Milwaukee Biz Blog

Over the past year, business leaders in our community have been vocal about steps Milwaukee needs to take to improve its overall business climate and grow our local economy, starting with enhancing our education system and promoting a greater understanding of business and capitalism.

It is important to look at this dialogue as a call to action, and it is equally important to highlight the efforts that are underway in our region to impact our young people and reach this goal.

On Tuesday, April 22, Wisconsin Business Hall of Fame honors will be bestowed upon three new laureates whose business innovations, effective management and civic involvement made a difference in companies and communities throughout the state. These laureates are exemplary of what it takes to move a region forward and invoke positive change.

In particular, the laureates are recognized for the high standards they have set as role models for Wisconsin's young people - our future leaders. I applaud the efforts to honor these important leaders in our business community and encourage participation in programs aimed to grow business leaders from a young age.

Each year, the Wisconsin Business Hall of Fame induction ceremony is held to benefit Junior Achievement of Wisconsin, whose purpose is to inspire and prepare young people to succeed in a global economy.
It is the largest and fastest growing nonprofit economics and financial literacy education organization in the world, reaching approximately 8 million students worldwide, and is a critical component to overcoming business and economic challenges in any region, including ours. With a focus on business, financial literacy, entrepreneurship, ethics and related life skills, Junior Achievement of Wisconsin is helping to pave the way for the successful leaders of tomorrow.

The inductees announced at this year's ceremony are innovative business leaders who have positively shaped Wisconsin's business climate.

The 2008 class of laureates includes innovative leaders such as Don Davis, who has provided leadership for significant growth of Rockwell Automation in our local community, region and outside the United States. Similar honors will be shared with other statewide business leaders Robert Cervenka of Phillips Plastic Corp. and Leonard Gentine of Sargento Foods.

I encourage anyone looking for examples of business leaders' efforts to improve our education system and promote an entrepreneurial spirit to attend the Wisconsin Business Hall of Fame event and hear the accomplishments and commitments these leaders have made to the community.

In addition, I challenge each of us to answer the personal call to action to become involved with an organization such as Junior Achievement to ensure a continued crop of bright business leadership is grown right here in Wisconsin.

For more information on the Wisconsin Business Hall of Fame event visit http://wisconsin.ja.org.

Mark Furlong, president and chief executive officer of Marshall & Illsley Corp., also is the current board chair of Junior Achievement of Wisconsin.

I am pleased that many of my colleagues voted recently to approve a resolution I sponsored to urge the Wisconsin State Legislature and Governor to require corporations to provide more transparent reporting of tax liability and tax reduction methods. As large publicly traded corporations use tax loopholes to lower their taxes, the burden is shifted to small, locally-owned business and the hard-working residents of Wisconsin.

State passage of this bill would be a great first step to exposing how lopsided our system is.

The Corporate Tax Accountability Act (Wisconsin State Senate Bill 367) would require all publicly traded corporations doing business in Wisconsin to submit annual statements to the Department of Revenue to provide greater transparency of taxes paid by corporations in Wisconsin as well as techniques used by corporations to reduce their tax burden or avoid paying state income taxes at all.

A recent study performed by the Institute for Wisconsin's Future found approximately two-thirds of publicly traded companies doing business in Wisconsin paid NO income tax at the state level in 2004. These include major employers in Milwaukee County. How do they do it? They fly under the radar. They use tax law loopholes to drastically lower their tax burden without breaking any laws.

As a result, Wisconsin ranks 38th in corporate tax collections.

The study provides solid evidence that Wisconsin's tax base has shifted over the years:

• While individual property tax payers provided 36% of state and local tax revenue in Wisconsin in 2004, corporate income taxes accounted for only 3% of the total.
• In 1970, manufacturing accounted for 18% of the property tax burden.  It shifted drastically to 3.6% in 2005, according to the Legislative Fiscal Bureau.
• Residential property owners now provide 70% of state revenue, up from 50% thirty years ago.
• If Wisconsin businesses paid the same amount of state and local taxes as the national average, Wisconsin would see an additional $1.3 billion in revenue each year, an amount equal to Milwaukee County's entire 2008 budget.
• When corporations use loopholes to legally avoid paying their fair share of taxes, the burden is shifted to individual property tax payers. That is just plain wrong. Our hard-working residents and small-business owners should not be subsidizing corporations that skirt the law.

