Andrew Hemingway: Laboring away without unnecessary government burdens

By Andrew Hemingway, chairman of the Republican Liberty Caucus of New Hampshire

If you've been listening to Democratic rhetoric in recent months, you'd think Republicans were bent on destroying jobs with the budget they just passed. It's time for another reality check.

When Republicans promised to create jobs, that meant they would help create the conditions to encourage private-sector employers to start hiring. The best way to stimulate such job creation is to reduce the size and scope of government so that taxes and fees can be decreased or eliminated. In fact, that's exactly what Republicans promised to do during their 2010 election campaign. Right now, they're fulfilling their campaign promises—promises that the people clearly supported and still support.

So far, the Republican record is on track. July was the beginning of the fiscal year affected by the Republican budget that just passed. From June to July in preliminary findings by New Hampshire Employment Security, 6,100 jobs were created in the private sector, while 9,300 jobs (many vacant) were eliminated in the government sector. In an apples-to-apples, year-over-year comparison, private sector jobs increased by 12,400 since last July to 551,800 in July 2011, and public sector jobs in state and local government increased by 700 to 76,700 positions.

If you do the math (628,500 / 76,700 = 8.19), there are roughly 8 people working in private-sector jobs to support one person working in a state or local government job. Republicans still need to focus on private-sector job creation so more people are supporting fewer government positions. The economy will improve as a result.

Just to be clear, though, when Republicans say they want to “reduce the size and scope of government,” that means they plan to reduce the number of available government positions, which many times are vacant or unneeded. The job losses reported by Democrats in the New Hampshire Legal Assistance program, the New Hampshire Court System, New Hampshire Public Television and the State of New Hampshire in general were necessary reductions in government positions to give private-sector taxpayers a much-needed break. Democrats, thrown out for four years of excessive government spending, would have you paying ever-higher taxes and fees year-in and year-out, which has been shown to cause job losses in the private sector.

With continuing Republican leadership, government department heads should start thinking of more efficient ways of providing the same services, because the state is still far too large in New Hampshire, and more cuts have got to be made to make room for real tax and fee relief. This is a good thing. Government jobs do nothing to produce wealth or stimulate a healthy economy, while at the same time they destroy wealth for the people who actually produce it in the private sector. The people who might work in government jobs can do better working in the private sector or coming up with an innovative idea to start a company of their own. The economy will benefit from this transformation, although it will take time.

New Hampshire employs more public sector employees per capita than the average U.S. State. Does the Democrats' idea of job creation mean that everyone will work in a government job or a position supported by taxpayer dollars? If so, who is going to produce all the wealth needed to pay for those jobs—particularly when those still working in the private sector are facing expanded bureaucratic hurdles enforced by an army of government employees with nothing better to do than make it harder for people to do business. The Democrats' idea of job creation is simply not sustainable. On the other hand, Republicans are working to build an affordable and sustainable government that fosters job growth and development. They're just getting started.

As you relax at the beach or in the mountains this Labor Day vacation, take a moment to consider how employment statistics are starting to signal a growing private sector in New Hampshire, and if that trend continues, the people will have no one but the Republicans to thank in 2012.

Small Business Investment Will Resolve Recession

By Nathaniel Gurien

     North Conway

Business tax cuts create or maintain jobs, and only indirectly, when businesses with ready access to capital, i.e., large publically-traded companies, are confident of increasing demand.  In this economy, most businesses share the same “crisis of confidence” as consumers, so are unwilling take speculative risks by increasing their costs until demand is obvious and demonstrable.

Small businesses in today’s economy are effectively barred from access to fresh capital, so they have no discretionary money to hire people and/or purchase equipment, even if they have a productive, recession-proof business model in place.  A six-percent reduction in payroll taxes, or accelerated depreciation on equipment is useless if there's little to no capital or financing available.

Especially in the North Country, small business is the primary engine of permanent job creation (as opposed to the temporary jobs created by infrastructure projects).

As written, the ‘jobs’ bill making its way through Congress will do little to help small businesses create jobs and grow community prosperity.

