When it comes to driving local economic growth and putting small business owners in the best position to succeed, Donald Trump missed the mark.
On taxes, Mr. Trump couldn't be further from the views of Main Street small businesses. He brags of his massive and phenomenal wealth while skipping out on his taxes for decades due to manipulation of the tax code following nearly $1 billion in losses.
“Trump has exploited the tax system for decades and threatens the safety nets in place to help struggling business and families. Taxes are a cost of doing business and are essential in funding the infrastructure my business depends on”, said Doron Petersan, the owner of Sticky Fingers Sweets & Eats and Fare Well Diner Bakery Bar, in D.C. “Skipping out on your taxes year after year doesn’t make you qualified to rewrite our tax code, it qualifies you for an extended visit from the I.R.S.”
"Trump's recently released tax plan would only worsen the unfair U.S. tax system by disproportionately benefitting the highest-income earners and putting a strain on the rest of us. We need to move away from a system that has been manipulated by greed and self-indulgence to create a tax code that levels the playing field, said Matt Birong, the owner of 3 Squares Café in Vergennes, Vermont.
On immigration, Mr. Trump continued to lob insults calling many undocumented immigrants "bad hombres" and doubling down on the need to use tax dollars (to which he does not contribute) to build a wall to keep our customers, future business owners, and innovators out.
“As an immigrant and the owner of an architecture firm, the walls I build are on homes, designed to keep families safe. We don't build walls designed to keep good people out. It's not how our country or our economy works. Trump's idea of an immigration policy would be a disaster for our country," said Francisco Garcia, the owner of The Building Workshop in San Diego.
“This country depends on a strong immigrant community. Any ‘business’ person who uses these hard-working employees to make millions, but turns on them for political gain, is no leader to fit to hold our nation's highest office," said Alma Rodriguez, the owner of Queen Bee's Art and Cultural Center.
On access to capital, Mr. Trump shrugged off Mrs. Clinton's claims that he borrowed $14 million from his father to start his business. He corrected her, stating it was ONLY $1 million. For small business owners struggling to get the capital they need to start a new business or keep their business afloat, $1 million is not a sum to be shrugged off.
"I lost my father at a young age, so getting a loan to start my business from him wasn't an option. I built my business from the ground up, the right way. By honoring my debts, investing in the community that supports me, and treating people with dignity and respect," said Ethel Taylor, the owner of Doggie Washerette in D.C. "Donald Trump could learn a thing or two from business owners like me."
On the issues facing small business owners, the businesses responsible for 2/3 of our nation's job growth, Mr. Trump struck out. Perhaps he should have formed his Small Business Advisory Council before this week.
Just three weeks before the election, the Trump Campaign forms a Small Business Advisory Council.
On Sunday, a mere three weeks ahead of the November election, the Trump Campaign announced its formation of a small business advisory council tasked with providing advice on the issues and solutions most important to small businesses.
“I think it’s great that Mr. Trump is interested in hearing from small business owners, but it's unfortunate that he is reaching out to us now, just weeks before the election,” said ReShonda Young, the owner of Popcorn Heaven in Waterloo, Iowa and Main Street Alliance Executive Committee Member. “We would have loved to help ensure his tax policy wasn’t just another giveaway to large corporations and the rich, and we would have put our foot down on his immigration stance. Instead, we have more of the same on taxes and an immigration policy that tears apart our communities and threatens our businesses.”
Mr. Trump has boasted his wealth and business acumen since entering the race last year, but he has lacked coherence on policy aimed to help small businesses. His small business tax cut was on the table, then off the table, and his immigration policy lacks even the most basic understanding of what fuels and drives our local economies.
“To the Trump Campaign, this council’s formation was probably better late than never, but to me, to real small business owners on Main Street, it shows the utter disregard he has had for us throughout his campaign and career,” said Paul Heroux, a retired painter in Orlando, Florida and Main Street Alliance National Action Committee Member. “Donald Trump made a business of screwing over small business owners, like The Paint Shop, in Doral, Florida”
Economy-boosting investments have largely been missing from Donald Trump’s policy platform, a shining example of why he should have put an advisory council together months ago. The tax breaks and regulatory lifts that motivate large corporations don’t work for Main Street. A 2015 report from Main Street Alliance, “Voices of Main Street” surveyed over 1100 business owners on the issues impacting their businesses. More than half of respondents noted customer acquisition as their most significant concern, more than double those concerned with taxes and four times the respondents that answered ‘regulations.’
