Blockchain technology has upended traditional finance. To outsiders, take your pick of cryptocurrency and it appears you are doing nothing more than pulling the handle on a slot machine. The payouts are just as large too if you pick the right token and pay as little as possible. This is the reason why a couple of provisions in the Infrastructure Spending Bill were so fraught with danger to this new industry. The first was aprovision requiring crypto-miners, developers, wallet companies and others who deal with tokens to register and send 1099’s to those who bought, used or sold them. This directly impacts the anonymity of using currency rather than say, a check, to purchase goods or services. The second is more egregious and when combined with the first provision spells out why and how Uncle Sam will end the panoply of tokens and possibly institute a virtual dollar as the preferred cryptocurrency in the US.

The recent infrastructure bill that passed the House this week contained a provision requiring “Brokers” in cryptocurrency to be knowledgeable about their customers.They would be required to obtain their customer’s name, address, phone numbers and Social Security numbers. Resulting transactions that the broker performs would result in a 1099 being sent to the account owner at the end of the year, much like a stock. Owners of cypto had to know this was coming after much debate during the Trump administration. Recently,SEC chair Gary Gensler stipulated that nearly all cryptocurrencies are a security and should subject to reporting of initial purchase date and price, quantities and sale date and price.The market has had time to digest this and, well frankly, expected it given the large bull market that has hit tokens. If there is income, you can be sure that Uncle Sam wants his cut. There was a second provision waiting in the wings that makes things far worse.

A recently added piece of text now makes electronic assets including NFTs and cryptocurrency subject to 26 USC Section 6050i. This section of the Internal Revenue Code governs cash transactions of over $10,000. This means that that should an asset or collection of assets used in a transaction be valued at over $10,000, it must be treated as cash. If a person in the transaction were to conceal or be unable to provide the buyer/seller information associated with this transaction, they are guilty of a felony punishable up to 5 years per offense. Not only that, no person may assist in an effort to make a transaction fall under the $10,000 limit, have omission or misstatement about the assets or block a person in the transaction from filing with the IRS. If they do, that’s the same 5-year felony. If this sounds like a provision to prevent money laundering, it is!

Once President Biden signs the bill, the Treasury will have until 2024 to implement these rules. Typically, this is a very public process where a Notice of Potential Rulemaking (NOPR) is posted. Industry stakeholders and the general public are allowed to provide comment on the rules, regulators are supposed to take them under advisement and then provide the actual rule. Two years is a very accelerated timeline for many administrative regulations. Treasury Secretary Janet Yellen has already stated that she wants to tax unrealized gains. Now that NFTs and cryptocurrency are now deemed “cash”, it would be a very small stretch to implement a provision that any increase in a virtual asset’s value is not an unrealized gain but rather akin to a dividend or interest payment. Dividends and interest are subject to taxation even when the initial asset is never sold. It is my belief that Secretary Yellen will deem any increase in value in any token or cryptocoin as such and taxable at year end.

Should the US Treasury or Federal Reserve create the virtual dollar, how do they get everyone to convert to it? There are several stable coins already in existence and how does one go about seizing them without the lengthy battle over private property. Also, the developers of the winning stable coin get a nice payout from Uncle Sam. Enter President Biden’s nominee for Comptroller of the Currency Saule Omerova. Ms. Omerova has proposed a shadow unelected Congress called the National Investment Authority as well as a virtual currency system. In a recent white paper titled “The People’s Ledger: How to Democratize Money and Finance the Economy”, she details that the Fed should hold the actual bank accounts of people while community banks are merely pass-through organizations accepting physical deposits. She also advocated for the virtual dollar as a means of commerce and controlling the population’s spending habits.

“The core idea here is simply to allow all U.S. citizens and lawful residents, local governments, nonbanking firms and nonbusiness entities to open transactional accounts directly with the Federal Reserve, thus bypassing private depository institutions. In this sense, it is a variation on the familiar FedAccounts – or FedCoin or “digital dollar wallets” etc. – theme.”The People’s Ledger

Should a virtual dollar be created with bank accounts at the Federal Reserve, Treasury Secretary Yellen may simply write a letter stating that virtual dollars are exempt from 6050i as the Fed already has the person’s information on file. This is explicitly allowed in the statute. This gives the virtual dollar an enormous market advantage while reducing other electronic assets to transactions conducted entirely outside the United States. These transactions are exempted from 6050i per statute. No vote from Congress or action by the President required. The American Public will have been bypassed and robbed at the same time.