Now is the time to reverse this trend. Instead of relying on increasing the level of personal property taxation, we should instead end the practice of letting large corporations get away with obscene tax exemptions.

As a Milwaukee County Supervisor, part of my job is to make sure the State funds the services that counties are mandated to perform. That's why I was proud to sponsor this resolution urging the State of Wisconsin to gather more information on taxed (or the lack thereof) collected. Milwaukee County taxpayers should not have to pick up the slack.

Milwaukee County Supervisor Gerry Broderick represents the 3rd District. For more information on the study compiled by the Institute for Wisconsin's Future, visit www.wisconsinsfuture.org.

Credit union advocates like to talk about how unique their financial institutions are compared to banks. Once upon a time, they were right. Credit unions were different because they promoted thrift and provided low cost credit, especially to people of low- and modest-means.

Today, the only thing that makes large, profit-driven credit unions unique is that they don't pay corporate income taxes, yet they are indistinguishable from the taxpaying banks they compete against.

Recently, the Internal Revenue Service (IRS) cracked down by forcing credit unions to actually pay "some" taxes on the profits from services deemed to be unrelated to the institutions' tax-exempt mission.

But paying even a token amount of income taxes is apparently too much for Community First Credit Union.

The Appleton-based financial institution with nearly a $1 billion in total assets is suing the IRS for $54,604 in unrelated business income taxes it was forced to pay in 2006.  That same year, Community First posted profits of $8.4 million and spent a whopping $550,223 on travel and conferences for its executives and board of directors.

The credit union industry's corporate tax subsidy already costs Wisconsin taxpayers $40 million per year and $2 billion nationally. By the end of 2008, Wisconsin could have as many as six tax subsidized credit unions with $1 billion in assets or more.  The explosive growth of non-traditional credit unions comes at the expense of taxpaying institutions, which ultimately erodes corporate income tax collections used to fund government services.

What makes matters worse is that several studies prove that large credit unions do a poor job of serving lower income and minority consumers, despite the tax subsidy they were given to serve that very population. In fact, a 2007 study revealed Community First shares the worst rating for making home loans to low- and moderate-income borrowers among Wisconsin's largest credit unions.

The same study, which was conducted by two PhD economists, also found that the median income within a 2.5 mile radius of Community First's locations is well above the county and state median.

Both findings indicate that Community First's tax exemption is being used to subsidize financial services to the wealthy at the expense of lower income consumers.

Community First's suit to keep it from contributing even the bear minimum in corporate taxes should have Fox Valley residents wondering what return all taxpayers receive in exchange for the credit union industry's multimillion dollar tax subsidy.”

Kurt Bauer is president and chief executive officer of the Wisconsin Bankers Association (WBA).

Some opportunities come along only once in a lifetime. If you hesitate, they're gone forever. Other opportunities, however, come along more frequently, and we get plenty of chances to take advantage of them.

Take New Year's resolutions, for example. They afford us an opportunity every year to set goals and to realize the potential that lies within each of us. You know the story. January rolls around, and we make promises to ourselves to do things differently, to do things better, to be smarter.

But how often have you reached December only to realize, much to your chagrin, that last year's resolutions have become nothing more than a series of broken promises? That's where setting firm and realistic goals becomes so important, especially when it comes to financial planning.

If you're serious about achieving financial independence for your family and meeting all of your objectives, setting goals is a must. Over the last 15 years, we have assembled a list of the top five most important goals that people need to address regarding their finances. If you can achieve these five goals, you are ahead of the curve in managing your wealth and reaching financial independence. 

1. Pay yourself first: If you wait until the end of the month, after all of your monthly bills are paid, to save for your retirement or other goals, you are limiting your potential for success. By paying yourself first, you will keep your savings plan on track and your consumption habits will change to reflect available cash flow. Once people begin saving consistently, it becomes an addictively positive habit that creates additional financial opportunities. To increase your probability for success, utilize payroll deductions into 401k or 403b accounts, or simply authorize automatic deductions from your bank account towards your savings account. This savings plan must be set-up to occur automatically, on a consistent and frequent basis.