“The Trump Campaign’s formation of a small business advisory council at this point in his campaign is hardly a gesture of good faith. The reality is that Mr. Trump thinks he is a business genius and that he can speak for us,” said Chris Petersen, independent family farmer and Main Street Alliance of Iowa member. “What he hasn’t realized is that the way we do business on Main Street couldn’t be further from his cut-and-run business tactics. He has a lot to learn over the next three weeks.”
Despite his big business experience, Donald Trump is out of touch with the needs of Main Street. If he prioritized small business success, he would have built our issues into his platform months ago. Instead, he offers the empty gesture of forming a small business council weeks before the election.
“I’m honestly shocked that the Trump Campaign just thought of forming a small business council, his opponent has had one for months,” said Megan Baker, co-owner of Orange Blossom Jamboree in Brooksville, Florida, and Main Street Alliance of Florida member. “Forming the council now seems more like an empty gesture than a real focus on the issues important to us. His policies are already written. His tax policy skews towards large corporations and the rich, his immigration policy is a mass deportation of members of my customer base and his position on raising the federal minimum wage won’t put more money in consumer’s pockets.”
Main Street leaders campaign to stem the tide of hateful rhetoric consuming the national political dialogue and threatening local economies
Donald Trump chose to drive a wedge between us, following a violent act of vandalism at the Orange County North Carolina GOP Headquarters. With the identity of the perpetrators still unknown and their motives unclear, Mr. Trump took to Twitter calling them “animals” who “represented Hillary Clinton and the Democrats.”
Main Street Alliance believes the actions taken in North Carolina are un-American, and so too is the dehumanizing language and swift form of social media justice deployed by Donald Trump in response. In choosing to make such a statement, Donald Trump doubled down on the vitriol and fear mongering that helped secure him the nomination, while only adding to racial and political tensions.
Name-calling and publicly casting judgment on entire groups, based upon the actions of a few, have become a cornerstone of the Trump campaign. It’s a problem Main Street Alliance leaders have taken head on during the 2016 election with the #HateHasNoBizHere campaign.
The campaign encourages small business owners to make clear statements of principles to stem violence we saw this weekend in North Carolina. Business leaders in Minneapolis started the campaign from their restaurant, Common Roots Cafe, which caters to a diverse clientele, including the nation’s largest population of Somali-Americans.
Soon, the campaign stretched across the country, with business owners from Seattle to Burlington, Vermont, taking lead. The campaign aims to shed a light on the swell of hate and fear permeating our national dialogue as dangerous and bad for businesses and our local economies.
“Just being able to say, you know, hate has no business here is a good reminder to people that they should second guess this rhetoric when they hear it. They should say ‘wait a minute, this is just not correct.’ It’s all too easy to get sucked into the angry politics and not think about what it really means,” said Diana McLeod, the owner of Tradewinds in Burlington, Vermont.
When a simple statement of condemnation and gratitude towards law enforcement conducting the investigation would have sufficed, Donald Trump resorted to insults and blame. Appearing incapable of exercising restraint, Mr. Trump once again chose to fan the flames of hatred. It’s that kind of hatred that Main Street small business owners should and will challenge at every turn, for the good of our businesses and our country.
"America must be a place where people from all nations, races and creeds seeking freedom and opportunity feel welcome and can build safe, prosperous lives for themselves and their families,” said Amanda Ballantyne, National Director of Main Street Alliance. “When politicians and pundits target people in our communities for political gain, when they fan the flames of hatred and fear, it must be met head-on with clear statements of principle from local business owners as leaders in their communities.”
Despite Mr. Trump’s hateful and misguided reaction, North Carolina Democrats circulated a donation page via GoFundMe that has already raised over $13,000 from more than 500 donors, with the goal of getting the office back up and running. That is the spirit of community and camaraderie that makes America great.
“As a member of the Main Street Alliance Executive Committee, I can tell you that members are deeply disturbed by the rising tide of hateful rhetoric and violence aimed at members of our community, at refugees fleeing violence, at immigrants and people of color,” said David Borris, Owner of Hel's Kitchen Catering, Illinois. “We want to make it very clear that we do not share in this hateful rhetoric, and our businesses thrive from diverse populations."