If Ms. Omerova is confirmed, and it thankfully doesn’t look good, she could certainly create the provisions and developer documents necessary to create the virtual dollar. The Comptroller of the Currency was actually created to supervise banks and implement a uniform bank note. It is up in the air if the Comptroller could unilaterally require the Fed to create bank accounts for individuals or implement other ideas from “People’s Ledger”. Most of this would have to be passed in Congress which is looking wearily at the 2022 midterms. Even if Ms. Omerova’s nomination is withdrawn or voted down, Secretary Yellen certainly now has what she needs to tax all cryptocurrency accounts on an annual basis as they are now fungible “cash”. Much like the Sales and Local Taxes (SALT) cap, once these revenue generators are created, they are very difficult to get rid of.

So how can the crypto community fix this or prevent it from coming to fruition? There are two alternatives left. One is to flood the NOPR process with comments and possibly cause enough rancor to slow the rule implementation. Second, and more importantly, help elect Libertarian Party members to Congress. Please hear me out on this.

The Republican Party is rather clueless when it comes to crypto and has a similar outlook on the industry. They may tax it less but they still want to tax it. Only the Libertarian Party understands that your cryptocurrency, and certainly your NFTs, have value and you are entitled to keep it! It’s the value the community or market places on it and it shouldn’t be devalued or cancelled by our Federal Government. They had no part in creating it.

Think of it this way, if I trade a rare football card for some rare baseball cards, there’s no taxable event and no records. Trading these assets should be no different. The Democratic Party has now instituted a system where I must pay taxes both on the gain in value of the card from when I bought it AND when I exchange it for something else. I must now also tell the government what other cards I own tell the government who I traded with. If I don’t, I face 5 years in prison. Libertarian Party candidates run on issues like these and they need this community’s help to get elected. Republicans will assuredly do nothing or make it even worse.

Enjoy the crypto-boom while it lasts. Help where and when you can. If things don’t change, please don’t be stuck in 2024 holding crypto-coins that will be subject to heavy reporting requirements the next time you make a trade or purchase.

The post Making Blockchain Infrastructure appeared first on Larry Sharpe, Libertarian.

Comedy club owner Dani Zoldan filed suit against the Cuomo Administration for unfair treatment. With help from Larry Sharpe, the 2018 Libertarian Party candidate for Governor and host of The Sharpe Way, he retained Constitutional Attorney James Mermigis to reopen Stand Up NY following New York restaurant and bar guidelines.

Venues in New York have been shuttered since the pandemic began, while restaurants, bars, bowling alleys, pool halls and movie theaters have been able to operate. Venue owners have received no guidance as to when they can reopen. Many New York institutions have already closed permanently including Dangerfield’s—the legendary comedy club which opened in 1969.

Sharpe convinced Zoldan to sue the Cuomo Administration after seeing Zoldan’s efforts to revitalize the comedy industry by holding pop up shows in parks, rooftops, houses of worship and train stations. Elon Musk’s January 13th “legalize comedy” tweet fortified his confidence to move forward.

“When I heard that Stand Up NY, a wonderful venue that my campaign used often in 2018, fell victim to Governor Cuomo’s stranglehold on small business, I knew that I had to help.”

Larry Sharpe

The Sharpe Way team worked with Stand Up NY to retain Attorney James Mermigis of the Mermigis Law Group, P.C., who has a history of success against Cuomo in court. Known as the “Anti-Shutdown Lawyer,” he has filed over half-a-dozen lawsuits against the state, Governor Andrew Cuomo and NYC Mayor Bill de Blasio on behalf of small businesses in New York including theaters, pool halls, family entertainment centers, restaurants, and gyms. Mermigis filed a class action on behalf of 1,500 gyms in August. His lawsuit was instrumental in opening gyms throughout the State of New York, as Governor Cuomo issued guidance just days before oral arguments. Mermigis defeated Cuomo and his 17 pool hall clients were granted an injunction when a State Supreme Court Judge in Syracuse, NY found no rational basis for distinguishing between billiards halls, on the one hand, and bowling alleys, casinos, large stores, restaurants and airports, on the other hand. This victory was the only case to defeat Governor Cuomo on a “rational basis” theory in the State.