2. Get Organized: How often do you receive financial statements in the mail, and simply set them in the ever-growing pile on your desk? Financially successful individuals organize their information, throwing away the material that is easily retrievable electronically or that is not important. Get a simple filing system to save important statements, and other financial documents. In the event of your incapacity or death, your loved ones should be able to easily find and understand your records. With good organization, you will be able to review what is important and make better decisions.

3. Damage control: Accidents happen, and the loss of your income, coupled with high health expenses, is a major cause of bankruptcy. Having proper insurance coverage is critical to ensuring your financial independence. We have seen way too many families suffer financially because of inadequate insurance. Anticipate the unexpected, and take immediate steps to protect your family from a financially devastating accident or situation. Review all of your insurance policies, including: life, health, automobile, disability, and home owners' policies. Going through financially challenging times is difficult. However, knowing that you put your family into that situation when you could have avoided it is devastating.

4. Investment check-up: Take an inventory of your investments to find out how your money is allocated. Be certain that the mixture between stocks, bonds, real estate, international and cash investments suits your situation. Frequently, people take on too much risk, or too little risk, and reduce their probability for growing their assets at an optimal rate. If a security has grown to become a large component of your portfolio, consider reducing or hedging the position. If a significant amount of your assets are sitting in money market or CD instruments, consider equity investments that historically outpace inflation. Be certain you know what you own and why. Review it when those statements come in every month. 

5. Cut the fat: We live in the wealthiest country in the world and the media is constantly telling us to consume, consume, consume. The sizes of our houses have increased as the sizes of our families have decreased. Certain "necessities" of today such as cell phones, cable television, computers, Game Boys, heated car seats, GPS, iPods, etc. weren't even luxuries 20 years ago because they didn't exist or weren't prevalent.   

When thinking about retirement, many people are quick to realize that it isn't how much money one makes or the size of their assets that is most important. What really matters is the amount they spend relative to their income or assets. Identify what is truly important to you, and leave everything else behind.

Sit down and write out your goals. Share those goals with your family, friends, and advisors. By writing down our goals, and sharing them with others, we are creating a support network that will help us accomplish those goals. 
Circle July 4, Independence Day, on your calendar.  This marks the halfway point of the year. If you aren't on track to accomplish your goals, re-double your efforts to get back on course.

Remember, the more difficult the journey, the more rewarding is the finish line. We want you to sit back in December 2008 with a feeling of accomplishment and pride, knowing that you have taken the steps towards financial independence.

It sure beats looking back at a string of broken promises!

Kevin Reardon, CFP, is a financial planner and president of Shakespeare Wealth Management in Brookfield.

The 2007 Wisconsin Early Stage Symposium will take place this Wednesday and Thursday, Nov. 14-15. Attendees can register at the event, which will begin at 7:30 a.m. at the Monona Terrace Convention Center in Madison.

Here are the top 10 reasons to attend:
 

1. You'll hear from top-flight speakers: The line-up includes Wisconsin's own Mark Lee, astronaut-turned-entrepreneur, and Jeff Wacker, a nationally known futurist for EDS. Blast off AND gaze into a crystal ball of technology! 
2. You'll be exposed to successful entrepreneurs: Meet panelists and presenters such as: Geoff Bastow of Thin Air; Jay Bayne of Meta Command Systems; John Biondi of C 5.6 Technologies; Kelly Fitzsimmons of ComicWonder; Kevin Conroy of Third Wave Technologies; Mark Gehring of Sharendipity; Shawn Guse of TomoTherapy; Ralph Kauten of Quintessence Bioscience; Deven McGlenn of NeoClone; David Snyder of NimbleGen; and more.
3. You might bump into a seasoned investor: Look for investors from Baird Capital Partners, DaneVest Capital, Silicon Pastures, Wisconsin Investment Partners, Falcon Capital Group, Piper Jaffrey, CR Management, Steininger & Associates, The NEW Fund, Phenomenelle Angels, RPX Group, Continuum Investment Partners, Marquette Golden Angels, Central Wisconsin Business Angels, Stateline Angels, SDWA Ventures, CapVest Venture Fund and Venture Investors LLC and more.
4. You will have plenty of choices: The program features 12 panels in three tracks, including plenary panels on Wisconsin's homegrown "home run" companies and market overviews by veteran industry analysts. 
    
