00:00:10.329 – 00:00:13.199
This is The Anderson Files on PodClips.
00:00:13.569 – 00:00:22.079
The Anderson Files is a look at commerce, investment, economics and retirement issues that affect each and every one of you.
00:00:22.229 – 00:00:30.42
Your host is Mike Anderson, Executive Vice president, retirement services, and partner of Finestone Partners.
00:00:30.43 – 00:00:36.74
Finestone Partners is an independent firm with securities offered through Four Point Capital.
00:00:36.75 – 00:00:41.389
And now your host, Mike Anderson, thank you, Mark.
00:00:41.439 – 00:00:47.09
I’d like to introduce our guest, Paula Calimafde with Haley Rothman.
00:00:47.099 – 00:00:48.54
She’s an attorney.
00:00:48.65 – 00:00:51.04
The firm is in Bethesda Maryland.
00:00:51.049 – 00:00:56.9
She is current chair of the SBCA, the Small Business Council of America, Paula.
00:00:56.909 – 00:01:00.549
Welcome. Thank you, Mike. The SBCA
00:01:00.88 – 00:01:17.269
What’s the mission? Well, how is it helping America? So, the Small Business Council of America was formed about 40 years ago and its purpose was to represent small businesses on the Hill, Capitol Hill where small business is generally underrepresented.
00:01:17.739 – 00:01:33.76
We, we decided it really needed a voice on the hill and with respect to technical tax issues, employee benefit issues and those issues just were not covered by any of the other groups that were advocating for small businesses.
00:01:33.809 – 00:01:44.04
We also wanted to represent professionals on the Hill and that group was not represented properly either in those areas.
00:01:44.319 – 00:01:46.26
So that was our mission.
00:01:46.269 – 00:02:02.425
And over the last 40 years, I think we’ve made some real changes in the law that are really been advantageous to those small business, business owners, family businesses and the professionals who operate in a small business context or privately held context.
00:02:02.675 – 00:02:07.434
We’ve, made their life easier as much as we can in the tax and employee benefits area.
00:02:07.565 – 00:02:23.91
What, have been some of the marquee legislative accomplishments of the group both within the last few years and with the organization operating for several decades, could you point to two or three? Sure.
00:02:23.919 – 00:02:27.96
I think probably our most famous one was establishing the IRA.
00:02:28.46 – 00:02:30.96
Now that goes back quite a ways as you can imagine.
00:02:31.119 – 00:02:34.63
We were also the architects of the 401(k) Safe Harbor.
00:02:34.639 – 00:02:47.589
So for those of you who are familiar with 401(k) plans, if you adopt an optional 401(k) Safe Harbor, you are excused from all ADP testing, or the anti-discrimination testing.
00:02:47.6 – 00:02:57.32
So it was a real as help for small business owners and small businesses that did not want to take, go through all the steps required to do testing.
00:02:57.47 – 00:03:06.44
And it also helped out a lot of small businesses where highly compensated employees were not being allowed to put in as much in their 401(k) plan as they wanted.
00:03:06.759 – 00:03:19.289
So that was, I though,t one of our big accomplishments, another one was we were able to sort of put in cross-testing into the law and keep it in the law.
00:03:19.66 – 00:03:31.125
We got rid of Section 89, which was a horrendous code section years ago, and saved a lot of owners, a lot of expense and heartache trying to deal with it.
00:03:31.134 – 00:03:43.455
We very often work at trying to reduce regulations for small business owners because very often they’re trying to run a business and there’s just regulation after regulation, notice after notice.
00:03:43.464 – 00:03:48.104
So we work with different agencies to try to get that more manageable as well.
00:03:48.69 – 00:04:04.94
I’m sure I’ve left some out. But I would say that is some of the marquee legislation. Yeah, that’s some of them for sure. One of the things that comes to my mind is the fact that small business drives America, but they’ve been left behind.
00:04:04.949 – 00:04:10.639
Would you agree with that? As far as on the Hill, they’ve been left behind.
00:04:10.649 – 00:04:18.89
You know, unfortunately, very often big business has a lot more money than small business to spend on lobbying and on advocacy.
00:04:19.089 – 00:04:24.95
And each small business generally is not that flush with cash.
00:04:25.119 – 00:04:28.459
So you really have to pull the small businesses together.
00:04:28.959 – 00:04:39.929
And a number of the small business groups that come to mind are just not experts in the fields of employee benefits and retirement plans and taxes.
00:04:39.94 – 00:04:47.109
And 199 A, and so many on the Hill think of us as like the tax think tank for small business.
00:04:47.119 – 00:05:04.79
For small business currently, what would be two or three of some of the priorities in terms of reducing regulation, reducing taxation, letting small business thrive and flourish in the US.
00:05:05.809 – 00:05:19.47
Well, one of our priorities is to keep the state tax system pretty much where it is and if we can keep the state tax exemption as high as it is right now, which is $11.58 million per person, we’d be very happy with that.
00:05:19.779 – 00:05:39.04
Another one of our priorities is the 199A deduction, which is deduction allowed by pass through entities, which in effect allows them to reduce their taxable income and try to make it more in line with the C Corporation rates which would dramatically reduce the last tax reformat.
