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Gorin: Taxes and Small Business: Is There Hope for the Future?

April 19, 2012 by   - () Leave a Comment

David Gorin

Editor’s Note: David Gorin, former ARVC CEO, is president of David Gorin & Associates, providing management consulting services to the outdoor hospitality industry. He is also a partner in King & Gorin, specializing in Washington representation for associations and businesses in travel, tourism, transportation, recreation and public lands. Contact him at dgorinassociates@aol.com or (703) 448-6863.

With the presidential election just 8 months away, both sides are working hard to lay out their vision should their party win. Nowhere was this more obvious then in late March in the House Ways and Means Committee (the tax writing committee in the House of Representatives) and in the House in general.

On March 27, the Ways & Means Committee favorably reported out The Small Business Tax Cut Act (HR 9), which has been championed by Majority Leader Eric Cantor, R-Va. Can you imagine that! The legislation will allow businesses with less than 500 employees to take a tax deduction equal to 20 percent of their active business income and applies to business owners who pay their taxes at the individual or corporate level. The full House is expected to consider the legislation when the House returns after the April in-district work period. Do I hear pandering? Setting the table for next year? Who among us small business people wouldn’t vote for that Act? Or for those supporting it!

And on March 28, the House Republican Budget Resolution passed. Included in this budget proposal are new measures related to comprehensive tax reform that represent the House Republicans’ commitment to provide a stronger climate for economic growth and job creation. The tax section builds off of last year’s FY2012 House-passed Republican budget that included comprehensive tax reform with a top rate of 25 percent for individual and corporate taxes. The House-passed Republican budget takes three additional steps toward job creating, comprehensive tax reform that:

  • Consolidates the current six individual income tax brackets into just two brackets of 10 percent and 25 percent.
  • Repeals the Alternative Minimum Tax, which currently creates higher taxes for some 31 million middle-class families.
  • Reduces the corporate rate to 25 percent and encourages investment and hiring here at home.

Got to keep in mind that at the moment, the House is Republican-controlled but the Senate is Democrat-controlled. Everything the House does must at some point move to the Senate. These strong pro-business tax provisions being touted by the House are going nowhere in 2012, but it’s certain they will be back on the table in 2013, especially if the White House and/or the Senate comes under Republican control.

There’s certainly a lot at stake for small business during the next 8 months.

New Thinking at the Forest Service

At a recent meeting of the America Recreation Coalition (ARC) with which ARVC has a longstanding relationship, Harris Sherman, Under Secretary of the Department of Agriculture for Natural Resources and Environment, with responsibility for the National Forest System (as opposed to the National Parks Service), outlined some of the salient facts about the forests. He was the primary speaker and discussed some of the facts and challenges facing the forests, and described at least one possible solution.

On the factual side, and to provide some perspective, Sherman explained that the 193 million acres managed by the Forest Service, which represent approximately 8 percent of the land in the United States, provide significant sequestration of carbon and are the source of drinking water for 66 million people. He also noted that the national forests host 200 million recreation visits annually and are home to 550 threatened and endangered species, in addition to thousands more species.

On the challenges side of the ledger, Sherman, noted that the challenges facing the National Forest System are equally significant. He noted that 70 million to 80 million acres are in need of what he described as serious restoration, including a thinning out of very dense growth. He described the increasing threat to the forests from fire, noting that the 3 million to 4 million acres that used to burn each year have now increased to 5 million to 10 million acres annually, with even more acreage at risk in the near future. He also mentioned the challenge represented by “bizarre climate changes” and cited as an example the previous year, when the northern tier of the country experienced the wettest year on record while a number of southern states endured record droughts.

Bottom line: The Under Secretary stated that “We need to redouble our efforts to take care of the forests” while, at the same time, struggling with budgets that have decreased 5 percent to 8 percent in recent years.

How to accomplish the daunting challenge?