5. You'll walk away with some great materials: Fill your conference goodie bag as you tour our exhibit area, and our 52-page conference program manual is loaded with information. Visit more than three-dozen exhibit tables plus a kiosk to check your e-mail.
6. You could learn about some investment-ready companies: The Wisconsin Angel Network Investors' Track on Wednesday will feature presentations by nearly two-dozen companies seeking between $500,000 and $5 million in early stage investments. 
7. You'll witness Wisconsin's entrepreneurial version of "American Idol:" The Elevator Pitch Olympics on Thursday is a fast-paced competition in which entrepreneurs are judged, in real time, on their presentations to investors.
8.  You'll meet a new crop of entrepreneurs: Winners of federal Small Business Innovation Research grants will be honored at Wednesday night's dinner, and the UW-Madison "First Look Forum" will offer a preview of emerging technologies. 
9. You won't leave hungry: Two luncheons, a reception, a dinner and a breakfast are included in your registration fee. It's hard to go wrong on that alone! 
10. You'll be a part of a major networking event: Whether it's the luncheons, the reception, the panel discussions or lobby conversations, you'll meet hundreds of people who are building Wisconsin's entrepreneurial economy. Join them!

Tom Still is president of the Wisconsin Technology Council.

Every business conducts its affairs as a particular kind of business entity (or business structure). The organizational form that you choose determines which tax and legal regulations will apply.

For tax purposes the IRS gives a choice of the following kinds of business structures:

• Sole proprietorship.
• Partnership (several types).
• Corporation (two types).

If you’re self-employed in business and you have done nothing about a business entity, your business is already structured. It is a sole proprietorship.
There is no need to complicate where simplicity will suffice. For all but a few newly-hatched solo ventures, a sole proprietorship is the way to go.

Wait. Wait. Wait.

If cousin Harry at the schvitz or Aunt Tillie during Thanksgiving dinner told you that you’re a big boy now and you’d better incorporate, hold on a minute.

Don’t rush into anything. Get some information.

When you look at how to structure your indie business, trying to decide which entity is best for you, be sure to ask yourself the right question.

So, ignoring Harry and Tillie for the moment, are you looking to change your business entity for tax reasons or for liability purposes?

If it’s for tax reasons, as a sole proprietor are you taking full advantage of every tax law and reg available to you? Don’t go into the expense and hassle of incorporation if you can’t answer a firm yes to that question.

The Feds say that nearly four out of five businesses in the United States are sole proprietorships. Yet just about every lawyer advises a budding indie to incorporate. In25 years of experience I have found only one attorney who didn't answer, "yes,” when asked, ”Should I incorporate?” And every new client that has come to me already set up as a corporation said he or she did it because "my attorney (or my accountant) told me to do it." None of them had a clear idea of why incorporation was supposed to be an advantage.

The tax benefits of incorporation are pushed heavily by attorneys because that’s what they’re used to: working with corporations, not working with solos who design web sites or computer programs. They don’t know the tax benefits available to indies!

Sometimes there are good reasons why a self-employed should incorporate, but, if advised that you must do it, find out why. Be sure the professional explains to your satisfaction - and also to the satisfaction of a savvy friend, colleague or relative - what makes incorporation necessary.

Facts - to stifle some old husbands' tales:
All business structures.

• Allow you to deduct business expenses.
• Allow some sort of deduction for medical insurance.
• Allow for contributions to pension plans.
• Allow you to hire employees or subcontractors.
• Allow the other guy to sue you.
• Do not allow you to hide income.
• Do not allow you to write off personal non-business expenses.

Other business structures
If four out of five businesses in the USA are sole proprietorships, that leaves one out of five that’s structured differently. The other choices are: partnerships - a sole proprietorship is a one-owner business, a partnership is for more than one owner; and two kinds of corporations - a regular or C-corporation, and an S-corporation, which is a hybrid, part partnership and part corporation.

I said that it is important to know why you are considering a change of business entities - because of taxes or liability. Well, sole proprietorships, partnerships and corporations are tax entities.