Main Street business owners Support Earned Sick and Safe Time, call Chamber-led lawsuit frivolous
The Minnesota Chamber of Commerce filed a lawsuit today taking on the recently approved ordinance to provide paid sick leave to employees of all businesses operating in the city. When presented with a diverse set of opinions from the business community, the council voted unanimously to approve the ordinance, slated to go into effect in July of 2017.
Despite hearing the will of the small business community and witnessing the unanimous support of the Council, the Minnesota Chamber has elected to take legal action in a move that further delays implementation of an ordinance critical to the success of our small and mid-sized businesses, our employees, and our city.
“The ordinance that was passed represents a compromise that was negotiated and supported by a vast majority of our community, including small businesses like us,” said Andy Pappacosta, Events Coordinator at Gandhi Mahal and Main Street Alliance of Minnesota member. “This lawsuit is being led by a select number of businesses, and does not represent many small business owners who have deep roots in our community.”
“It is no surprise that the Chamber is throwing in a last-minute legal challenge,” said Danny Schwartzman, the owner of Common Roots Cafe and Catering and Main Street Alliance of Minnesota member. “Since the beginning, they and their allies including the Downtown Council, have tried to do all they can to stop paid sick time from moving forward. They have even been hesitant to acknowledge the reality of the problem that all too many residents in Minneapolis face -- with no access to even a very basic level of paid sick time. This a public health issue, an equity issue, and an economic justice issue and is a pressing one for our community. The Chamber presents no solution beyond the idea that businesses could voluntarily provide sick pay benefits, which is suggesting exactly the system we have now that fails so many low-wage workers and is bad for our community.”
“It’s unfortunate that the City will now have to fight a frivolous lawsuit to stop implementation of earned sick and safe time, rather than investing the necessary funding for outreach and communication, and technical support for businesses, which we need” said Jason Rathe, the owner of Field Outdoor Spaces and co-chair of the Main Street Alliance of Minnesota.
“Cities across the country have passed similar sick time legislation, and we were glad to be a part of that movement,” said Kagalee “KB” Brown, the owner of Wolfpack Promotionals and co-chair of the Main Street Alliance of Minnesota. “It is unfortunate the Chamber sees this as ‘unworkable and unlawful.' It’s clearly very workable, legal, and has been created to be flexible, not ‘one size fits all’.”
Main Street Alliance Applauds Treasury Department for Strong Rule to Curb Multinational Tax Avoidance
After shocking Wall Street in April with proposed rules that ultimately halted the Pfizer-Allergan inversion, the U.S. Treasury released its final rule.
The U.S. Department of Treasury on Thursday finalized a rule aimed at curbing earning stripping, an abusive practice that multinational companies use to avoid taxes. The Main Street Alliance applauds the Treasury Department for taking this critical step.
The rule aims to discourage inversions by making it more difficult for multinational companies to engage in earnings stripping--when companies load their U.S. subsidiaries with foreign debt, and impose artificially high fees and interest on the debt, to reduce their US tax burden. The Treasury’s final rule is expected to raise an additional $7.4 billion in revenue over ten years.
The US Chamber of Commerce and other large business associations strongly opposed this common-sense rule and filed a lawsuit to halt it in August. Meanwhile, the real small business owners on Main Street overwhelmingly support laws that aim to close loopholes taken advantage of by large multinationals. Main Street Alliance submitted comments in support of the rule in June.
“For too long, large corporations have exploited tax gimmicks to dodge their financial responsibility while small businesses are left to pay the tab,” said Michelle Sternthal, Deputy Director of Policy and Federal Affairs for Main Street Alliance. “This behavior, which costs an estimated $134 billion a year, not only erodes the U.S. tax base but undermines businesses who pay their fair share of taxes. Nevertheless, there is a limit to what the Executive branch can accomplish."
To truly address corporate tax loopholes, Congress must act. Main Street Alliance calls on Members of Congress to close these and other tax loopholes that enable companies to shift their profits overseas as a means of corporate tax avoidance.