Among his solutions is the need to forge partnerships among those who can help the agency do its work while helping the partners with their work. He noted that he was delivering this partnership message not only to the recreation community, but also to electric and water utilities as well as timber, grazing, and oil and gas interests.

The Forest Service has to find new ways to do business and be more effective, efficient and focused.

The Under Secretary discussed partnerships and found a receptive audience. In discussing the new Forest Service Planning Rule, President Obama’s America’s Great Outdoor initiative, and the new Travel & Tourism National Strategy, Sherman clearly is optimistic that real change can come about that will be helpful to the private recreation sector. The possibility of new forms of partnerships in the coming years can be a boom or bust for the park industry. Opening up new RV park and campground opportunities on public land developed and operated by the private sector, bringing more and more Americans outdoors and bringing increased international visitation to the U.S. all hold great promise for the park industry.

The American Recreation Coalition is following up on Sherman’s remarks and is convening in April a group of interested private sector recreation people to brainstorm how the private sector and the U.S. Forest Service can work cooperatively for the good of both sectors and the American people.

The Park Industry and Pool Lifts

The issue on the minds of park owners around the country for the last two months or so? No doubt it is the requirement that public accommodations need to add pool lifts to enable disabled individuals to access park swimming pools.

The need to comply with this Americans With Disabilities Act provision by March 15th and the need to install a fixed lift as opposed to making a portable lift available, became a crises in early March for many parks owners. Uncertainty about the need to comply, the shortage lifts for immediate shipment, and resentment that the government was mandating the lifts all contributed to the pressure and tension among park owners. ARVC, working with the American Hotel & Lodging Association and others seeking an implementation delay or a modification to the requirements were successful in having the Justice Department delay implementation for 60 days during which time they would entertain comments from all sources about a lengthier compliance period and possibly other changes to the requirements.

There seem to be two issues at play here.

First, many park owners have become increasingly angry and vocal about government interference in their business by mandating that they spend their money to comply with a government regulation that forces them to prepare to serve a market park owners claim is very small or maybe non-existent.

It’s impossible to argue with this point of view. Government regulates way too many aspects of business life and makes way too many demands on the business owner to spend their money to meet government expectations.

From taxes to licensing fees, from compliance with the hazardous materials standards to environmental regulations of all kinds, the government is almost a partner in small businesses.

From this point of view, the anger is, I think, justified.

The other side of this story has two considerations that deserve comment.

There are 36 million who are classified as disabled (12 percent of the population) and of these, 5.5 million are disabled veterans and half of those vets are in their working years, i.e., ages 18 to 64. If you think the definition of “disabled” is way too large and covers things that are not disabilities, I encourage you to read the Americans with Disabilities Act for a definition of the term “disabled.”

This is a substantial market. It’s actually larger than the RVer market! Why don’t parks see more disabled visitors? I think the answer is simple: they are not accommodating and parks are not easy for many disabled people to get around and feel comfortable. Provide appropriate accessible accommodations, advertise and market for the business, and my guess is that over a few years, this market segment can become considerably more important to many parks.

Also on this side of the coin is the simple (or maybe not so simple) matter that in the U.S., businesses that serve the public are not permitted to discriminate about whom they serve. Public accommodations, public businesses cannot restrict or limit the segments of the population they serve. This principle is well established in this country. Big or small, business in America is not free to pick and choose its customers. Americans come in many shapes, sizes, ages, ethnic heritages, races, religions, etc., and all must be welcome by businesses that purport to serve the public.

I hope that the Justice Department and maybe Congress will provide a reasonable opportunity for parks to comply with the pool lift requirement, but most of all, I hope they will publish guidelines covering the concepts of “readily achievable” and “undue hardship.” These concepts are misunderstood and business people need a bit more clear guidance on these terms.

Calm heads will hopefully prevail and no one will be forced out of business, no one will have to close their pool, no one will have to spend tens of thousands of dollars to become accessible, but businesses will become open and available to the millions of disabled Americans who now are shut out of enjoying many of the things that able-bodied Americans so easily take for granted.

 

 

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