Now enter the new kid on the block - the LLC. An LLC is a limited liability company. Note that the “C” means “company,” not “corporation.” The important thing to know: An LLC is not a federal tax entity but a legal business structure set up under the laws of each state. Because LLCs are formed under 50 different sets of state law, regulations governing an LLC depend upon the state of organization. The legal treatment of an LLC may vary from state to state.

If your business is an LLC, it has liability protection similar to that enjoyed by a corporation. You are not personally liable for the debts or liabilities of the LLC. That means a disgruntled supplier could go after your office equipment (a business asset) as payment for a delinquent invoice but could not confiscate your kitchen appliances (personal assets).

The legal entity, LLC, may be set up for tax purposes as a sole proprietorship, a partnership or a corporation.

If, as a sole proprietor, you foresee potential liability problems because of the kind of business you are in, then speak to an attorney about forming an LLC as a sole proprietor.

Some states recognize another legal entity called a Limited Liability Partnership (LLP). This is available in certain states to certain professions such as doctors or attorneys or accountants. An LLP bears many similarities to an LLC.

Remember: LLCs and LLPs are legal designations, not tax designations. Before setting up an LLC or LLP speak to a knowledgeable attorney about the liability protection afforded you by your state’s regulations governing an LLC.

June Walker is a tax and financial consultant to the arts and independent professionals. She is based in Santa Fe, N.M., but she is a regular reader of the Milwaukee Biz Blog and has several clients in Wisconsin. Additional information is available at www.junewalkeronline.com.

In an effort to head off a massive tax hike that will impact more and more middle-income taxpayers in the next few years and give taxpayers the option of a simpler, fairer alternative to today’s overly complex tax system, this week I introduced the Taxpayer Choice Act, which repeals the alternative minimum tax (AMT) and establishes a highly simplified alternative to the current individual income tax.

When the AMT was created in 1969, as a mandatory add-on to the existing tax code, it was aimed at preventing 155 wealthy taxpayers from exploiting loopholes in the tax code to escape their legitimate tax obligations. However, partly because it was never indexed for inflation, the AMT next year will subject close to 30 million more taxpayers to an automatic tax increase – ensnaring many middle-income Americans who dutifully pay their taxes with a stealth tax increase that was never intended. The bill I introduced together with several colleagues in the U.S. House of Representatives would repeal this illegitimate tax and offer people the choice of an alternative tax system that is transparent, simple and efficient.

The bottom line is that the AMT was never meant to become the burden on law-abiding taxpayers that it is today - especially for a rapidly growing number of middle-income families. And Congress should do more than apply just a temporary fix, as we have in recent years. We need to do away with this unfair tax before it automatically raises the tax bills of even more working Americans.

We must change the debate in Washington to put the taxpayer first – not the government. At the same time, we can take a big step toward making the tax code more efficient and less complicated by giving taxpayers the option to choose a simplified income tax if they wish. This will start us on the path toward a more user-friendly tax system that’s easier to comply with and doesn’t contain stealth tax hikes.

If left unaddressed, over the next 10 years the AMT will impose $841 billion in higher taxes, largely on middle-income families. Under current tax law, for instance, in tax year 2007, about 70 percent of married taxpayers (with children) earning $75,000 to $100,000 will be subject to AMT. Various proposals for addressing this looming problem have been floated, and the House Ways and Means Committee chairman has announced that his committee will soon consider an AMT reform bill. It is expected that the chairman’s plan will replace the AMT tax hike with other tax increases that could have a negative impact on our economy. The Taxpayer Choice Act offers a different approach to solving the AMT dilemma, without replacing the AMT with further tax hikes.

