MSA Leaders Urge Congress to Support the Incorporation Transparency and Law Enforcement Assistance Act
Members of the Main Street Alliance National Executive Committee and the National Action Committee penned the following letter today to Congress asking for their support on an Act aimed at increasing incorporation transparency and reducing the use and resulting harm caused by anonymous shell companies.
September 27, 2016
Dear Member of Congress,
As national leaders of the Main Street Alliance, the following businesses owners write to urge you to support the Incorporation Transparency and Law Enforcement Assistance Act (S.2489/H.R. 4450). The Main Street Alliance is a national network of small businesses who engage on important public policy issues that work for business owners, their employees, and the communities they serve. This bill, which would help curb tax evasion, corruption, and fraud facilitated by anonymous shell companies, is central to this mission.
The Incorporation Transparency and Law Enforcement Assistance Act would require the owners of companies to put their own name on an incorporation form. This simple act is critically important to those of us who have seen or experienced the harm resulting from anonymous shell companies. Anonymously-owned companies or those whose owners are hidden, fuel corruption, and corruption distorts markets. Shell companies win contracts on the basis of false promises, rather than legitimate competitive advantage. Consider the following:
- One couple created a string of anonymously owned companies and won U.S. government contracts by submitting extremely low bids. They then subcontracted to other businesses for the actual goods and services. The couple received the fees from the government but never paid the subcontractors. They shut down their anonymous company and set up new ones, frustrating law enforcement investigations and creating new opportunities to repeat the scam. (1)
- A U.S defense contractor used his position to secure more than $1.1 million worth of contracts for a Tennessee-based company that he secretly owned, but his wife ran under her maiden name to hide their conflict of interest. (2)
- Anonymous companies are used by patent trolls to file lawsuits, costing the companies they target $80 billion per year in lost profits and legal costs. These lawsuits serve to squash innovation and harm fragile start-ups. (3)
Sadly, these are just a few of the countless examples of the harm caused by anonymous companies and the consequences for small business. Whether losing out on an initial contract or finding themselves on the fraudulent end of a commercial transaction, small businesses cannot be expected to compete with the ever-changing scams perpetrated by the owners of anonymous companies.
Requiring secretive businesses to come out from the shadows will benefit small businesses in several ways. It will reduce conflicts of interest and cronyism in contracting, as well as curb false billing of contractors and fraudulent certification for small, disadvantaged, veteran, or disability-owned businesses. Furthermore, ownership information will help prevent those who previously defrauded taxpayers from establishing a new sham operation and winning new contracts. And speaking for those businesses who honestly pay their taxes, it will make it harder for bad corporate actors to gain advantage through tax evasion.
In short, transparency levels the playing field so that businesses will engage in open competition based on product or service quality, organizational efficiencies, and talent. That is a market in which we can compete.
Congress should quickly pass S. 2489/H.R. 4450 to end the corrupt practices associated with anonymous companies and support a healthier environment for small business. Further, we ask that you ensure any additional bill on incorporation transparency include a robust standard for beneficial ownership and make available this information to both law enforcement agencies and financial institutions.
Main Street Alliance Executive Committee Members
David Borris, Hel's Kitchen Catering Northbrook, Illinois
Melanie Collins, Melanie’s Home Childcare Falmouth, Maine
Kelly Conklin, Foley-Waite and Associates Bloomfield, New Jersey
Jim Houser, Hawthorne Auto Clinic Portland, Oregon
Reshonda Young, Popcorn Heaven Waterloo, Iowa
Main Street Alliance National Action Committee Members
Paul Heroux, Handyman Orlando, Florida
Andy Lytle, Receptor Sound & Lighting Orlando, Florida
Sumner Richards IV, S. Fernald's Country Store & Deli Damariscotta, Maine
Frank Brown, Minuteman Press Minneapolis, Minnesota
Todd Mikkelson, Sprayrack Minneapolis, Minnesota
Samia Bahsoun, Capwave Technologies Ashbury Park, New Jersey
Tony Sandkamp, Sandkamp Woodworks LLC Jersey City, New Jersey
Amy Collins, New Shelves Pittsford, New York
Jayson Waits, Bloomtastic Florist Columbus, Ohio
Molly Dullea, General Denver Hotel Wilmington, Ohio
Rosalind McCallard, Snackrilege Portland, Oregon
Maurice Rahming, O’Neill Construction Group Portland, Oregon
Caleb Magoon, Power Play Sports & Waterbury Sports Morrisville, Vermont
Matthew Birong, 3 Squares Cafe Vergennes, Vermont
Download a PDF of the letter HERE
1 FBI, Conspirator Sentenced to Prison in $2.3 Million Government Contract Fraud Scheme,
http://www.fbi.gov/baltimore/press-releases/2014/conspirator-sentenced-to-prison-in-2.3-million-government-contract-fraud-scheme; US DOJ Press Release, Clinton Woman Pleads Guilty In $2.3 Million Government Contract Fraud Scheme, http://www.justice.gov/usao/md/news/2013/CLINTONWOMANPLEADSGUILTYIN2.3MILLION.html
2 United States Attorney’s Office Eastern District of Virginia, Former employee of defense contractor and wife sentenced for conspiring to obtain millions in fraudulent scheme involving vehicle parts for Afghan National Army, February 14, 2014, available athttps://www.justice.gov/usao-edva/pr/former-employee-defense-contractor-and-wife-sentenced-conspiring-obtain-millions.
