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2 posts from January 3, 2013

January 03, 2013

Dubious deal? Small biz mixed on cliff compromise

By Joyce M. Rosenberg, Associated Press

Congress stopped the country from going over the so-called “fiscal cliff” – and that's great news for some small business owners. But with a deal that doesn't immediately address federal budget cuts, for many, the uncertainty drags on.

The compromise bill that passed the House late Tuesday raises taxes on couples earnings $450,000 or more and individuals earning at least $400,000. That affects small company owners who report their companies' income on their personal 1040 returns. Democrats and small business lobbying groups had estimated that just 5 percent of owners would have paid higher taxes under President Obama's proposal to raise rates on couples earning $250,000 or more, and individuals earning at least $200,000. The number of owners who will pay higher taxes now is likely to be even less than those estimates.

“That will help out tremendously,” says Nate Nelson, who owns a medical testing company, Frontera Strategies, based in Dallas. He sets aside money to pay his taxes, and the higher threshold means he may have more cash available to make two hires and $80,000 in equipment purchases he's been putting off. “It will help us loosen the belt a little,” Nelson says.

The bill avoids widespread tax increases, but it delays deciding on for two months about spending cuts that could be deep. Companies that benefit from government contracts – whether they work directly for the government or do business with companies that contract with the government – still don't know how they might be affected by cuts in defense and other federal programs. Without the cliff compromise, the Pentagon and numerous federal agencies would have been subject to billions in budget cuts as early as this month. Cuts are still expected but it's unclear where, or how much, they will be.

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View: For South Florida to build a tech industry, the business community needs to coalesce, collaborate

By Doug Poretz

Poretz
The economic and cultural future of South Florida, from Miami to St. Lucie, is at a critical point.  Right now, it looks like the region will grow slowly, largely through low paying jobs generated by the three long-time state pillars of real estate, agriculture and tourism.  But it is also possible that the region will experience sharp and accelerating growth with high paying jobs generated by new and growing technology businesses. 

All the factors are in place for the first alternative to be realized.  But for the more optimistic alternative to come true, one critical ingredient is needed:  the support of the region’s broad business community.  This includes all those organizations that have nothing to do with technology per se, but that are motivated because they understand the proposition that a rising tide lifts all ships. 

Before the broad business community can really marshal the firepower to support an idea as big as building a new major industry for the region, the business community has to coalesce behind a shared commitment to a shared aspirational vision. 

That vision must be very robust, and have a multi-year horizon.  There must be an effort to make the region more attractive to “the creative class,” especially including the young tech workers that will be needed in growing numbers – or else the tech firms will leave the area as they grow.  The region’s investment community will have to be grown, from angels to VCs and private equity and investment banking firms, so that local businesses can access local financial support and high quality ongoing mentorship.  Both the region’s physical and intellectual/educational infrastructures need to be enhanced to support tech companies.  And an exciting vision for what could happen here should be bannered and promoted in a way that makes this region competitive with the aggressive campaigns of regions such as Silicon Valley, Northern Virginia, Boston, Research Triangle Park, and a growing list of regions from around the world that seek a similar future, for good and obvious reasons. 

To date, the onus of promoting economic development in this region has fallen on the shoulders of state, local or regional government-backed programs as well as public-private partnerships.  When the few outstanding achievements and lots of small victories of these well-intentioned organizations are analyzed against the backdrop of what other regions are doing, it is clear that South Florida is not on the path to capturing the competitive position necessary to build a viable invigorated and growing knowledge economy well into the future.

Many of the region’s organizations with over-lapping missions have shown a great sensitivity not to compete with each other.  But there is a major difference between “we don’t compete” and “we collaborate aggressively,” which is what is so desperately needed and can exist only when the region’s business community gets fully behind an idea whose time has come.

But before there can be collaboration, the businesses of South Florida need to coalesce into a true community with a shared commitment and identifiable leadership.  For those wanting to see the technology industry of the region boom, that coalescing of the business community will be the most critical leading indicator that will distinguish what happens now compared to all the previously failed cycles of similar optimism for the growth of a real regional tech community.

 Doug Poretz of Palm Beach Gardens has been a communications advisor to senior executives for more than four decades. He has extensive experience in community-building and played a leading role in making Northern Virginia a center of excellence for the global IT industry.

Read Doug Poretz's last viewpoint on Starting Gate here.