Among its highlights, the Taxpayer Choice Act would:

• Eliminate the $841 billion tax increase that would result from the automatic expansion of the AMT, or from other tax increases imposed to “offset” the AMT.
• The Taxpayer Choice Act would prohibit the AMT from being imposed on individual taxpayers in any taxable year after 2006.
• Provide comprehensive reform – establishing a highly simplified alternative to the current individual income tax, one designed to keep federal tax revenue near its historical level (around 18.5%) as a share of the overall economy (GDP).
  Offer taxpayer choice. Under this proposal, taxpayers can choose either to pay their taxes under the Simplified Tax or to continue paying taxes under the existing code. The advantages of the new tax system lie mainly in its simplicity and transparency: it has just two income tax rates (10 percent and 25 percent), a generous standard exemption amount, and no special tax preferences.
• The Simplified Tax system has two income tax rates: 10 percent on taxable income up to $100,000 for joint filers, and $50,000 for single filers; and 25 percent on taxable income above these amounts.
• Under the Simplified Tax, taxable income equals gross income minus a standard deduction and personal exemption. The standard deduction is $25,000 for joint tax filers, $12,500 for single filers. The personal exemption is $3,500. The combination is equivalent to a $39,000 exemption for a family of four. There are no additional credits or itemized deductions.
• Retain the current allocation of tax burdens. Analysis shows that if all taxpayers chose to pay taxes under the Simplified Tax, the distribution of tax burdens among income groups would remain close to what it is today.
• Deter "gaming" the system. This proposal doesn’t permit year-by-year tax code switches (“gaming”) aimed at avoiding legitimate tax liabilities. In general, individuals can choose to pay taxes under the new system at some point within 10 years of the date of enactment. After that initial choice, individuals are allowed one additional changeover between the two tax systems over the course of a lifetime. Individuals are also allowed to change tax systems if a major life event (death, marriage, divorce) alters their filing status. Otherwise the choice is essentially permanent.
• Maintain economic growth-oriented tax relief. The legislation makes permanent the capital gains and dividend tax relief of 2003.

U.S. Rep. Paul Ryan (R-Wis.) represents Wisconsin's 1st Congressional District.

Having recently returned from a biotech conference in Japan; having traveled to Canada, India and Brazil in 2007; and having attended the global BIO conference that featured delegations from 60 countries, I have remarked previously on the globality of the biotech industry.

Another conference I recently attended was the Bio Mid-America Venture Forum, which was held this year in Milwaukee. Now on its fifth year, the conference has become like a band of troubadours wandering the Midwest in search of the Holy Grail: the elusive treasure known as venture capital.

The conference originated in Chicago and moved to St. Louis, Minneapolis, Cleveland and then Milwaukee. The good news regarding the conference is that there were more companies presenting than in the past (almost 60). The bad news is that it seemed like the same Midwest venture capital companies with no major additions from the east and west coast.

While most of their money-raising efforts were regionally focused, it did impress me that their product development and commercialization efforts went beyond the U.S. in a number of cases.

This is good news because the life sciences market today is global. Also, a company's patent portfolio extends beyond the U.S., and the company needs to maximize the value of this technology not just in the U.S. Finally, it's often easier and faster to launch a product and technology outside the U.S.
To support this statement and theory, I turned to an interesting Web site called DoingBusiness.org, which charts improvements and declines in doing business around the globe. DoingBusiness.org's latest report ("Doing Business in 2008") was cited in recently in The Wall Street Journal.

As The Journal comments, the survey evaluates the regulatory climate in 178 countries (particularly for entrepreneurs looking to start up businesses). In the report overview and comments, Eastern Europe and Russia have not only surpassed Asia in the ease of doing business but also a number of Western European countries.

The report looked at starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

While we do think about the U.S. as one large open market, the reality is the U.S. can often be like 50 different countries when it comes to starting a business. The local legislation and laws for all of the above vary significantly. This confuses many foreign companies trying to come into the U.S. and figure out where to set up shop.

For entrepreneurs looking to do business overseas (particularly the U.S. biotech entrepreneur), it is logical to look at the size of the market for drugs, devices and diagnostics (meaning the European Union and then Japan). After that, selected markets such as Korea, Australia, Mexico, Russia and Brazil might be logical targets.

Though China and India are attractive, most companies are still frightened off by the IP issues along with the ability of local engineers and scientific talent to reverse-engineer technology and come up with slight improvements that might circumvent patents. Most biotech entrepreneurs don't think about the details of the ease or lack thereof of doing business in a country.

