLION dollars spending bill. (AKA Stimulus Program) The economy is barely moving and hanging on by a last thread of entrepreneur/consumer confidence that trusted representatives in Washington will finally begin to make prudent decisions in the best overall interest of our country and its people! 3
THE PROBLEM 4
With our current, more than double the norm, actual unemployment-rate the situation is only going to degrade further as MILLIONS of students continue to graduate annually from high school & college needing to enter the workforce to support themselves + their families creating an ever increasing glut of unemployed available workers. The country is absolutely susceptible to a double-dip recession or worse! We need to slow the business closures, downsizing and outsourcing to foreign countries by offering tangible tools to stabilize as well as provide the incentive required for investment, growth, corporate/consumer spending to jump start + fast track our economic recovery. We MUST motivate the business masses to Save & Create jobs! 5
A preferred plan to achieve this goal should be that which has the most positive impact on our economy + employment and negatively affects the fewest number of people the least for only a short period of time Accordingly, I believe my proposal, as set forth herein, fills that bill… 6
An estimated 500,000 businesses cease to exist each year in the United States and far fewer are opening. A major reason for this constant turnover + loss of ground is stifling taxation, whereas it discourages ownership, stabilization, reinvestment, growth and the possibility to become financially successful! FYI: It is not uncommon at all today that a U.S. based employer will forfeit 50% - 70% or more of their gross profit towards combined Payroll Taxes, Income Taxes, Property Taxes, Usage Taxes, Energy Taxes, Sales Taxes, Excise Taxes + other local/state/federal taxes. This is unreasonable, counterproductive and does not support a sustainable vigorous economy as is evident. It put my company out of business! It also provides an unfair advantage to many countries exporting here. 7
This crushing combined tax burden & handicap can be a serious strain even in a thriving economy, but will more often mean the difference between staying in business, closing or only maintaining, rather than growing in a weaker one! Again, it further demoralizes new business start-ups and favorable risk/ reward, which is a prerequisite for any effective economic stimulus. 8 On top of that a new Obamacare Employer Tax is on the way, some states are increasing the minimum wage approaching $10/hr. and new regulation is often being passed to further restrict commerce. To resist is futile! Its you against the system and a growing portion of a population that treats you as an enemy. Who would chose to invest here under such a hostile atmosphere? Perhaps an occasional large corporation with special tax incentives might, however 70%+- of all Americans are employed by smaller businesses and they are taking the brunt. Survival of only the fittest is no way to grow an economy! If you want to diminish the middle class and bring about a Socialist agenda through systematic economic/employment deprivation this is definitely the way to do it. Our foundation of Capitalism is doomed to crumble without contrary intervention. For business to flourish the government must be a friend NOT an adversary. Without a realistic opportunity to accumulate wealth through hard work + risk taking there is absolutely NO reason to become an employer and create jobs!
As a businessman employing 1,000+ people over the recent years I can attest that a primary factor negatively influencing hiring & retention in the United States today, having a relative easy remedy, is the high cost of Payroll Taxes with the most burdensome aspect of all being The Employer Social Security Tax Contribution paid on their employees behalf. Right now ALL employers are required by the federal government to pay 50% of Social Security taxes on their employees. The current taxation rate is 12.4% of gross earnings. Subsequently an employee pays 6.2% and the employer pays 6.2%. The effect of this 50%/50% split is felt far less by the individual employee, whereas 6.2% is a somewhat small portion of their total pre-tax pay. However, it is felt far more by the employer, because they must pay the 6.2% contribution on ALL of their employees combined each payroll period. 9 Note: Let me make it abundantly clear that I am not suggesting to reduce the amount of Social Security taxes collected in any way; rather, an alternate option for dispersal to save and create jobs!