CBPP Finds Trump Tax Plan Heavily Tilts Towards the Wealthy–Away from Small Business Owners and their Customer Base
The latest version of Donald Trump’s ever-changing tax plan is facing scrutiny from the Center on Budget and Public Policy and Main Street Alliance leaders. The plan, one that features across the board tax cuts, disproportionately benefits the highest-income earners, those grossing more than $1 million annually.
The self-proclaimed business genius and master of the tax code has failed to produce a tax plan that would not prompt a chain reaction of budget and service cuts, and he has ignored the most significant key to a small business owners success–customers with money to spend.
A 2015 report released by the Main Street Alliance, “Voices of Main Street,” surveyed over 1000 small business owners and found that 52% of respondents cited “more customers” as the most important key to increasing small business success. Doubling the number of respondents that said “lower taxes” and more than quadrupling the number that responded “fewer regulations.”
Tax cuts skewed towards the wealthy elite starve our communities of much-needed resources while further tilting the scales towards large corporations and the rich. What Hillary Clinton coined “Trumped up trickle-down economics” is at play in the Trump proposal, one that ignores history in favor of policy that aims to put his family and families like his in the driver seat of our economy.
Small business owners and our customers are the real economic drivers and to succeed we need a fiscally solvent tax plan that maintains essential services while proportionally distributing tax cuts across the bottom and middle tax brackets.
“To level the playing field for Main Street businesses our tax code must no longer skew in favor of large corporations and their shareholders,” said Deborah Field, the owner of Paperjam Press in Portland, Oregon, and a former corporate tax accountant. “Without holding multinational corporations accountable to pay what they owe and first providing relief to low and middle-income earners we shouldn’t begin to consider tax cuts for the rich.”
"Mr. Trump's tax breaks would deprive the government of badly needed funds for investments in infrastructure, transportation, education, and social services. The resulting budget cuts hinder the types of investments that drive local economies and put small businesses in a better position to succeed,” said Amanda Ballantyne, National Director of the Main Street Alliance. “A tax policy that works for the shops and restaurants on Main Street is one that supports our customer base and our communities. In that regard, Trump's plan falls flat."
“The vast majority of small business owners don’t support a tax system that augments their piece of the pie by cheating their fellow citizens out of theirs. When we contribute our fair share of taxes, those dollars get reinvested in our local communities,” said David Borris, the owner of Hel’s Kitchen Catering in Chicago and Main Street Alliance Executive Committee member. “Local communities that support tens of millions of small businesses nationally.”
Addressing a crowd in New Hampshire, Mr. Trump claimed he could eliminate 70 percent of regulations, many of which small business owners on Main Street view as necessary protections for employers and consumers.
Just hours after a Trump campaign advisor told members of the media that his candidate could quickly remove 10 percent of regulations on businesses, Donald Trump took the stage in New Hampshire and amplified the claim stating he could remove as much as 70 percent of regulations. The rules that keep big businesses in check, ensure product safety and protect our environment could be lifted under the Trump administration in favor of a free for all for large corporations and the wealthy elite.
Among the regulations Mr. Trump promised to target is the Department of Labor's new Fiduciary Rule that demands that wealth managers and financial advisors act in the best interest of their clients. The regulation was deemed necessary by the DOL earlier this year and would prevent advisors from taking advantage of small business owners and our customers with high-fee investment plans and advice motivated by bonuses and incentives.
“When small business owners make investments they need to be confident that the advice given by professionals is in their best interest. Advisors chasing bonuses and incentives lead investors down the path that is most profitable to them, putting their profits ahead of their clients’ interests. It is this type of chicanery that led us to the market collapse in 2007 that devastated small businesses and communities, and the Fiduciary Standard shakes up business as usual on Wall Street and promotes a fairer and more equitable investment process,” said Amanda Ballantyne, National Director of the Main Street Alliance.
The GOP candidate took aim at the Dodd-Frank Wall Street Reform and Consumer Protection Act claiming it stifled the growth of American businesses. The act is designed to rein in the Wall Street abuses and deception that led to the mortgage and financial crisis, which seriously impeded growth. The very financial crisis Mr. Trump boasts about profiting from when making a case for his business genius. Meanwhile, small business owners on Main Street know that real genius lies in the ability to turn a profit while protecting homeowners and creditors and refusing to repeat the same mistakes of decades prior.