3 James Bessen, Jennifer Ford, & Michael J. Meurer, “The Private and Social Costs of Patent Trolls,” Regulation 26, 2012.
As Councilmembers consider a Paid Family and Medical Leave policy for the District, D.C.'s "cupcake queen" extends her support to the measure that she says will help her business and improve the lives of her employees.
Doron Petersan owns Sticky Fingers vegan bakery in Columbia Heights and Farewell, a bakery, diner and bar on H Street. Today, the two-time winner of Food Network’s Cupcake Wars stepped out of the bakery and spoke as a member of the DMV Small Business Alliance (a project of Main Street Alliance) in support of a Paid Family and Medical Leave policy for D.C. Doron told the crowd of around 100 that as a small business owner she knows her employees and business will benefit from a Paid Family and Medical Leave policy, particularly from one funded by small contributions to an insurance pool.
“Paid Family Leave is a benefit that everyone should have access to, regardless of the size of their employer,” she said. “Policy that understands the demand for employees to balance time between their careers and their families makes good business sense. When we as employers can meet the needs of our staff and their families, we can attract and retain a talented and committed workforce that will grow our businesses.”
Doron was joined by a dozen other speakers who spoke to the need and impact of time off to recover from illness, care for a sick loved one, or welcome a new baby to the home. Doron was in a unique position to speak as both a business owner whose employees would benefit from the policy and as an individual who would personally benefit from access to the protections. In DC, the pooled insurance fund could be used by small business owners, too.
“I am someone whose business plan reflects my values,” Doron continued, “health, wellness, and social responsibility top my list of priorities, right alongside turning a profit and creating more jobs. An insurance pool funded Paid Family Leave policy allows more small and micro-businesses to live their values and match the offerings of their larger competitors and helps level the playing field for the shops and restaurants on Main Street.”
With a paid leave policy on the books, one funded by employer contributions of just 1 percent of payroll, DC businesses will have the opportunity to provide a benefit that helps employees, businesses, and the community. “Policy that is socially conscious and cost effective is a no-brainer for small business owners in the District. I urge lawmakers and my fellow entrepreneurs to work together to build a stronger local business climate and heed the call for Paid Family and Medical Leave,” said Doron.
New Jersey Steering Committee member Marilyn Sealy's testimony, delivered Tuesday helped ensure Morristown became the 13th New Jersey municipality to pass an earned sick day policy.
"When I heard other businesses didn't offer earned sick days I couldn't believe it," Marilyn testified before a packed town council
meeting."I've always offered them, and it's good for my business."
Marilyn owns Wells Rugs Service, a carpet and rug cleaning service that has operated in Morristown since 1921. Shortly after her testimony, the township passed the earned sick day ordinance by six votes to 1.
The law enables employees to earn one hour of sick time for every 30 hours worked. Staff of businesses with 10 or more employees can earn five paid sick days per year; while those in firms with nine or fewer employees can earn three paid sick days per year. Food service and healthcare workers can earn five sick days regardless of company size. Employees may use sick days to care for themselves or their sick children, siblings, parents, grandparents or grandchildren.
Morristown joins New Jersey municipalities Jersey City, Newark, East Orange, Irvington, Passaic, Paterson, Trenton, Montclair, Elizabeth, Plainfield, New Brunswick and Bloomfield in having enacted an earned sick days policy at the municipal level. In total, 35 municipalities throughout the United States have passed earned sick day ordinances.
Marilyn dismissed concerns played up by those opposing earned sick days that the ordinance would hurt businesses, or that employees would take advantage of their employees.
