Dan Sutter: State and local barriers to entrepreneurship
State and local governments lure businesses with incentive packages. Yet these governments impose rules stifling entrepreneurs starting new businesses, forgetting that Amazon, offered multi-billion dollar deals for its HQ2, started out of Jeff Bezos’s garage. A new Cato Institute study, “Entrepreneurs and Regulations” by Chris Edwards, details the state and local government burdens on startups. Elected officials should carefully weigh these policies’ benefits against the burdens. The administration of many rules can be significantly improved. How do regulations harm small businesses? First, many compliance burdens occur at startup. While every added employee or business location involves compliance, many licenses, permits, and inspections must be obtained before opening. One study found that regulatory costs per employee were 29 percent higher for small versus large businesses. Startups also employ more lower-wage workers: weekly earnings at small firms were half the average for the largest firms. Increases in minimum wages and mandated employee benefits hit small businesses harder. Large businesses have more political influence and can reduce the burden of new regulations on themselves or obtain exemptions to rules. Businesses that do not yet exist cannot influence regulation. Startups have very tight margins and cannot afford extra costs. Entrepreneurs typically invest their life savings, borrow from friends and family, and earn little initially. One study found that half of tech company founders made less than $6 an hour during the first year. Alcohol licenses illustrate another type of burden. Eighteen states limit the number of alcohol permits; the existing permits can be sold, with prices often exceeding $250,000. Chain restaurants can more easily afford this cost than a chef opening her first restaurant. “Entrepreneurs and Regulations” offers a new measure of state policy burdens, called the Entrepreneurial Regulatory Barriers Index. The index includes 13 measures across four areas: small business owners’ perceptions of the burden of regulations, occupational licensing, entry barriers (like Certificate of Need laws), and policy-created costs. The best states for startups are Georgia, South Dakota, and North Dakota; California, New Jersey, and Connecticut are the worst. Alabama ranks 29th, a little lower than in other small business policy indexes. The Pacific Research Institute and Small Business and Entrepreneurship Council rank Alabama 15th and 11th, respectively. Alabama’s climate for startups is not horrible but could be better. Local governments may impose even greater burdens, as Mr. Edwards details. Consider the sheer number of rules. In New York City, small businesses are subject to 6,000 regulations, while 15 city agencies issue over 250 licenses and permits. Delays are common. Honolulu is supposed to issue small commercial building permits in 14 days but takes on average over 150. Entrepreneurs often must pay rent while waiting for approvals. In addition to delay is uncertainty, which economic research consistently shows reduces business investment. Many city offices offer no way to track the progress of applications, so entrepreneurs cannot know when or if permission to open will be granted. Government rules, frequently zoning laws, hamper home-based businesses. Zoning historically kept businesses and industry out of residential areas. Yet, the internet allows businesses to be run unobtrusively from home, keeping costs low while entrepreneurs explore the potential for their product or service. Complaints by neighbors typically trigger zoning enforcement, highlighting the often unpredictable impact of rules on new businesses. The Alabama legislature helped home-based businesses this year with a “cottage foods” bill. The law lifts a cap on the value of annual sales, increases the range of foods people can make at home and allows internet sales. Alabamians can now more fully participate in America’s cottage food boom. State and local governments might have to sustain business over the next several years. The Biden administration is clearly very pro-regulation. As Mr. Edwards writes, “whatever happens in Washington, state and local governments can do much to improve the entrepreneurial climate by repealing low-value and harmful regulations.” Regulatory reform can help grow Alabama’s economy. Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Paul DeMarco: Alabama Lawmaker’s Critical of President’s Proposed Defense Budget
President Joe Biden’s Proposed Budget for the Department of Defense has raised the concerns of Alabama Lawmakers regarding the effects on the Nation’s military readiness. Both Senator Richard Shelby and Representative Mike Rogers sharply criticized the budget by pointing out that they do not believe the president’s request meet the needs of the Nation’s defense, particularly in modernizing and improving the weapon’s technology for the future and the sacrifices the military will have to make with the proposed budget. Senator Shelby pointed out that the United State’s Army’s proposed budget is a two percent reduction from the past year, which is a dramatic reduction compared to what the countries adversaries are doing. Representative Mike Rogers also chided the proposed defense budget as being inadequate for the Nation’s mission to protect the country and how insufficient to allow the military to do their job. Both Russia and China have significantly increased their military budgets and thus the president’s reduced budget is emboldening our enemies. These two Alabama leaders have now thrown down the gauntlet to the president – either properly fund the military or risk the United States National Security. Paul DeMarco is a former member of the Alabama House of Representatives.