“Formed as a result of the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) acts as the first and last line of defense for consumers and borrowers,” said David Borris, the owner of Hel's Kitchen Catering in Chicago and a member of the Main Street Alliance National Executive Committee. “That is why financial regulations are so important in their potential to stem the tide of financial ruin for millions of local consumers throughout the country.”
The Environmental Protection Agency (EPA), an agency Mr. Trump's promised to abolish, a promise he has since reframed, protects the solvency of our businesses and reduces the significant impact large companies have on our environment. We have seen countless instances of lax regulations and in cases when disaster results, small businesses often suffer. Take, for example, the restaurants and cafés in Charleston, West Virginia that had to close their doors for weeks following the 2014 spill that released MCHM into the Elk River, or the hotels, charter fishers and gift shops devastated by the ongoing fallout from the 2010 Gulf Oil Spill.
Mr. Trump's proposals are the latest in a series of indications that his policies fall in line with his personal interests. They are policies designed for large businesses and real estate moguls like him that fail to consider the needs of small business owners and their employees. To ensure that our financial interests are put before our advisor's profits, to protect our businesses and our customers from a repeat of the financial meltdown, and to reduce our impact on climate change and risk for eco-disaster, we must reject the notion that regulations are bad for business. Instead, we should embrace the regulations that keep companies in check and look for new rules that provide a safer and more consistent climate to conduct business.
"We want a regulatory system that works for all of us and does not give the advantage to the largest corporations and trade groups that employee huge lobbying staffs for the purpose of rigging the system to their benefit–at the expense of the rest of us. Most of all, Donald Trump must stop using small businesses good name to justify his self-serving attacks on the regulatory safeguards that keep his company in check and ensure the safety and well-being of our employees and customers," said Kagalee "KB" Brown, the owner of Wolfpack Promotionals in Minneapolis and a member of the Main Street Alliance of Minnesota.
A coalition of business organizations and associations is backing a weakened alternative to the D.C. Council’s paid family and medical leave bill that cuts out small businesses.
Today, a consortium of business organizations and universities presented an alternative to the D.C. Council’s proposed paid family and medical leave policy in a letter to Mayor Bowser. This weakened bill fails to meet the needs of small businesses, and, if passed, would fail to help Main Street businesses match the offerings of their larger competitors and ensure coverage for their staff members.
The D.C. Council’s initial bill proposed a paid family and medical leave policy that was accessible to all employers--large and small-- in the District. This bill relied on a citywide insurance pool as its funding mechanism, requiring employers to contribute 1 percent of their payroll costs to the pooled fund. Using this funding mechanism allows small businesses to provide their employees with a paid family and medical leave policy that was previously out of reach. The alternative plan, in contrast, shifts the funding source to an employer mandate model. Under this model, each employer is responsible for absorbing the cost of their employees’ paid leave, rather than utilizing the insurance pool.
While some large businesses may prefer this model, an employer mandate is simply unaffordable for the small businesses that sit at the heart of our communities. D.C. small businesses want to offer their employees paid leave, but they cannot afford to. An employer mandate does nothing to change that reality. If enacted, large employers would retain a competitive edge, while the employees of small businesses would remain without coverage.
Touting their plan as one that takes D.C. government out of the picture and preserves the sanctity of the employer-employee relationship, the business coalition insists their proposal is better for both employee and employer. But, for the thousands of in-district businesses with fewer than 50 employees, the plan falls flat. No large businesses embrace the employee-employer relationship more than a small business, and few are as closely tied to the wellbeing of their communities and their customer base.
To level the playing field for all businesses, and to equip small companies to match the offerings of their competitors and to ensure all employees in the District have access to paid family and medical leave the D.C. Council’s plan must move forward without an overhaul.
“With a paid family and medical leave policy on the books, one funded by employer contributions of just 1 percent of payroll, we will all have the opportunity to provide a benefit that helps our employees, our businesses, and our community,” said Doron Petersan, the owner of Sticky Fingers Sweets and Eats in Columbia Heights and a member of the DMV Small Business Alliance, a project of Main Street Alliance. “Policy that is socially conscious, accessible and cost effective is a no-brainer for small business owners in the District.”