“In New York now, Saturday Night Live is doing live shows every week, Jimmy Fallon is doing live shows, Jazz Supper Clubs are open and restaurants with incidental live music are open but Stand Up NY is still shut down. The State’s refusal to open Stand Up NY amounts to an unconstitutional content-based restriction on speech. The State has no power to restrict expression because of its message, its ideas, its subject matter or its content.”

James Mermigis

The trio announced the lawsuit on The Sharpe Way show online, on Monday March  1, 2021. In addition to the lawsuit, they are asking people to support the reopening of Stand Up NY and to sign the petition at LegalizeComedy.NYC.

About Stand Up NY: A Manhattan landmark, Stand Up NY opened in 1986. Comics like Chris Rock, Jerry Seinfeld and Louis CK are regulars in what New York Magazine calls the “incubator of stand-up nobility.” Tucked into a residential block of 78th Street on the Upper West Side, it features superstars as well as the brightest young talent in the business.

About The Sharpe Way: The Sharpe Way show was founded by Larry Sharpe, the 2018 Libertarian Party candidate for Governor of New York  to help heal the nation’s political divide between liberals and conservatives.

PRESS CONTACT
media@standupny.com
(646) 229-1650 (voice/text)
Dani Zoldan

The post Stand Up NY Shutdown Lawsuit vs. Cuomo is No Laughing Matter appeared first on Larry Sharpe, Libertarian.

Small Business Ownership

Larry said that there is a systemic lack of ownership that’s noticeable in lower-income, Black and Brown communities and among immigrants. Business-minded people come to the United States with a high level of enthusiasm, and visions of a better life than the one they left. People everywhere imagine owning their homes and starting businesses. Yet, our system of governance puts major obstacles in the way of their success.

Here in New York, they are faced with a wall of regulations and occupational licenses for everything you can imagine, from braiding hair at a whopping $20,000 required spend on education and other prerequisites, to its crackdown on unlicensed dog-walkers. Seriously?

How is a person expected to respond to such entrepreneurial spirit-killing over-regulation? Unsurprisingly, Larry says that with limited choices, these impoverished people begin looking at high-risk activities and crime. Those people who turn to crime will prey on their neighbors, where these crimes often go unreported, particularly in immigrant communities where undocumented people fear deportation, or where previously incarcerated individuals don’t want to increase their own risk of recidivism. According to Larry, this endless cycle continues, increasing incentives for human trafficking, the illegal drug trade, protection rackets, and sweatshops.

Larry believes that one approach to reducing poverty in these communities is by creating incentives for business ownership. For example, licensing requirements can be replaced with non-compulsory credentials. A hair-braider can just braid hair if they want to, without a license, or they may take the courses necessary to qualify for credentials in which some people may find value. This is especially true for low-risk jobs that do not involve dangerous activities. In this regard, a hair braider or dog-walker may get to work right away to earn an honest living, and they may also choose to get credentialed after they have the necessary funds in hand. As a result, consumers have more choices and can make rational decisions. They may choose the lower-priced, non-credentialed dog-walker, or they may choose to pay more to the dog walker who took a 12-hour class on animal care.

Home Ownership, and Poverty

According to Larry, wealthy, and often middle-class people are able to give their children an edge with the savings they accumulate through homeownership, but impoverished people have no corresponding equity. This leaves their children in a cycle of dependence and poverty, where money spent is money lost, as is the case with rent,  and a community that encourages the use of government programs that are funded by taxpayers.

Larry wants to see these communities thrive. People from every background are eager for homeownership, business ownership, and self-ownership. Yet because of barriers to ownership, people stay on welfare and stay poor.

Larry believes that public housing should have a path to ownership, too. Renting housing to low-income families is a bandaid, even when rental costs are low. Instead, Larry believes that we should give people the chance to purchase their public housing units. Instead of throwing away money on rent every month, people can invest in their property. In addition, when people own their property, they take better care of it. This is a win for society, and for the new homeowner. London already has a similar model for homeownership, where low-income families can have shared ownership in property, without investing the full market rate.