Let's take a look at DoingBusiness.org's latest ranking on the ease of doing business in its 2008 report results. Interestingly, the U.S. is not ranked either first or second. It ranks third, behind No. 1 Singapore and No. 2 New Zealand.
These are some very interesting statistics particularly when you look at the BRIC countries, which are ranked at 83 (China), Russia (106th), India (120th) and Brazil (122nd). Little Costa Rica (115th) has become a Mecca for medical device companies to set up manufacturing bases for the U.S. and Latin America.

I would have thought that Japan (12th), Israel (29th)and Korea (30th) would have had higher rankings. If DoingBusiness.org was doing a life sciences version of this study, there would have to be some additional factors as an overlay to the study.

They'd have to take into account the regulatory time to approve a drug or device; intellectual property protection; price approval (or reimbursement) approval time; the ability to sell directly to hospitals, physicians and pharmacies; clearance for local investors to invest in company; and local vs. foreign ownership.

It's clear that most small, young companies (life sciences firms or otherwise) have a lot on their plates in terms of developing products for the market, raising money and finding appropriate employees and talent. It's hard enough to think about operating overseas when just getting established in the U.S. for U.S.-grown companies is sufficiently taxing.

From listening to the 60 life sciences companies presenting their stories in Milwaukee to a Midwest audience, I was encouraged by the improved quality of the presentations, their thinking about the global markets for their products and the initial tie-ups with foreign companies and investors.
It shows me that the Midwest life sciences community is beginning to really think globally.

The lessons of Friedman's "The World is Flat" are finally becoming apparent to our often insular Midwest thinking processes. On the other hand, it's not difficult to think beyond the U.S. even in the Midwest when a good portion of a life sciences company's scientific employees and talent are coming from places like India, Pakistan, China and Russia.

Michael S. Rosen is senior vice president of new business development for the Science + Technology Group at Forest City Enterprises, a publicly traded real estate development company which develops and builds bioscience parks across the United States. Rosen is also a founder and board member of the Illinois Biotechnology Industry Organization. He can be reached at rosenmichaels@aol.com. His blog first appeared at Midwest.Business.com, a media partner of Small Business Times.

U.S. Rep. Charles Rangel (D-N.Y), the chairman of the U.S. House Ways and Means Committee, recently said he was willing to consider reducing tax rates on America's corporations to help them remain competitive in a global economy.

He also said he was willing to work with Treasury Secretary Henry Paulson on ideas from the administration, including reducing the top corporate rate from 35 percent to 27 percent.

We applaud Chairman Rangel's comments, as well as his willingness to work in a bipartisan fashion, as we firmly believe that America must remain competitive. But if we want to help all of our country's businesses, not just the largest corporations, here are some of the things that Congress can do for the heart of our country's economy, the creators of most of our new jobs - America's small businesses.

• Chairman Rangel's plan targets large corporations, those that file taxes as C-corporations. However, most small businesses file as S-corporations, which pay the same tax rates as individuals. Tax relief for small entrepreneurs is just as vital to our economy and America's competitiveness as relief for large corporations.
• Complex, unclear tax rules force small businesses to spend millions each year on professional tax help, money that can't be put back into their business. In addition, even honest, compliant taxpayers make mistakes when filling out their tax forms. These mistakes add to the estimated billions of dollars lost each year to the U.S. Treasury. Simplifying the tax code will help to solve both problems.
• Entrepreneurs are treated differently than Americans who receive their health care benefits from a corporation. The tax code prevents them from deducting health-care costs from their wage base for self-employment taxes. They're forced to pay additional taxes simply because they're self-employed. This tax bias should be eliminated.
• A permanent increase in Section 179 expensing limits, which are set to expire in 2010, would allow small firms to expense additional investments. This is a proven strategy that enables those businesses to grow, create new jobs and expand the tax base, increasing revenues to the government.
• Permanent repeal of the federal estate tax will enable small-business owners to plan for the future with certainty, including how to pass their business to the next generation without worrying about selling assets to pay for it.

Small firms with fewer than 500 employees represent 99.9 percent of the 26.8 million businesses in the country, both large and small. If America's small business were a separate economy, it would be the world's third-largest, trailing only the United States as a whole and Japan.

In addition, according to the U.S. Small Business Administration, small businesses account for about two-thirds of all net new jobs created in recent years, while every day we read about large corporate layoffs.