Ex. A small business of 25 full-time employees averaging $15/hour, would have a payroll of $15,000/week, with the employer being responsible to pay 6.2% of that amount towards Social Security taxes, which adds up to $930/week = nearly $50,000/year. A midsized business with 100 employees averaging $15/hour would pay nearly $200,000/year in Social Security taxes. A large company with 1,000+ employees could pay MILLIONS of dollars annually in Social Security taxes! Even a business employing as few as 2-10 people could easily pay $2,000-$20,000 or more in Social Security taxes each year. 10
Business- 10 Employees Business- 25 Employees Business- 100 Employees Business Employees Average hourly Employee wage$15 Employer paid Social Security taxes/week$372$930$3,720$37,200 Employer paid Social Security taxes/year$19,344$48,360$193,440$1,934,400 11
The Solution 12
Spending TRILLIONS of dollars, which we have to borrow, to create short- lived jobs for often nonessential projects and positions + expanded entitlements to support the inflated unemployed is like putting a band aid on a bullet wound. It might cover-up the appearance of critical damage temporarily, but its just a matter of time before you bleed out internally. Businessmen see through this façade of borrowing to pay debt with no effective plan for correction and have justifiably lost confidence. At this point, the ONLY way to substantially + sustainably advance our economy is by strongly encouraging employers & entrepreneurs to take risk. The path for that is through new and significant incentive to restore their faith. Standard tax deductions for business expenses is not nearly enough and token efforts by the government, such as low interest loans, is practically useless whereas in the current economic climate the vast majority of companies cannot absorb further debt, even if it were at 0% interest and most of the few remaining candidates would not likely qualify because of their distressed financial position. Again, we must motivate the mass of faltering businesses, NOT just a small minority, to have any real- time significant impact on the economy & employment! 13 (Once confidence is gone, hope is next and panic isn't far behind SJS)
There is also a limit to how much money other countries will loan the United States to fund our lavish expenditures, benefits, entitlements and conflicts. If we wait until that day comes the result will be catastrophic! Unfortunately, many Americans still believe that things are much better than they truly are via relentless political spin. However, anyone with a desire to scratch below the surface can see that any Wall Street boom is not trickling down (Investors lack the ambition for long-term risk to create jobs) and the misleading published unemployment rate is wildly far off the mark considering that MILLIONS of laid off workers who have run out of unemployment benefits, but still NOT employed, are no longer being counted towards official statistics. In addition, the Feds are shoveling approximately ONE HUNDRED BILLION dollars/month of debt into our economic furnace to propagate this illusion. 14 The real Jobless Rate is calculated closer to 15%, which is near to where it was in the later years of the Great Depression. There is no denial that we are flirting with disaster! These government supported distortions may well be conducive to generating votes for the time being, because of a false reality it projects, but we must face facts and be proactive. Have we NOT learned anything from the recent crash caused by blatant deceptive practices and procrastination? That would be miniscule in comparison to what is coming should we not relent from only a reactive policy posture.
We need to understand and accept that in order to revitalize our economy + employment, basic laws of manpower supply and demand for benefits should rule as part of a balanced approach. As such, with the present overabundance of unemployed workers it necessitates a bipartisan compromise in this costly area for business to encourage employee retention as well as hiring & spending. What if the many current struggling United States businesses were allowed flexibility to require employees to pay up to 100% of their own Social Security taxes, rather than the current mandated 50%/50% split? These desperate employers could then redirect that substantial savings of $100s, $1,000s, even 10s of THOUSANDS of dollars or more on a regular weekly basis to stabilize, reinvest + grow! If youre thinking even for a second that this may not be fair to American workers, just ask yourself if it would be fair for them to avoidably lose their job or not get a job and potentially lose their home, car, credit + so much more (millions have suffered this battle already) simply because the government would rather see a business release workers or even shut their doors instead of simply allowing them to reasonably shift a portion of their tax obligation to the people who ultimately benefit from it. 15