Nathaniel Ledbetter elected as Chair of Southern Legislative Conference Economic Development, Transportation and Cultural Affairs Committee
After serving two successful terms as the committee vice-chair, Alabama House Majority Leader Nathaniel Ledbetter (R – Rainsville) was recently elected chair of the Economic Development, Transportation, and Cultural Affairs Committee of the Southern Legislative Conference (SLC). Established in 1947 as the Southern Office of The Council of State Governments’ legislative association, the SLC is a member-driven organization and serves as the premier public policy forum for Southern state legislatures. The 15 states comprising the SLC include Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. SLC’s programs seek to provide policymakers diverse opportunities to interact with policy experts and share their knowledge with colleagues. The committee has addressed a myriad of policy issues, including the economic impact of the American Rescue Plan on Southern states, utilizing workshare programs during economic downturns, leveraging Opportunity Zones for economic development, and unemployment amid the COVID-19 pandemic. According to today’s press release, “The mission of the SLC is to promote and strengthen intergovernmental cooperation among its 15 member states. As chair of the Economic Development, Transportation & Cultural Affairs Committee, which comprises members from each of the 15 states represented by the SLC, Representative Ledbetter will guide the committee’s policy focus and projects. He also will serve as an ex-officio member of the SLC Executive Committee.”
Mo Brooks releases first radio ad in campaign for Senate featuring Donald Trump
Rep. Mo Brooks’ (R-Huntsville) campaign released its first radio ad today, featuring former President Donald Trump. The ad will increase awareness of the former President’s endorsement of Brooks as a survey commissioned earlier this year by Club for Growth PAC featuring 509 likely GOP voters revealed only 23% of respondents were aware Trump endorsed Brooks. President Trump formally endorsed Brooks in Alabama’s 2022 Senate race for the first time several months ago. The former President relayed his support in an April statement, “Few Republicans have as much COURAGE and FIGHT as Alabama Congressman Mo Brooks. Mo is a great Conservative Republican leader, who will stand up for America First no matter what obstacles the Fake News Media, RINOs, or Socialist Democrats may place in his path. Mo Brooks is pro-life, loves our Military and our Vets, will protect our Second Amendment, combat the Biden open borders agenda, is fighting for voter integrity (like few others), and was the Co-Chair of our winning, and record-setting, Alabama campaign in 2020. Mo Brooks has my Complete and Total Endorsement for the U.S. Senate representing the Great State of Alabama. He will never let you down!”