Fixing Families and Prison Reform

Larry Sharpe applies this concept to the idea of taking ownership of your life. This is most apparent in Brown and Black populations, where men are incarcerated at a considerably high rate. These people–predominantly men get convicted for nonviolent crimes like drug-related offenses, resulting in fatherless homes. The other people in these populations who actually have productive lives are incentivized to work for the government, where their lives aren’t self-owned, either.

Larry believes that we can do a lot of good by eliminating the fear among potential employers when it comes to hiring less-skilled, minority, and immigrant employees. Presently, employers may be targeted by the government if they fail at complying with any number of regulations, and so they hire the “safer” employees.

Want to know more? Watch the video, below:

The post How to Decrease Poverty in America appeared first on Larry Sharpe, Libertarian.

New York has been escalating its Minimum Wage rate. But consumers are having their say. In many cases, they are reminding us that the real minimum wage is $0.00—meaning that if consumers won’t pay, workers lose their jobs . . . and maybe their futures.

By: Dan Smith

If you’re like me, you like seeing people do well. You like to see people have a job where they can support themselves and their loved ones. Doing well requires that they have a wage which allows them to pay the bills and build a future.

Most voters care about this, too. And voters often see the ballot box as a way to vote for a wage sufficient to afford life’s expensive necessities.

But do voters really get to make this choice: to set wages at a minimum of $7.50/hour or $10.50/hour  or $15.00/hour?

No, they don’t. Voters don’t decide this . . . neither do politicians.

And businesses and workers don’t decide this, either.

Consumers decide what a workers’ minimum wage is. If consumers value a product or service, they pay what it’s worth to them—or they walk away. When consumers buy, businesses and employees each get paid. But if consumers aren’t willing to pay for products or services, no one gets paid. Businesses close. Workers get nothing, even if the Minimum Wage law says the rate is:  $7.50/hour or $15.00/hour or $100/hour.

It’s All About Choices

Consumers are people—you and me.  Billions of times each day, we demand, ‘GIVE US WHAT WE WANT, AT A PRICE WE’RE WILLING TO PAY!’. We only have so much time and we only have so many dollars in our pockets. We have to make choices. That’s what consumers do.

And business owners have to listen to consumers. Businesses have to choose the right products, services, employees, locations and prices. If a business gets any of this complicated mix wrong, customers will scream, ‘NO!’, the business will lose money and may even go out of business.

And closed businesses have no workers.

Some businesses make a lot of money. Many do not—they survive on thin or no profits. They sometimes suffer losses for long periods.  

If the state raises the legal Minimum Wage rate, a shop owner has to react. She has some options. She might choose to raise prices, but customers may walk away. She may cut employee hours. She may choose to absorb the loss, but her profits may be too thin already. She might run out of options and have to go out of business. Going out of business involves firing all her employees—their wages go to $0.00/hour. Employees have no job and therefore no wage, and their futures are damaged.

Workers normally have a number of choices—which jobs to apply for, which job to take, when to ask for a raise, when to quit. But when a business doesn’t make money and closes, all of its employees lose the choice of working at that job. Their wage goes to $0.00/hour.

Workers Get Paid What Consumers are Willing to Pay

Although only 3 percent of workers earn the Minimum Wage rate, that 3 percent are the most vulnerable people: the young and low-skilled. They are the ones whose futures are most dependent on having a job—to learn new skills, to gain working experience. A 2004 study found that two-thirds of minimum wage earners quickly get raises after learning skills, escaping the minimum wage. Without the job, they don’t get those skills and they don’t start climbing the ladder of success. Without that job, they are most at risk of falling into the trap of illegally working under the table or becoming dependent on handouts. They won’t have a legitimate job to list on a future job application. Until employees have skills which customers value, they get paid less. If the state’s Minimum Wage rate is higher than the value customers put on a person’s skills, that person doesn’t have a job. Their future is compromised.

This probably sounds unfair. However, it’s the result of the choices everyone has.

But if this sounds like a made-up story, it’s not. It’s happening in New York right now.

New York Workers Are Facing Some Uncertain Times

In 2016, New York City’s Minimum Wage rate increased by 50 percent for restaurants and 17 percent for fast food.

In 2017, Minimum Wage rates for all businesses in New York state went up 22 percent.

While New York lawmakers are still patting themselves on the back, consumers and businesses have reacted. And workers are suffering.

There’s a “scourge of store closings that afflicts one section of the city after another, notably in Manhattan and parts of Brooklyn,” The New York Times proclaimed this week.