00:05:39.369 – 00:05:45.059
199A, we’re finding a lot of small businesses think it’s too complicated.
00:05:45.42 – 00:05:51.88
There’s rules that single out professionals for worse treatment and we’re trying to get through some of those roadblocks.
00:05:52.369 – 00:05:55.579
So I’d say those are, are probably our two highest priorities at the moment.
00:05:55.589 – 00:05:58.429
We also want to get cafeteria plans.
00:05:58.44 – 00:06:02.279
So they’re available to owners of small businesses right now.
00:06:02.29 – 00:06:04.41
They’re only available to C Corporations.
00:06:04.839 – 00:06:18.239
So if you have a pass through entity and you want to sponsor a cafeteria plan, well, you can, but the owners cannot participate in the plan, which takes to what currently, which takes away a lot of enthusiasm to adopt a cafeteria plan when you can’t be in it.
00:06:18.57 – 00:06:23.13
So that’s been one of our major attempts over the last few years.
00:06:23.32 – 00:06:27.51
Can you explain what a cafeteria plan is? Sure.
00:06:27.619 – 00:06:33.709
Sorry, I sometimes I just get into the lingo and that’s the tax lawyer in me that gets me just going that way.
00:06:33.72 – 00:06:41.565
But a cafe plan is a type of plan that is available literally to almost every employee in the country but small business employees.
00:06:41.575 – 00:06:44.855
So the federal government has a cafeteria plan, big business has it.
00:06:44.864 – 00:06:51.95
And it’s a plan where employees get to choose between a number of number of benefits.
00:06:51.959 – 00:07:13.019
So it could be a premium conversion plan, meaning if you have to pay some of your health insurance premium as an employee, you can do it on a pretax basis instead of an after tax basis, you can pick up a flexible spending account where items that are not reimbursed to insurance, you can pay for those items on a pretax basis.
00:07:13.329 – 00:07:16.589
The famous one of course is eyeglasses and braces.
00:07:16.6 – 00:07:20.309
You can, which aren’t covered by insurance, but you can get them on a pretax basis.
00:07:20.57 – 00:07:29.549
There’s also dependent care arrangement and that works towards not just children but older adults who are dependent, you know.
00:07:29.559 – 00:07:33.32
So the parents so very often you’ve got two sides that you have got dependents.
00:07:33.739 – 00:07:39.39
It also can pick up additional life insurance, it can pick up disability insurance.
00:07:39.42 – 00:07:50.989
So there’s a number, a smorgasbord of options available and then all the supplemental health insurance type of items like an Aflac plan. For the membership across the country.
00:07:51.0 – 00:07:56.47
And I’m assuming there’s, there’s members that are engaged from across the continental us, Hawaii.
00:07:57.119 – 00:08:21.429
What would be a path for them to get involved and engage? Is it typically through someone who’s already a member, or how would someone typically become a member and, and involved with the SBCA. I would say, usually members go out to the community and they find people who are interested in these issues and who want to make the laws better as far as it affects them.
00:08:21.709 – 00:08:32.69
They can also, it’s as simple as looking at www.SBCA.net where you can sign up and then you’re a member.
00:08:33.039 – 00:08:38.049
You can also call our executive director who’s listed on the US website.
00:08:38.28 – 00:08:52.549
But I think the best way is to get involved, is to just come to the meetings because we’re a pretty friendly group and we’re very we really love to hear new ideas, get new thoughts, we love ideas percolating from all over the country.
00:08:53.049 – 00:09:34.059
So that would be the best way to get involved. In coordinating with, with Congress, the administration professionals, small business owners, private company, business owners, your role with the organization in spearheading and bringing these groups together and the message to the Hill, typically, how does that filter up to get to Capitol Hill to get to the White House? Well, I think I’m the chair because I happen to reside in Bethesda, Maryland, which is right across from the Capitol, basically. Geographically desirable, Yes, geographically desirable.
00:09:34.27 – 00:09:36.95
And then being a tax lawyer helps with this group.
00:09:36.96 – 00:09:42.219
But what happens is we are members of various different groups.
00:09:42.229 – 00:09:46.95
So for instance, I’ve been on the US Chamber Employee Benefits Committee for probably 20 years.
00:09:47.2 – 00:09:52.719
We have people in our group who are key members of NFIB.
00:09:53.059 – 00:09:55.13
We have people who are members of the SBA.
00:09:55.14 – 00:09:57.299
So these are different small business groups.
00:09:57.309 – 00:10:02.929
So when we have issue, we start trying to get different groups also involved with the issue.
00:10:03.119 – 00:10:17.609
We have, I think, very good advocacy pieces that we write up on the different issue,s and we get them out to Congress, usually through staff first and then they might work it up to the member level.
00:10:17.619 – 00:10:24.27
And very often we have folks on the board who have worked with members of Congress.
00:10:24.28 – 00:10:37.0
I’m on Senator Cardin’s tax advisory committee for instance, and that I’m not the only person in the SBCA who has that kind of relationship with their senator or their member of Congress.