Voting rights ruling increases pressure on Democrats to act
Congressional Democrats are facing renewed pressure to pass legislation that would protect voting rights after a Supreme Court ruling Thursday made it harder to challenge Republican efforts to limit ballot access in many states. The 6-3 ruling on a case out of Arizona was the second time in a decade that conservatives on the Supreme Court have weakened components of the Voting Rights Act of 1965, a landmark Civil Rights-era law. But this opinion was released in a much different political climate, in the aftermath of President Donald Trump’s lie that last year’s election was stolen. Trump’s fabrications spurred Republicans in states such as Georgia and Florida to pass tougher rules on voting under the cloak of election integrity. Democrats on Capitol Hill have already tried to respond with a sweeping voting and elections bill that Senate Republicans united to block last week. A separate bill, the John Lewis Voting Rights Advancement Act, which would restore sections of the Voting Rights Act that the Supreme Court previously weakened, has been similarly dismissed by most Republicans. Those setbacks, combined with the Supreme Court’s decision, have fueled a sense of urgency among Democrats to act while they still have narrow majorities in the House and Senate. But passing voting legislation at this point would almost certainly require changes to the filibuster, allowing Democrats to act without GOP support. “Absolutely this increases the pressure to take a very hard look at whether the Senate is an institution that will allow itself to be rendered powerless and dysfunctional,” said Rep. John Sarbanes, a Maryland Democrat who sponsored a voting bill that passed the House in March. Change won’t be easy. A group of moderate Democratic senators, including Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, have ruled out revisions to the filibuster. In an evenly divided Senate, their rejection denies the votes needed to move forward with a procedural change. Thursday’s ruling was on a case in Sinema’s home state. In an opinion by Justice Samuel Alito, the court reversed an appellate ruling in deciding that Arizona’s regulations — on who can return early ballots for another person and on refusing to count ballots cast in the wrong precinct — are not racially discriminatory. Sinema assailed the decision in a statement, saying it would “hurt Arizonans’ ability to make their voices heard at the ballot box.” She reiterated her support for the bill yet said nothing about her opposition to the filibuster changes. That opposition stands in the way of the bill passing. Democrats, who say the issue is an existential one for democracy and who need the support of voters of color in next year’s midterms, quickly condemned the decision. “If you believe in open and fair democracy and the principle of one person, one vote, today is one of the darkest days in all of the Supreme Court’s history,” said Senate Majority Leader Chuck Schumer. House Speaker Nancy Pelosi called the ruling an “unprecedented assault” that “greenlights the brutal, accelerating campaign of voter suppression.” Speaking in Florida, President Joe Biden said he would have “much more to say” soon, but largely sidestepped comment. For their part, Republicans show no sign of willingness to engage with Democrats on the issue. “The states created the federal government, and it’s not up to Chuck or Nancy or anyone else in Washington, D.C., to tell Arizona or anyone else how they should conduct an election,” Arizona Attorney General Mark Brnovich, who was a party in the case, said on Fox News. Many Republicans other have dismissed a series of recent hearings on the John Lewis bill as “theater.” “They are using this issue because they see a political opportunity,” said Rep. Mike Johnson, a Louisiana Republican who sits on the House Judiciary Committee. “The more they advance this narrative that it’s us versus them, and oppressors versus the oppressed, and black versus white, it divides the country.” Questions hang over existing lawsuits challenging voting laws. While experts generally agree that Thursday’s decision will make legal challenges under Section 2 of the Voting Rights Act more difficult, many of the lawsuits pending against GOP-backed laws this year make separate, constitutional claims. So those lawsuits will proceed. The U.S. Justice Department’s recent lawsuit against Georgia’s new voting law does make a Section 2 challenge, although it was narrowly written and alleges an intent by Republican state lawmakers to discriminate against minority voters. In the Arizona case, the legal challenge centered on whether there was a discriminatory effect of the laws. Still, advocates of voting rights protections were surprised by the breadth of the ruling. “This ruling is much worse than we had anticipated,” said Wendy Weiser, an attorney for the Brennan Center for Justice. “This is going to put a lot of pressure on Congress and the White House to pass the voting bills.” And it could embolden more Republican-led states to pursue further restrictions. Judicial Watch President Tom Fitton, who supports the ruling, said: “States can be confident that they can go full speed ahead to strengthen elections and protect voting rights with security measures such as voter ID and other sensible measures to make it harder to steal elections.” Republished with the permission of the Associated Press.
Gov. Kay Ivey raises $1.2 million for reelection
Alabama Gov. Kay Ivey has raised $1.2 million in her bid for reelection, her campaign announced Thursday. The Republican incumbent’s fundraising could deter challengers from either side of the aisle in the 2022 election. In a bit of saber-rattling, her campaign made the sizable figure known ahead of mandatory election filings. “The people of Alabama are energized and enthusiastic for 2022, and I could not be more grateful to them for their overwhelming support of my re-election campaign,” Ivey said in a statement. Ivey, 76, announced four weeks ago that she’s running for reelection. She made the announcement in a video message released by her campaign. The governor emphasized her administration’s investment in infrastructure, job creation, Alabama’s pandemic recovery, and the state’s low unemployment rate. Campaign finance records show that Ivey had a campaign balance of under $200,000 at the end of 2020. She has garnered a number of major contributions since announcing her bid for office. Ivey is the state’s second female governor and the first Republican woman elected to the position. She had been lieutenant governor when she succeeded Gov. Robert Bentley in 2017. She won election to her first full term the next year, defeating first a field of primary challengers and then Tuscaloosa Mayor Walt Maddox in the general election. Ivey, who is two years younger than President Joe Biden, faced indirect questions about her health during the 2018 race but easily won her party’s nomination and then the general election. Republished with the permission of the Associated Press.