People are losing their jobs. As Forbes describes, “2016 was the first year since 2009 where New York City’s retail trade experienced a decline in year-over-year employment growth. Current data suggest that the 2017 decline in retail employment will be even worse.”

Workers employed by restaurants and fast food are struggling, as well. Labor growth in those jobs is less than half of that seen in 2015, the New York Department of Labor highlights.

While the overall economy is improving, businesses which are most dependent on low-skill labor just can’t keep up: small shops and restaurants. Raising prices doesn’t work, customers won’t pay. For many businesses, there aren’t profits to eat into. So, some businesses are cutting back on workers’ hours (something seen recently in Seattle, as well, when they raised their minimum wage to $13/hour), some are starting to close their doors. Employees’ paychecks are getting smaller and some are losing their jobs.

This wasn’t the goal of the changes to New York’s Minimum Wage law. But it’s the outcome: fewer choices, lost jobs.

And this isn’t the end. The Minimum Wage rates are set to keep climbing in New York City—and across New York state for years to come. New York consumers, businesses and workers will face even tougher choices and they will increasingly suffer.

Voters and politicians can make a law that will drive the Minimum Wage rate to $15.00/hour. And that’s what they’ve done.

But consumers might just tell you the real minimum wage is $0.00, because employees without a job make nothing. And that’s what consumers are doing. They’re taking their business elsewhere.

Businesses are closing, jobs in New York are being lost. Low-skilled workers are getting paid less, or nothing at all.

The REAL minimum wage for workers is $0.00 once consumers have their say.

The post The Real Minimum Wage appeared first on Larry Sharpe, Libertarian.

How New York can review our costly licensure laws and enact smart alternatives in order to drive down costs, improve access to service and open up real job opportunities for New Yorkers

By: Dan Smith

More and more, you need permission from the government to work in good jobs. Fifty years ago, only 5 percent of professions required workers to have an occupational license or certification. Today, it’s over 30 percent. Such licenses often require hundreds or thousands of dollars in fees and months or years of often needless coursework and apprenticeships.

New York is getting hurt by this:

• people who are willing to work are kept out of good paying professions,
• the lack of competition in these professions drives up prices and reduces availability of services to consumers, and
• the hurdles keep people from moving to New York because of the added time and expense to get our state’s approval to work. And it is likely contributing to why many are fleeing New York.

The supposed justification for licensing jobs is “to protect the public’s health, safety and welfare” of workers and consumers. And while that sounds like common sense, it is often just not true.

“The preponderance of the evidence suggests that occupational licensing does little to protect public health and safety. It drives up prices . . . and my research shows there’s almost no effect on the overall quality of service,” says Dr. Morris Kleiner of the Humphrey School of Public Affairs at the University of Minnesota—a preeminent researcher on occupational licensing for over 20 years. “Licensing serves only as a fence, a barrier to entry. It hurts entrepreneurs and those individuals who might work for those entrepreneurs.”

Some evidence which backs up Dr. Kleiner:

• many professions require a license in only a minority of states,
• requirements vary widely between states,
• you typically see no meaningful difference in health or safety outcomes between states which require licenses versus those which don’t, in some cases quality declines,
• you see higher consumer prices and fewer jobs in those states which require licenses.

New York’s Licensing Laws Are Cumbersome and Often Make No Sense

As is common with regulations, licensing requirements have crept into more professions and the requirements almost always grow and grow. They are rarely streamlined or reduced. And there’s often little examination by lawmakers as to why they grow. Lawmakers simply take the word of professionals who stand to gain by limiting competition on themselves. It’s often just crony capitalism. Some of the most egregious examples of extraordinary barriers:

• New York requires a license to become an upholsterer, while 40 other states do not,
• In New York, cosmetologists must have over 1,000 hours of education, for the job of giving skin and hair treatments—that’s nine times the training required to be an EMT,
• Makeup artists require 600 hours of coursework in New York—while nine states don’t even require a license for this profession,
• 28 states don’t even require a license to work as a retail optician, but New York requires a license which takes two years of education,
• 32 states do not require a license in order to operate a crane. But New York does. And New York’s rules require 1,095 days be spent obtaining that license—that’s six times the duration of the few other states which require such a license . . . and almost twice the class time of a four-year college graduate, and
• one must pay a $3,000 registration fee to be apply pesticides to vegetation, a $2,300 fee on non-vegetation.