While the President’s proposal to invest the $30B of repaid TARP funds in community banks to bolster small business lending may help on the margins, small business borrowers would still be subject to these regulated banks’ ‘risk-adverse’ lending standards and reserve requirements. The many small businesses throughout NH that I’ve spoken with know well what I’m referring to.

What would have an immediate positive effect would be for small businesses with sound business plans that emphasize job creation to have access to lending.  This could be accomplished on a fast-track utilizing the existing local infrastructure of SBA/SCORE to review and polish viable business plans combined with lending via the actively functioning network of non-profit small business investment & development corporations in the North Country and throughout NH.

Since the capital would be provided as a loan, the ultimate net cost to the taxpayer would be comparatively low.

Typically, at an average of $50,000 per business loan, a small business would on average create about 5-10 jobs @ $30,000 per year (gross w/benefits), with a resulting additional annual gross payroll of $150,000 to $300,000.  To put this into a national perspective, $30B in repayable loans would roughly create upwards of $200B in new annual payroll, or 6,000,000 permanent new jobs.  How many permanent new jobs has the so-called $800B ‘stimulus’ bill created or saved even according to the most optimistic estimates? And how much of that is being repaid?

Each new job increases the quality-of-life for several family members as well as the job-holder. Their increased spending in their communities lifts the prosperity and confidence of other local small businesses, and well as friends and neighbors.  And of course, productive small businesses spend money in their communities for supplies, services and charitable works.

If this initiative was implemented, a tangible measure of optimism would grow among both consumers and businesses countering the prevailing economic pessimism that is at the heart of this ‘Great Recession’.

Taxpayers would receive an extraordinary ‘bang-for-the-buck’ with a comparatively tiny net investment, and demonstrable job creation and renewed confidence would be felt by summer's end.

OBAMA ON "JOBS"

OBAMA: LISTEN UP! GOVERNMENT DESTROYS JOBS ENTREPRENEURS CREATE THEM

Obama is dead wrong about jobs. Government does not create them. Entrepreneurs create them. The latest study of entrepreneurship shows that nearly 2/3 of net new jobs are created by new, young companies less than five years old.

Obama’s proposal to provide incentives for new hires should be DOA (dead on arrival) in the Congress -- IF there were any members of Congress who understood how jobs are created. Businesses hire when there’s demand for their products and services. A business owner would be a fool to put someone on payroll just to get a small government incentive.

Obama’s proposal to provide tax incentives for investment in “small business” is also misguided unless the business is less than five years old and investment comes in the right form. New or young enterprises need equity capital, not tax incentives or loans. Some states show the way. They provide tax incentives to those who invest “patient money” in promising new and young enterprises.

A government that builds huge deficits destroys jobs by taking capital out of private hands. Thus, there’s less to invest in new, young and innovative enterprises -- less job creation, less innovation.

No wonder China is getting the jump on us!

Congress and the 1st Congressional District in New Hampshire could use a Doctor of Economics who knows how to generate enterprise and jobs -- and who would be a truly strong, effective voice against the Obanomics that threatens to destroy jobs and bankrupt our nation.



Taxes in Review

As the year rolls to its inevitable end, time has come to look at the legislative events in Concord.  Space is limited so we can not discuss each of the 40 (yes, 40) or so fee or tax increases piled upon the residents of New Hampshire by the current majority party.  Of course this is on top of nearly 30 fee or tax increases from the last biennium.   The state’s budget increase 17.5% in the last session and increased 10%+ in the midst of, to use the President’s term “the worst economic recession since the Great Depression.”  This is just what virtually every economist warns against, increasing taxes in an economic downturn.

Since we can not discuss individually the 40 or so fee or tax increases passed by the radicals in the majority let us consider just one as an example of the process followed.  Perhaps the so-called LLC Tax best demonstrates the transparency, or lack thereof, and the total disregard for the welfare of the people of New Hampshire demonstrated by the current liberal majority.

The LLC tax law was passed, literally (not figuratively), in the middle of the night with no public presence except a tired reporter.  This new and untried tax was created in a desperate attempt to balance a totally unbalanced budget.  It was hidden in HB-2 the "trailer," i.e. the implementation bill for the budget, HB-1.  THERE WAS NO PUBLIC HEARING ON THIS TAX!  Well, so much for openness and transparency in a Democratic administration! 