Trump Organization, CFO indicted on tax fraud charges
Donald Trump’s company and its longtime finance chief were charged Thursday in what prosecutors called a “sweeping and audacious” tax fraud scheme in which the executive collected more than $1.7 million in off-the-books compensation, including apartment rent, car payments, and school tuition. Trump himself was not charged with any wrongdoing, but prosecutors noted he signed some of the checks at the center of the case. And one top prosecutor said the 15-year scheme was “orchestrated by the most senior executives” at the Trump Organization. It is the first criminal case to come out of New York authorities’ two-year investigation into the former president’s business dealings. According to the indictment, from 2005 through this year, the Trump Organization and Chief Financial Officer Allen Weisselberg cheated tax authorities by conspiring to pay senior executives off the books by way of lucrative fringe benefits and other means. Weisselberg alone was accused of defrauding the federal government, state, and city out of more than $900,000 in unpaid taxes and undeserved tax refunds. The most serious charge against Weisselberg, grand larceny, carries five to 15 years in prison. The tax fraud charges against the company are punishable by a fine of double the amount of unpaid taxes, or $250,000, whichever is larger. The 73-year-old Weisselberg has intimate knowledge of the Trump Organization’s financial dealings from nearly five decades at the company. The charges against him could enable prosecutors to pressure him to cooperate with the investigation and tell them what he knows. Both Weisselberg and lawyers for the Trump Organization pleaded not guilty. Weisselberg was ordered to surrender his passport and was released without bail, leaving the courthouse without comment. In a statement, Trump condemned the case as a “political Witch Hunt by the Radical Left Democrats.” Weisselberg’s lawyers said he will “fight these charges.” The case is being led by Manhattan District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James, both Democrats. Vance has been investigating a wide range of matters involving Trump and the Trump Organization, such as hush-money payments made to women on Trump’s behalf and whether the company falsified the value of its properties to obtain loans or reduce its tax bills. The news comes as Trump has been more seriously discussing a possible comeback run for president in 2024. He has ramped up his public appearances, including holding his first rallies since leaving the White House. In announcing the grand jury indictment, Carey Dunne, the top prosecutor in the district attorney’s office, said: “Politics has no role in the jury chamber, and I can assure you it had no role here.” The Trump Organization is the entity through which the former president manages his many ventures, including his investments in office towers, hotels and golf courses, his many marketing deals and his TV pursuits. Trump’s sons Donald Trump Jr. and Eric Trump have been in charge of day-to-day operations since he became president. In addition to exposing the Trump Organizations to fines, the criminal case could make it more difficult for the business to secure bank loans or strike deals — a hit that comes at a particularly bad time, with the company already reeling from lost business because of the coronavirus and the backlash over the Jan. 6 attack on the Capitol. “Companies that are being indicted, whether they are private or public, big or small, face serious collateral consequences,” said Daniel Horwitz, a white-collar defense attorney. “Companies in the financial services industry are reluctant to do business with them. Their access to capital is limited or cut off.” Weisselberg came under scrutiny in part because of questions about his son’s use of a Trump apartment at little or no cost. Weisselberg’s son Barry Weisselberg — who managed a Trump-operated ice rink in Central Park — paid no reported rent while living in a Trump-owned apartment in 2018, and he was charged just $1,000 per month — far below typical Manhattan prices — while living in a Trump apartment from 2005 to 2012, the indictment said. Allen Weisselberg himself, an intensely private man who lived for years in a modest home on Long Island, continued to claim residency there despite living in a company-paid Manhattan apartment, prosecutors said. By doing so, Weisselberg concealed that he was a New York City resident, and