New York licenses hundreds of professions, so there are many, many other examples. And they are hurting New York.

Much Can Be Done to Create Jobs and Help Consumers in New York

Some states are changing their laws to closely review and limit licensing to only the necessary. New York can and should do this, too. The Institute for Justice has concluded, “New York should evaluate whether such onerous licensing requirements can be reduced, repealed or—if government regulation is necessary—replaced with less restrictive regulatory alternatives.” New York can do this safely by contrasting ourselves with other states and by using the market:

• New York can look to other states where licensing requirements don’t exist or are less cumbersome and examine health and safety outcomes for opportunities to remove or reduce the burden for people looking to get to work.
• New York can look for opportunities to rely on private certifying organizations and consumer ratings agencies in order to take the politics out of licensing.
• Where health and safety are indeed an issue, New York can consider requiring bonding or insurance rather than licensing, to rely on independent experts who can evaluate the financial risk in the marketplace and prescribe financially meaningful education and training.

New York lawmakers should demand credible proof that systematic harm exists without a market solution before considering requiring a government license or certification. The cronies who benefit from the way thing currently are will try and scare us into not changing anything. They want to protect the profits they reap from such government protection. But let them provide real, independent evidence of their claims. They should show why other states get the same or better outcomes without their complicated and expensive barriers.

We should remove licenses where no benefit can be demonstrated, let the market determine the risk in many cases and reset the requirements to match the risk. This will allow more people to get to work in good jobs, drive down costs and improve service for consumers—without risking the health or safety of New Yorkers. It will drive out crony capitalism, create lots of good paying jobs and improve access to services and lower costs for New York consumers.

The post Occupational Licensing and How It’s Killing Our Economy appeared first on Larry Sharpe, Libertarian.

Taxes and Regulations Stifle Development

Franchise tax, ENI tax, business and investment capital tax, minimum taxable income, fixed dollar minimum tax, subsidiary capital tax, MTA tax, state filing fee, personal income tax—these are just some of the taxes New York state imposes upon local businesses. The tax rate in the state for businesses ranges from about 6.5%-7.1%. Because of the state’s high personal income tax, sales tax, and property tax rates, New York is considered “one of the least favorable states for new and small businesses.”

In terms of regulations, the list of things required to start and run a business in New York City is extensive. It includes certificates, inspection requirements, permits, licenses (individual and business), registrations, rules and regulations, signage requirements, and much more. These cost time and money to obtain and follow, which mega corporations have to spare. Small businesses, on the other hand, like mom-and-pop, brick-and-mortar shops don’t necessarily have the money to adhere to these requirements. They hinder business development and growth.

The IRS considers any company with 500 or fewer employees a small business. But New York has lowered that standard to any company with fewer than 100 employees. Imagine having only a few hundred employees in your business, but being regulated as if you employed over a thousand. New York should make it easier for small businesses by at least categorizing them the same way they are recognized federally.

Lowering Taxes Helps Businesses Grow

Which taxes should be lowered to make it easier for businesses to flourish in the state? One example is the capital gains tax. According to the Cato Institute, “reduced capital gains taxes can generate greater financing of young companies by angel investors and venture capitalists.” As we’ve all seen on ABC’s Shark Tank, small businesses and start-ups rely on those investors to get the push they need to make it big. If the capital those investors receive is taxed too much, the investors are less likely to invest, and entrepreneurs are less likely to even try to start their business in the first place.

The individual income tax in the state should also be lowered, since small businesses file as individuals. Big corporations only pay about a half percentage higher tax rate than small businesses. That’s not to say that we should increase the corporate tax rate in the state, since “state corporate taxes are borne mostly by workers, not shareholders, because it’s easier to pay local labor less than it is to attract global investors at lower rates of return.” So if the corporate tax rate were also reduced, we’d start to see wages increase. And if the individual income tax rate were reduced, there would be much less of a burden on small businesses.

Regulations and taxes make it much more difficult for small business owners to make a worthwhile profit. These taxes and regulations inhibit business growth and hinder start-ups. This results in less competition in the market and fewer choices for consumers and wage workers (which regulations are intended to help). Legislating minimum wage, occupational licenses, zoning and parking requirements, etc. do nothing to help small businesses. Most of these laws are written by big corporate lobbyists who know that it will only subdue any challengers that the Wal-Marts and Targets of the state may have to compete against. Pizza Hut can afford a higher tax rate and can pay their employees $15/hr. Salvatore’s Pizzeria cannot.