I therefore propose that in consideration of the current stagnant and vulnerable economic circumstance, the Federal Government allow ALL businesses to decide individually whether they can afford to continue to pay a 6.2% of payroll employer contribution towards employee Social Security taxes or, instead, have employees shoulder more or all of it through the standard payroll deduction process. This strategy causes NO loss of tax revenue whatsoever! The foreseeable result would be that more employers could stay in business, more Americans could remain employed + become employed and the economy could gain long awaited momentum on a forward course of recovery/growth. Note: Through jobs savings + creation it would further depreciate national debt accumulation by reducing dependency on costly social programs such as unemployment benefits, Section 8, welfare, food vouchers & Medicaid. Unlike other cost cuts, which can actually raise unemployment and lower tax generation + increase government dependency, my plan requires the difference to be spent on specific "Allowable Expenses" to guarantee a positive economic impact & increased business spending, which creates more jobs + higher state/ federal tax income. Keep in mind also that many more industries in the U.S. are going to be devastated over the upcoming years if they dont somehow gain the ability to commit significantly in research/development, technology, infrastructure and leadership especially for competition against diligent international efforts."Allowable Expenses" 16
For all practical purposes, the current 50% mandated employer contribution to its employeess Social Security taxes would then become a company benefit, to be offered or not to be offered in part or in full, at their sole discretion as deemed appropriate. Active employees and applicants of participating businesses always have the option to seek work elsewhere if they so chose. Again, there would be strict safeguards for use of the employers Social Security tax savings in compliance with a detailed "Allowable Expenses" guideline to insure overall economic benefit, including alsoOffsets & Benefits for those affected employees, to minimize Net Impact, while encouraging consumer spending. "Allowable Expenses" Offsets & BenefitsNet Impact 17
If a participating employer utilizes the entire 6.2% Social Security tax savings on "Allowable Expenses" to stabilize, reinvest and/or grow a business, they would have no further tax liability to their affected employees."Allowable Expenses" However, if less than 100% of the saving was spent on "Allowable Expenses", that would require a return of the discrepancy to affected employees, either quarterly or annually, to help offset the additional Social Security taxes absorbed. "Allowable Expenses" 18
I.e. If an employer experienced a $50,000 annual savings from the Social Security tax deferment, but dedicated only $30,000 of that amount on "Allowable Expenses", the remaining $20,000 surplus would be compensated back to their affected employees."Allowable Expenses" 19
This is welcome, new working capital for existing employers who previously had to painstakingly expend it regardless of their low profit, no profit, financial loss position and/or inability to modernize for potential long-term operations. Contemplate for a moment the cumulative effect from 100s of THOUSANDS of borderline businesses in our country now having a rare opportunity to reinvest 100s of MILLIONS of dollars or more combined each and every week as well as all the tax revenues + jobs that will create in providing related goods/services! 20
Examples of Proposed Participating Employer "Allowable Expenses" Employer supplement of private or government sponsored employee medical/life/dental/vision and disability insurance, onsite health care facility, onsite childcare facility or otherwise offset to childcare costs, onsite not for profit food preparation, psychiatric care, counseling, dependency rehabilitation, emergency assistance, car pool allowance, etc. 21 Employee quality of life optional "Allowable Expenses" to consider: Equipment/Machinery/Tools purchase, repair & upgrades Technology purchase, repair & upgrades Business property repair & renovations (Not regular maintenance) Expansion costs (I.e. New rental & utilities) Business property/land purchase (I.e. New mortgage or cash acquisition) Office furniture repair or replacement Employer/Employee cell phones & computers Company vehicle purchase, payment or lease (Must be 75%+ business dedicated) New fixtures, displays & signage Business travel (Only if 100% official purpose) Company debt pay down (Up to 25% of savings could be applied on loans, credit cards & tax debt accumulated before implementation of the amendment) Morale support activities (I.e. Employee meals, company events, contests, logo clothing & incentives) Advertising (Expansion & new business related) Consulting for qualified expenditures Partial offset to their employees additional Social Security tax contribution
Examples of Affected Employee Offsets & Benefits The additional Social Security tax paid by the employee is non-taxable income. The additional Social Security tax paid will favorably affect the end benefit when received. Sales Tax credit allowance towards identified purchases of goods to encourage continued discretionary spending for affected employees. (I.e. Clothing for themselves and dependents, furniture + appliances) Any surplus from the employers Social Security tax deferment not spent on "Allowable Expenses" would be reimbursed to affected employees."Allowable Expenses" They gain or retain employment! 22 Note: An employer may choose to exempt key management, executives and/or veteran employees, etc.