"We don't want workers coming to work sick, they could infect their co-workers, our customers, or even get into accidents," she said. "And I think the fact that my employees have stayed with me for 10 or 20 years has something to do with the fact that I offer earned sick days. It creates very loyal workers."
Trump’s Paid Maternity Leave Policy Falls Short, Could Impose Unknown Costs on Small Business Owners
Small business owners are overlooked by a policy proposal that would likely increase employer costs while failing to provide adequate coverage.
Although a universal paid family and medical leave program could provide a significant benefit for many small business owners, Mr. Trump’s plan misses the mark. Under Mr. Trump’s maternity leave plan, small business owners would likely bear the cost of a policy that doesn’t do enough to address the real needs of their employees.
Mr. Trump’s plan offers only limited six weeks of paid maternity leave, with no benefit for non-birth parents (fathers, partners and adoptive parents). The plan also does not provide coverage for care of a family member who is elderly or ill. By offering only a short recovery period for recovering mothers and omitting care time for sick relatives all together, Mr. Trump’s proposal leaves the small business owners on Main Street in a familiar position. The responsibility for developing and funding necessary family care for employees would continue to fall on them. Paid family and medical leave is a critical program that can allow small employers to recruit and retain valuable team members and measure up to offerings of their competitors.
Mr. Trump also claims that his maternity care plan can be paid through unemployment insurance. He claims the added cost of the benefit would be covered by eliminating waste and abuse in the unemployment insurance system and through the use of spending rebates in the Earned Income Tax Credit for lower-income families. The policy lacks coherence and clarity and potentially threatens an already under-resourced unemployment insurance system.
Main Street business owners have criticized both the plan’s limited coverage for parental and medical leave and are wary that the plan will not provide the relief they need as employers:
“The idea that the policy applies to women only is both sexist and anti-family. It flies in the face of the modern construct of family and shows just how out of touch Trump is with the middle class,” said Molly Moon Neitzel, the owner of Molly Moon’s Homemade Ice Cream with seven locations in Seattle. “This policy does so little to help employees that I would still have to foot the bill for a private policy while contributing to the unknown costs of Trump’s shortsighted and outdated policy. “
“As a business owner with first-hand experience with a government paid family leave policy here in New Jersey, I see Trump’s proposal as a significant step backward. It fails to address the critical need for family medical leave insurance for employees and business owners to recover from an illness or care for a sick loved one,” said Tony Sandkamp, the owner of Sandkamp Woodworks in Jersey City."
U.S. Census Bureau reports that real median household income increased 5.2 percent from 2014-2015, boosting consumer confidence and spending, and raising income to near pre-recession levels.
Today, the U.S. Census Bureau released their report, “Income and Poverty in the United States: 2015” showing the first increase in median household incomes since 2007, and a 1.2 percent decrease in our nation’s poverty rate.
In the midst of slow recovery, this uptick in household incomes is music to the ears of Main Street small business owners who have already begun to feel the impact on their bottom line as incomes surged to near pre-recession levels. The boost in household income is one factor in recently reported increases in consumer spending, particularly in the retail and food service sectors.
Also encouraging was the decrease in households living below the poverty line. A 1.2 percent decrease from 2014 is representative of 1.1 million families and 3.5 million individuals who can now play a more significant role in their local economies and conduct business at the shops and restaurants on Main Street.
Looking at the numbers by race, Hispanic households fared the best with a 6.1 percent bump in pay, while Black households saw the smallest boost of just 4.1 percent. Wages grew at a similar rate for both men and women, while women still brought home just 80 percent of what their male counterparts earned, albeit a 3 percent improvement from the year prior.
The data shows that despite a slow and unsteady recovery, wages are recovering well and small business owners are in their strongest position to thrive in over a decade. Still, the pay gap in place for women and the slower growth experienced by Black households is concerning.
Confident that rising wages will give way to more rapid economic growth, Main Street small business owners vow to continue advocating for state and local wages increases and call on Congress to raise the wage at the federal level, narrowing the gender gap, and fueling the local economies on which their businesses depend.
“Any time there is a boost in household incomes the small businesses on Main Street can anticipate a positive impact on their bottom line. We’ve seen it in Seattle, L.A., and throughout the country,” said Amanda Ballantyne, National Director of the Main Street Alliance. “We need to continue to work to put small businesses in the best position to succeed by raising wages nationwide, closing the gender-based pay gap and ensuring equal participation in our consumer-driven economy for women and people of color.”
Small business owners with the Main Street Alliance of New Jersey joined New Jersey State Senator Raymond Lesniak and allies Monday in urging the state legislature to vote on a proposed bill that would close corporate tax loopholes for multi-state corporations.