Small business in America is alive and well. Let's make sure that we don't forget that, and that Congress does what it needs to do to ensure that this critical portion of our economy stays healthy and growing.
 
Todd Stottlemyer is president and chief executive officer of the National Federation of Independent Business (NFIB)in Washington, D.C.

Former Federal Reserve Chairman Alan Greenspan admitted earlier this month that he was caught by surprise by the subprime mortgage collapse and the depths of the credit crunch and the housing bubble.

Greenspan said he never saw it coming.

But Bob Chernow did. Chernow, a Milwaukee businessman, has more than 30 years of experience as a stock broker, a wealth manager and a futurist.
In a keynote speech about the future of the financial services industry during a conference held by the World Future Society in Toronto in July 2006, Chernow predicted the subprime collapse and the mess that would follow.

"In 'hot' real estate markets, many buyers avoid mortgage insurance because lenders encourage them to take out second mortgages as down payments. These second loans have higher interest rates and are often adjustable to variable interest rates. These types of loans encourage speculation by artificially allowing buyers to stretch what they have to buy homes they normally could not afford," Chernow told the Toronto conference last year.
"According to the Federal Reserve, 35 to 40 percent of all recent mortgages were interest-only variable loans. This type of mortgage allows buyers to buy homes when prices are inflated. It is interesting that the last time interest-only and balloon mortgages were popular was during the 1920's. This was a major reason that banks became insolvent during the Depression and was a reason why amortized mortgages were created, as these types of mortgages let buyers pay down principal.
"What is wrong with interest-only mortgages? Well, for one, the homeowner has no economic stake in the property. He can walk away if he cannot pay. He is, in essence, 'leasing' the home in the hope that property values will increase. This is the 'greater fool' theory of investing. What's that joke? If you don't see a greater fool, look in the mirror. Regardless of what the new bankruptcy law dictates, banks will be hard-pressed to collect on much of this debt."

Fast forward to today, with soaring mortgage foreclosures, skyrocketing late payments, home builders and home lenders going out of business and financial institutions tightening their credit standards. The U.S. Department of Commerce reported Thursday that the national median sales price of homes fell 7.5 percent compared with last year, the largest year-over-year decline in 37 years.

If you've got a home on the market right now, you're feeling the pain.

So, what's next?

I asked our resident futurist, who manages other people's money, to give us five new predictions. A short while later, he e-mailed his response. Here's what Chernow sees in his crystal ball:

1. "The lack of regulation and oversight in the hedge fund arena will lead to a major blow-up within the year. In great part, this is because hedge fund leverage is dramatically different than regulated brokerage firms."
2. "A coalition of Syria-Iran-Turkey and the United States will work to stabilize Iraq. This will occur after the 2008 elections, but preparatory work is already underway (Mr. Chernow, a Vietnam War veteran, delivered a talk in 2003 titled, 'The Nature of Terrorism & Advice on Combating It in the Future.')"
3. "Demographic shifts in our population will continue the move from the suburbs to the cities. Milwaukee's population should increase by 10 to 15 percent over the next decade. According to David Pierce Snyder, a leading futurist, one of the fastest-growing industries over the next decade will be the conversion of industrial and commercial properties to residential properties."
4. "Over the next decade, there will continue to be a movement to reduce the cost of health care through technology. This will be true, despite the fact that there will be a shortage of 1 million nurses by 2010. Note: I also predict that nurses will get more control over their schedules and training and that doctors and administrators will change their view of the nurse-doctor relationship to a more positive one."
5. "The manner in which education is dispersed, as well as the purpose of education, will change dramatically. Technology, practical exercises, computer games, lectures through the Internet, the place of corporations and the involvement of families in the education of their children will all combine to reduce the cost of education. (Chernow is part-owner of The Learning Connection, an early childhood learning company located in Florida & New York)."

Thanks, Bob. I'd like to add one prediction of my own: The 2008 U.S. presidential election will be the filthiest, most disgusting election of all time. Special interest groups on both sides will spend more money than the candidates and will drive the agenda. Half-truths and outright lies will be rampant. To save our democracy, it's time to rebuild it from the bottom up.

Steve Jagler is executive editor of Small Business Times.