LLCs in New Hampshire account for perhaps the largest number of employees in the state.  It is the LLC that hires your son or daughter during the summer.  It is an LLC that our children form to engage in their career paths in many instances.  The tax on "middle-class" workers; plumbers, electricians, massage therapists, hair stylists or barbers, chiropractors, dentists, landscapers, single person law firms, small rental property operators, postal center operators, your local restaurant or bar and yes, private investigators actually amounts to 13.5% according the David Hess of the House Republican Office and the Senate Minority Leader.  Just who do you think is going to pay the tax?  No business pays a tax; the tax is paid by you and me.  This midnight tax just increases the cost of getting the lawn mowed or morning coffee.

Wait, I hear a question, the law says it is “only” a 5% tax.  Yes, the law says is only a 5% tax on profits.  That means the state is now requiring every small business to figure your profit & loss.  Very few one or two person small businesses spends the hundreds or thousands of dollars per year needed to have their CPA prepare a P&L statement.  Of course, that is in addition to the money needed to get the federal tax 1040 completed.

Once the profits have been defined you are required to pay the existing 8.5% (exceptionally high in the nation) Business Profits Tax (BPT).  Then you are required to pay the 5% LLC tax.  Partnerships and similar business entities are also subject to this excessive taxation.  Regular corporations are subject to either the BPT or the payroll tax (the Business Enterprise Tax (BET)). 

What, you don’t have a formal P&L prepared for every year since you became an LLC.  You better get cracking, this middle of the night secret law allows the DRA (Department of Revenue Administration) to "reach back" (in socialist countries that is called a retrospective tax (c.f. NH Constitution Part the First, Article 23)).  Remember the law took effect July 1, 2009 but the DRA says they can go back forever to collect taxes.

Wait, you have a solution, just pay yourself the profits and take them annually as pay.  Sorry the state says that may not be possible.  The state (Big Brother, Metropolis, The Farmer, the all-powerful state by whatever name) will determine what you should be paid.  Yes, that is correct, the state, not you, will determine what “reasonable compensation” is.  I am of a sufficient age to remember that the Soviet Union set the wages for all occupations.  That worked out really well didn’t it?  But then again, no socialist entity has long existed. 

If you would like a look at the rules for this new tax do not look to your New Hampshire Legislator for a copy.  This law has a neat feature of tying the taxing rate not to what New Hampshire legislators write into law, but what the bureaucrats (not the congressperson, but the civil service wonks) running Washington write into IRS rules.  Of course that little thing called representative taxation found in Part the First, Article 28 of the New Hampshire Constitution has no affect whatsoever on the rights of the residents of New Hampshire.

This one new egregious and blatantly unfair and likely unconstitutional tax is an example of how the radicals in Concord are treating you and me.  Bills are passed with little or no notice.  Bills are passed with little or no public input.  Disregard for rational and commonsensical solutions is rampant.  There is exaggerated spending year after year.  There is no analysis of the consequences of actions because of a “good intent” or because “it feels good” to undertake and action. 

Then again we were assured there would be "hope" for a new tomorrow and promised definite "change."  I guess that the hope is that the feds and the state will not take all of your earnings and the change is literally what is left in you pocket after taxes.

There are some people in the House who consistently vote for the rights of people to earn a living.  It is a task to meet the challenges constantly thrown at businesses, individuals and honored social conventions by the radical elite now in power in Concord.  Check the voting record of the Representative and Senator serving your community.  The votes are on-line.  The Republicans took advantage of House rules to demand a role call vote on nearly every spending, taxing, fee increasing and social issue.

So this is what the last year of radical left-wing politics has wrought; fewer jobs and decreasing appeal of New Hampshire as a place to do business.  What will the next session bring is the question.  Until November arrives, we few can only try to slow and delay the onslaught of taxes and increased spending and lack of openness in government.

Jordan G. Ulery

Member 161^st   New Hampshire General Court – House

Ways and Means Committee

Republican - Hillsborough 27