he avoided paying hundreds of thousands in federal, state, and city income taxes while collecting about $133,000 in refunds to which he was not entitled, prosecutors said. According to the indictment, Weisselberg paid rent on his Manhattan apartment with company checks and directed the company to pay for his utility bills and parking, too. The company also paid for private school tuition for Weisselberg’s grandchildren with checks bearing Trump’s signature, as well as for Mercedes cars driven by Weisselberg and his wife, and gave him cash to hand out tips around Christmas. Such perks were listed on internal Trump company documents as being part of Weisselberg’s compensation but were not included on his W-2 forms or otherwise reported, and the company did not withhold taxes on their value, prosecutors said. Trump’s company also issued checks, at Weisselberg’s request, to pay for personal expenses and upgrades to his homes and an apartment used by one of his sons, such as new beds, flat-screen TVs, carpeting, and furniture prosecutors said. Barry Weisselberg’s ex-wife has been cooperating with investigators and given them reams of tax records and other documents. Two other Trump executives who were not identified by name also received substantial under-the-table compensation, including lodging and the payment of automobile leases, the indictment said. Weisselberg has a reputation as a workaholic utterly devoted to Trump’s interests. So far, there is no sign that he is about to turn on the former president. “I think it’s possible that Weisselberg would reconsider. Seeing the charges spelled out in this much detail, and seeing that the alleged federal tax loss is included, could, in theory, change his mind,” said Daniel R. Alonso, former chief assistant district attorney. “On the other hand, he is a loyal Trump soldier, which obviously argues
Leaders split on vote for January 6 Capitol riot investigation
On Wednesday the U.S. House of Representatives approved legislation to create a committee to investigate the Jan. 6 attack on the U.S. Capitol. House Resolution 503 passed the House with most Democrats voting for the resolution and most Republicans voting against it. The committee was approved by a 222-190 vote. In Alabama, Republicans Jerry Carl, Barry Moore, Mike Rogers, Robert Aderholt, Mo Brooks, and Gary Palmer all voted against the resolution. Democrat Terri Sewell voted yes. Rep. Sewell stated on Twitter, “#January6th was a dark day for our democracy & too many questions still remain. Since @SenateGOP voted down a bipartisan commission, I’m glad that the House is establishing a Select Committee to investigate. We cannot prevent future attacks if we don’t fully understand this one.” #January6th was a dark day for our democracy & too many questions still remain. Since @SenateGOP voted down a bipartisan commission, I'm glad that the House is establishing a Select Committee to investigate. We cannot prevent future attacks if we don't fully understand this one. pic.twitter.com/RKLe9LmhnE — Rep. Terri A. Sewell (@RepTerriSewell) June 30, 2021 In a press release, Rep. Moore stated, “During the six months that Speaker Pelosi demanded her committee chairmen sit on their hands while she conducted her political circus, two bipartisan Senate committees concluded exhaustive investigations and the Department of Justice and FBI arrested or charged over 500 people. If Speaker Pelosi was serious about investigating the January 6th riot, she would have already acted instead of pushing her partisan investigation closer and closer to next November’s elections. “Pelosi’s select committee would have a skewed, 8 Democrat and 5 Republican panel of members. The House standing committees have the full authority, jurisdiction, power, and staff to investigate the events of January 6th and are more than capable of conducting such investigations. “This would be a turbo-charged partisan exercise, not an honest fact-finding body that the American people and Capitol Police deserve,” Moore concluded. Rep. Brooks posted on Twitter, “Thanks to @stinchfield1776 for having me on @newsmax to discuss how Nancy Pelosi’s “select” committee on January 6 is for hyperpartisan political gain on the Social Democrats’ part.” Thanks to @stinchfield1776 for having me on @newsmax to discuss how Nancy Pelosi's "select" committee on January 6 is for hyperpartisan political gain on the Socialist Democrats’ part. pic.twitter.com/zmsmvKB0Oa — Mo Brooks (@RepMoBrooks) June 30, 2021