The post Small Businesses Need Small Government: Lessening Tax and Regulatory Burdens appeared first on Larry Sharpe, Libertarian.

The goal of IDAs is admirable. We can all agree that a strong economy and job growth is a positive thing. But there are many problems with their implementation and execution. The idea that businesses will be drawn to certain areas based on incentive packages and tax breaks holds some merit, but programs like these are no more than crony capitalism, or corporatism.

Crony capitalism is what happens when businesses profit from having money given to them (or having less taken from them in taxes) through a deal between the business and the government. Instead of taking a certain amount of risk, they are insulated from risk by your tax dollars. This is how an IDA works. For example, an agency may lease tax exempt property or issue bonds to a company that is planning on moving to or expanding in that area. Giving these benefits to big corporations while taxing local businesses makes an unequal playing field, giving advantages to special interest over small businesses. Not only that, but it shifts the property tax burden from big businesses to working families.

But IDAs have more problems than simply the underlying corruption. The criteria that decide which types of businesses get these benefits are often inconsistent. There is also a history of inaccurate reporting and billing. For businesses which are exempt from certain taxation, they make PILOT agreements with the IDA for payments overtime. The PILOT (payments-in-lieu-of-taxes) agreements in 2005 underbilled more than $51,000 from some businesses and overbilled more than $38,000 from others. These mistakes were due to vague term agreements and inadequate communication and monitoring.

This mismanagement is concerning, but not surprising. Government agencies are notorious for their inefficiencies. But worse, the main goal of IDAs, to create additional jobs than would be created without them, isn’t even achieved. Many of the jobs claimed to have been generated by IDAs would have been created without agency involvement.

The problems with government claiming it creates jobs are that 1) government does NOT create jobs. Entrepreneurs do. And 2) if the main goal is to create jobs (not to finish a project, or to sell a product/service), it will be at a loss of money and time. For instance, it would create a lot of jobs to require everyone to use spoons instead of shovels—thousands of digging jobs would be “created.” But that would be a drag on the economy as all of those people could instead be pursuing something more productive. Thus, IDAs have no incentive when doling out tax breaks to reach any goal efficiently, if the goal of “job creation” appears to be accomplished. The use of IDAs for this task is unnecessary and, at the least, must be scaled back.

So what can government do to make it easier for job growth to happen? Making the market as free and open as possible by making it easy for local businesses to open will increase job growth. After all, businesses are simply people who believe they have an idea, product, or service that will help others so much that people are willing to pay them for it. How will job growth happen? By getting government out of the way of people who want to offer a product or service to others at better price or quality than what is currently available.

As one example, New York should stop raising the state minimum wage. Every time the wage is raised, it makes it more difficult for people to hire employees to help them offer better products and services to the public. With a high minimum wage, businesses can’t afford to keep as many employees, automation takes over, and it makes it difficult for people to start at entry-level positions. It makes it nearly impossible for low-skilled workers to find work. And it also makes it hard for start-up companies to compete with large corporations who can afford to pay the higher wages.

Another way to keep government out of the economy is to eliminate occupational licensing. Under the current rules, if people want to start a business braiding hair, for example, they must go through thousands of hours and dollars to get a cosmetology license. This is unnecessary and no doubt stifles business development. Protecting consumers from accidents or other hazards is important and market regulations would still be in place to do that.

But current state regulations are too burdensome on business owners like a hair braider. And the thousands of dollars that need to be spent to obtain a cosmetology license will get passed down to the consumer to balance out that cost. So if the hair braider didn’t have to spend the money to obtain the license, the service would most likely be less expensive. Also, according to the Obama administration, these burdensome regulations keep employment down for licensed professions.

Don’t listen to a politician when they tell you they created X amount of jobs whether because of IDAs or some other incentives. As John Stossel writes, “jobs come from government getting out of the way and letting employers produce goods”. Government leaders need to empower business owners to run their businesses the way that works best for them.

The post The Mismanagement of Industrial Development Agencies in NY appeared first on Larry Sharpe, Libertarian.