If signed into law, the "combined reporting" bill would help level the playing field for small business owners while raising nearly $300 million in additional state revenue.The bill passed through the Senate Budget and Appropriations Committee earlier this year, and awaits a floor vote on Thursday. It has been introduced in the State Assembly, New Jersey's lower legislative house, but has yet to brought to committee votes there.
At a press conference in Trenton small business owners Marilyn Sealy, Jill Sasso, and Barbara Stanton called first and foremost for tax fairness.
“All businesses benefit from the public services, education, and infrastructure that New Jersey has to offer,” said Jill Sasso of Lawrenceville Provisions in Lawrenceville." I’m here to ask the state legislature to make sure that all multi-state corporations pay their fair share for these services.”
Combined reporting treats the parent company and subsidiaries of multi-state corporations as one entity for state corporate income tax purposes. Without combined reporting, such corporations can shift profits across state lines, and end up paying a lower effective tax rate than small businesses. The New Jersey Office of Legislative Services estimates that closing these tax loopholes could raise an additional $290 million in state revenue to invest in schools, roads, public services and other building blocks of a healthy state economy. More than half the states that levy a corporate business tax now require it.
“I run a family-owned business, and I pay my fair share of taxes and fees,” said Marilyn Sealy, the owner of Wells Rugs Service in Morristown. “I don’t hide my revenue through some P.O. box in another state, and neither should multi-state corporations. New Jersey needs the funding for many public services, and my business shouldn’t be the only one bearing the burden.”
Senator Lesniak, a primary sponsor of the bill, said he understood the frustration small business owners feel and called for his fellow lawmakers to support the proposed law. “They are upset because they have to pay what these multi-national corporations are not paying because they’re using accounting manipulations to avoid paying New Jersey taxes. This will put an end to that," said Lesniak.
More than 50 business owner have signed a letter of support for the law, with dozens more expected to join the campaign in weeks to come.
"Small businesses should not bear the burden of paying for services that benefit all businesses," said Barbara Stanton of Heritage Lighting. "Our state legislature needs to pass combined reporting into law as soon as possible.
Saint Paul is now home to the strongest paid sick days law in the country.
After months of council meetings, press conferences, social media activity and leadership engagement to raise public awareness, St. Paul members of the Main Street Alliance of Minnesota built on the successes of the Minneapolis campaign and ensured a policy was passed that is in the best interest of their businesses.
The Saint Paul City Council voted unanimously 7-0 to pass what many suggest is now the strongest earned sick and safe time ordinance in the country, one that ensures all employees in the city have access to paid sick time. The ordinance will take effect July 1, 2017.
“We are proud to support a strong, fair sick time ordinance as a basic floor for employees throughout the city”, said Shannon Forney, owner of Workhorse Coffee. “The benefits to providing sick time outweigh the costs a hundred fold. If we, a scrappy small business, not supported by capital investments, can do it, certainly other businesses can too”.
The vote came after a year-long campaign to win paid sick days for the 42% of employees in Saint Paul who did not have access to paid sick time. Dozens of small business owners took on leadership roles in the community and participated in roundtable discussions, forums, rallies and meetings with their council members to make Earned Sick and Safe Time a reality for every working family in Saint Paul.
The Main Street Alliance created a map marking more than 55 small businesses in St. Paul that pledged their support for the ordinance and took on leadership roles in their community, advocating on their own behalf to better the lives of their employees and customers while boosting their bottom lines.
Matt Zanetti, the owner of Lake Monster Brewing, shared his perspective as a both a parent and a business owner. “Allowing employees to earn paid sick days is a simple way to attract and retain the best staff members," said Zanetti. "I applaud the Council for passing an ordinance that puts me as the employer in the best position to meet the needs of my team and allows employees across the city to care for themselves and their families without lost income."
The ordinance closely follows the recommendations of the Earned Sick and Safe Time Task Force, appointed by the mayor and City Council in February to develop recommendations for a sick time ordinance and consisting of a broad representation of stakeholders including employees, business owners, and community leaders.
Consistent with the Task Force’s recommendations, all employees in Saint Paul will have access to Earned Sick and Safe Time. Staff members will accrue one hour of paid sick time for every 30 hours worked, up to 48 hours per year. Their paid time may be used to cover a wide-range of events including; time to care for themselves or a loved one through an illness or in the event of domestic, sexual violence or stalking or in the event of a school closure.
As proposed by the Task Force’s recommendations, the ordinance will be enforced through fines and a private right of action, the right of employees to sue their employers, if they face retaliation for taking their paid sick time.