Example of Net Impact to Affected Employees Note: With the limited Net Impact on affected employees of my proposed Social Security tax deferment + Sales Tax credit benefit, spending habits should not deviate noticeably, whereas consumers are slow to change unless theres a profound reduction to income/buying power. Participating employers will definitely spend the savings on Allowable Expenses, since most have a long list of overdue repairs & upgrades. Again, this would also save and create jobs!Allowable Expenses Gross 40 hours x $15/hour $ Current 6.2% Employee Social Security Tax Contribution $37.00 Proposed Additional 6.2% Maximum Employee Social Security Taxes$37.00 Income Tax savings based on a 25% bracket considering the additional employee paid Social Security Tax is non-taxable income-$9.25 Sales Tax credit for savings through spending incentives -$5.00 New company perks, such as medical/meals/contests/incentives/events -$5.00 Estimated average employer reimbursement from unspent savings-$5.00 Net anticipated impact to affected employees $10-$15/week 23
Related Criteria S evere penalties for intentional abuse or fraud. P ossible spending limits for some categories of Allowable Expenses.Allowable Expenses E asy to follow guidelines and instructions for employers/employees as well as a website for detail + assistance by phone as needed. P articipating companies could also be required to have a payroll processor & connected company bank account so that the employees Social Security tax contributions are properly calculated + paid as well as verify a total sum of an employers Social Security tax savings. I would further recommend the payroll company actually issue these employers a check with each payroll in the form of a direct deposit for the deferred Social Security taxes. T his provides for best tracking of the benefit amount and insures at very least an employer did have the money set aside at one point to reasonably indicate an ongoing ability to offset affected employees as applicable. A quarterly schedule filing could also be required to prove authorized expenditures past and projected detail. Therefore, a participating company may not ever draw from the designated account except for qualified "Allowable Expenses"."Allowable Expenses" 24
THE RESULT 25
Our unemployment-rate should inevitably progress back to past low single digits in a relative short time for all of the many reasons previously articulated. Eventually participating companies, then much more stable financially from extended tax relief, would again begin volunteering all or part of the prior 50% employer Social Security tax contribution as a result of heightened competition to recruit/retain quality & quantity staffing, thus creating a desirable full-circle affect. Note: I would estimate that out of 5,000,000 or so employers in the U.S. today perhaps 10% - 20% would participate in the program, beginning with those companies & employees in most serious jeopardy, which is the intended result. Again, the impact of HUNDREDS of THOUSANDS past failing businesses now having a far better ability to survive and prosper as well as motivation to reinvest as much as ONE BILLION dollars or more per week combined for associated goods + services ("Allowable Expenses") would be immediate & immense! It will also encourage approximately TWENTY MILLION small business owners currently without employees to advance much more aggressively towards employer status."Allowable Expenses" 26
The Stephen J. Sylvain 2014 Employment Protection & Jobs Stimulus Social Security Tax Amendment Targets struggling companies, entrepreneurs & at-risk employees by providing an employer the flexibility they desperately need to responsibly + accountably defer a portion of their overwhelming tax burden (Employers Social Security Payroll Tax Contribution) to employees for: Stabilization, Investment & Growth = Jobs Retention/Creation. Increased Business & Consumer Spending, Tax Generation + Government Savings. Reinvestment for repairs, renovations, expansion or upgrade to be more capable of withstanding worldwide competitors. 28 *Predictably resulting in a dramatically accelerated economic recovery & future stability!
We must act NOW at this crucial crossroads before it is too late for any action to have a spontaneous positive result + MILLIONS more jobs are avoidably lost & TRILLIONS more in national debt is realized. This is the sensible solution we demand and politicians only have to implement it. They must NOT circumvent its much needed effect with red tape and partisanship or otherwise limit impact potential through watering-down as is the historic trend! 29 REFLECTION Lets give employers a fighting chance to help our eager American workforce become employed or stay employed while at the same time increasing business/consumer spending, tax revenues and reducing government dependency + debt accumulation. Again, with a true free market economy where availability of employees dictates demand for benefits, once the unemployment rate diminishes noticeably, the interruption will lose validity resulting in an eventual reinstate of the employers Social Security tax share by companies which are more capable to afford it. However, the flexibility my proposal allows shall continue thereafter as a ready last ditch resource to depreciate employee layoffs, business closures and even bankruptcies.
Thanks for listening! Please also feel free to contact your Congressmen and Senators. Be sure to include the website address for a PowerPoint presentation reference. (www.businessmanwithaplan.com) CLICK HERECLICK HERE to contact Senators + Congressman & support this Proposal. Sincerely, Stephen J. Sylvain Skype: (347) Cell: (207) READ IT AGAIN Allowable ExpensesAffected Employees Offsets & Benefits Net Impact to Affected Employees PRINTABLE VERSIONSHARE Related Criteria 30 I welcome all requests to answer questions, have discussions or make presentations regarding my plan, therefore do not hesitate to contact me by way of the methods listed below. Contact me…