“The business lobby’s proposal for employers to pay directly for their employees’ leave may sound nice, but it’s motivated by a desire to save money for the city’s largest employers and corporations, hanging small and medium size business owners like me out to dry,” said Fatima Nayir, the owner of Mama’s Pizza in Anacostia and a member of the DMV Small Business Alliance, a project of Main Street Alliance.
DOL Issues Final Rules on President Obama’s Executive Order Granting Paid Sick Days to Federal Contractors
The final rule, coupled with the success of state and local policies advocated for by Main Street businesses, should encourage Congress to pass broad federal legislation.
In an address delivered on Labor Day, 2015 President Obama said his Executive Order granting paid sick days to federal contractors would “increase efficiency and cost savings in work performed by parties that contract with the government.” Cost savings and increased efficiency are among the reasons Main Street small business owners support paid sick days legislation at the local and federal level in addition to protecting fellow employees and customers from communicable illnesses and matching the offerings of their larger competitors.
Main Street Alliance members have played active roles in paid sick days in crafting and passing paid sick days legislation across the country at the state and national level, most recently in passing a comprehensive earned sick and safe time policy in Minneapolis and St. Paul. Advisory Board members in the Twin Cities sat on task forces to explore the language, implementation, and efficacy of the policy and determined it was in the best interests of small businesses to implement a minimum standard for paid sick days.
“Not only is an earned paid sick days ordinance the right thing to do, but it makes business sense. The advantages we gain in the areas of employee acquisition, retention, and productivity will help us do our jobs better, and will make St. Paul, and our country a better place to do business,” said Shannon Forney, the owner of Workhorse Coffee in St. Paul, MN
Joining cities like Seattle, Portland, Burlington, Jersey City, and Minneapolis, the Federal government will now serve as an example to private sector business owners and big business lobbyists who fail to see the benefits of a policy that levels the playing field for all businesses and employees while mitigating costs through increased productivity. As well, such programs reduce a phenomenon known as “presenteeism,” where an employee is present at work but due to illness is not performing well and at greater risk of making a costly mistake or becoming injured in the workplace.
The final rules and subsequent implementation of President Obama’s order will provide yet another example for Congress to consider when taking action on pending legislation aimed at reducing barriers to paid sick leave access and making such policies accessible to small business owners who can’t afford to offer the benefit to their employees while remaining competitive with low-road competitors without a policy on the books.
“We thank and applaud President Obama and Labor Secretary Perez for this important step in providing working families a choice beyond caring for their families or making a living,” said Beth Sachs, the Founder of the Vermont Energy Investment Corporation (VEIC), and a member of Main Street Alliance of Vermont. “As a federal contractor and a mission-driven organization that seeks to promote a healthy planet with thriving people, VEIC supports this action through our existing policies. We recognize that our employees are our most valuable asset and that their ability to care for their families is paramount not just to them, but to society as a whole.”
Main Street Alliance and our member businesses applaud the President for putting a policy in place for federal contractors and the DOL for issuing strong rules on implementation and compliance. We urge Congress to heed the call of small business owners and our employees and move forward with a universal standard for paid sick days, like the Healthy Families Act, which applies to all businesses regardless of size or location.
“As a CEO and mother, I believe that we need to change norms in corporate America to enable working parents to succeed, both in the workplace and at home. This begins with paid sick days. When parents get the time they need to help a child get well they come back to work as more loyal and productive employees,” said Sabrina Parsons, CEO Palo Alto Software, Eugene, Oregon.
“In a civilized society workers should not be penalized for taking time off from their jobs to care for themselves and their families. Allowing employees to earn paid sick days ensures the health and welfare of our workforce and instills loyalty and a sense of personal well-being that will translate to a stronger bottom line for business. The Healthy Families Act makes sense for employers and employees,” said Melinda Moulton, CEO Main Street Landing, Burlington, Vermont.
"When you stop being scared and do the math, paid sick days become more attainable to small businesses. This is especially true for the Healthy Families Act, which would make paid sick days the standard nationwide and level the playing field between businesses that allow their workers to earn paid time off and those that don't,” said Molly Moon Neitzel, Owner of Molly Moon’s Homemade Ice Cream, Seattle, Washington.
Read the DOL's final rules HERE.
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.