Taking a short break to celebrate and relish in their success, St. Paul members will soon set their sights on statewide legislation, ensuring all businesses and employees in the North Star State can benefit from a minimum standard of earned paid sick leave.
Deborah Field, co-owner of Paperjam Press in Portland, is a former corporate tax accountant who knows how companies like Apple game the system at the expense of small business owners and average taxpayers.
In response to a New York Times article highlighting Apple's outstanding U.S. tax bill, Deborah penned the following letter that appeared first in the New York Times.
To the Editor:
Re “Apple, Congress and the Missing Taxes” (editorial, Aug. 31):
While the editorial is spot on in calling for an end to the deferral process, it sorely missed the mark in characterizing President Obama’s proposed repatriation rate as “reasonable.” Tax holidays incentivize bad business behavior and reward companies that extract wealth from communities with a deep discount and a clean conscience.
A 14 percent rate on repatriated funds previously held offshore is a handout to large multinational corporations at the expense of small-business owners and our customers. Far from reasonable, it’s been estimated by the Main Street Alliance that the proposed holiday rate would be a $20 billion gift to Apple.
With their nearly unlimited access to capital and ability to buy in bulk, industry giants like Apple already hold a competitive edge over small to mid-sized businesses, which can’t afford to hire high-priced tax accountants and lawyers to devise tax avoidance schemes.
To level the playing field for Main Street businesses, Congress must act to end deferral, stop incentivizing offshoring of revenues with tax holidays, and hold all companies accountable to pay what they owe when they owe it.
The writer, a small-business owner and former accountant, is a member of the Main Street Alliance.
Maine small business owners look to boost consumer spending and level the playing field with low-wage competitors.
U.S. Deputy Secretary of Labor Chris Lu visited Fork & Spoon in downtown Bangor on Tuesday for a roundtable discussion with local business owners, community advocates and workers on the importance of raising the minimum wage, both nationally through congressional action and in Maine through the passage of Question 4 this November.
Business owners who spoke in favor of a minimum wage increase cited both the economic benefits of putting more money into the pockets of their customers and the moral considerations of low wages.
“No one can live on $300 per week and no one who works hard deserves to be paid so little,” said Tim Rich, owner of The Independent Cafe in Bar Harbor, who explained to Lu why he joined more than 500 other small business owners in publicly backing the referendum. “I want my employees to be able to support their families, so they need to be paid a fair wage. That’s why I support the referendum; it’s just the right thing to do.”
The initiative on the ballot in November as Question 4 seeks to raise Maine’s minimum wage from $7.50 an hour to $9 in 2017 and then by a dollar a year until it reaches $12 in 2020. After that, the wage would increase with the cost of living. The subminimum wage for workers who receive tips would also increase gradually from $3.75 an hour until it reaches the adjusted minimum wage.
A recent report from the National Employment Law Project found that Maine retail businesses already pay higher wages than their big-box competitors, almost $13 per hour on average, and so a low minimum wage tilts the playing field against them.
“Unfortunately, Congress has not acted,” said Lu. “Fortunately, states have acted. Since 2013, 18 states and the District of Columbia have raised their minimum wage. 51 cities and counties have also raised the minimum wage. We in the Obama administration are proud to support initiatives like what is happening here in Maine to give American workers the raise they deserve.”
This post originally appeared in the Maine Beacon.
As consumer demand rose, small business owners increased hiring.
Today the Bureau of Labor Statistics (BLS) announced the economy had created 151,000 new jobs in the month of August, building on data from the Paychex IHS Small Business Jobs Index that indicated growth in the small business sector.
Despite historically sluggish growth in August, the economy maintained its strong growth pattern, outpacing last year's gains, and more than doubling the 5-year August average of 71,000. Coupled with the rise in small business job creation over the same period these numbers are representative of a surging post-recession economy that has spurred 78 consecutive months of jobs growth and has driven the unemployment rate down to 4.9%.
The BLS report indicates the most significant growth was experienced in the retail and restaurant sectors, with those industries creating 14,000 and 34,000 jobs respectively. An encouraging development for the small businesses on Main Street that signals increased consumer confidence and spending heading into the holiday shopping season.
The Paychex report indicated the most significant small business jobs growth occurred in East Coast states and cities with the exception of Washington State. Washington State led the nation in small business job growth with Seattle topping the list of metropolitan areas.
With job creation and small business success widely attributed to consumer confidence and spending, it is hard to ignore Seattle's rising minimum wage and the role boosting the wages of the lowest-level earners played in earning them the top spot on the list.