00:10:37.469 – 00:10:40.19
So it’s, it’s mostly education.
00:10:40.58 – 00:10:44.19
As I said, we’re not the kind of people who are hanging around,
00:10:44.2 – 00:10:54.349
you know, fundraising parties at six o’clock at night and chit chatting, we’re the group that comes in the middle of the day with a position paper and explains what, how it all works.
00:10:54.78 – 00:11:12.52
And then we’re often called to testify and I think one of my favorite anecdotes in that in that regard is I remember testifying on the state tax issue, I believe it was and (edit Mark).
00:11:13.96 – 00:11:16.82
So I was asked to testify on the estate tax issue.
00:11:17.219 – 00:11:22.75
And after I testified, a staff member came running over to me and he said, that was amazing!
00:11:22.83 – 00:11:26.89
And I said, why was that amazing? And he said, well, you knew what you’re talking about.
00:11:26.9 – 00:11:29.95
And I thought, wow, it’s not very high level around here.
00:11:29.96 – 00:11:32.659
You know, if you know what you’re talking about, they get excited.
00:11:32.69 – 00:11:40.729
But the reality is, is that very often the people who are testifying are people who have been brought in by an association.
00:11:40.739 – 00:11:45.25
They’re given something to read and God forbid, they’re asked any questions about it.
00:11:45.479 – 00:11:53.969
So the SBCA, when we have state tax issues, we could bring in 10, 15, 20 experts on state planning.
00:11:53.979 – 00:11:59.82
If it’s a pension issue, we can bring in 10, 15 experts on pensions from around the country, from around the country.
00:11:59.83 – 00:12:00.77
Life insurance.
00:12:00.78 – 00:12:09.369
I mean, we have so many different avenues and so much depth with real knowledge that, that I think is the key to why the SBCA works.
00:12:09.489 – 00:12:24.52
Are there other benefits to join? The guy who owns family who owns maybe six dry cleaning stores someplace? He’s got, you know, 25 or 30 employees.
00:12:24.53 – 00:12:39.28
What would motivate him to join the SBCA? Well, if he’s the type of person, he or she who likes to be educated, what we do is we have an alert that goes out on it.
00:12:39.289 – 00:12:48.07
I would say probably once a month, at least that it would explain what’s going on the hill with issues that that person should be concerned about.
00:12:48.5 – 00:12:56.419
They also have the opportunity to come to the meetings and learn about these issues firsthand. Very often,
00:12:56.429 – 00:13:03.26
what we find is a lot of the actual members who get very interested and involved are advisors.
00:13:03.489 – 00:13:10.119
So the small business advisors who really want to understand the issues or know the issues and want to come together with other experts.
00:13:10.2 – 00:13:12.63
So there’s a lot of camaraderie and sharing in this group.
00:13:12.65 – 00:13:23.0
So that would be a lot of CPAs, financial consultants, attorneys, insurance, folks, actuaries, plan administrators.
00:13:23.33 – 00:13:37.299
So it’s a, it’s a number of people who are very interested and then we do have small business members who come in just, you know, not experts, not advisors. Dry cleaners, maybe? More like, yeah, sure dry cleaners.
00:13:37.309 – 00:13:38.75
Could, it could be a dry cleaner.
00:13:38.76 – 00:13:38.979
Sure.
00:13:38.989 – 00:13:39.9
It could be a doctor.
00:13:39.909 – 00:14:14.534
It could be, you know, they’re not, they’re not sitting around trying to do tax all day long, but they very often find out that there are issues that they really should be aware of and they bring them back to the community, which always helps us because one of the keys is if you can get people to call in to your own member or senator, you may not be talking to that person directly, but you’re talking to a staff person, you start building relationships and then they get used to Mike Anderson calling and they realize that, wow, this guy is an expert and, and he’s telling things to me straight so I can trust him.
00:14:14.544 – 00:14:21.21
And after the sixth or seventh time Mike calls with an issue now they, now they call him might be, this is a new policy out there.
00:14:21.219 – 00:14:29.38
What do you think about it? What do you think about this bill? Would you be willing to look it over for me? And, and that’s the magic of getting a group of people involved in.
00:14:30.15 – 00:14:38.919
So the SBCA works because the members are very involved. Paula. Mark mentioned dry cleaners for the SBCA.
00:14:39.169 – 00:15:01.19
What does the organization do for that person, that small business on the Hill? So what we really are doing for that kind of person, small business owner is that we’re providing a voice on the Hill for them at a very inexpensive price.
00:15:01.2 – 00:15:06.679
Because if you go out and you try to get someone to just represent you, it’s tons and tons of money.
00:15:06.69 – 00:15:18.119
If you’re one person in a large organization, then we’re able to provide this person representation on the Hill become their voice in Washington without them having to come to Washington.
00:15:20.51 – 00:15:25.469
This is The Anderson Files with Mike Anderson. Paula,
00:15:25.479 – 00:15:27.75
Thank you so much for being our guest.
00:15:28.059 – 00:15:39.669
And will you come back? We’d love to have you back in the future and we hope the SBCA will flourish well, well into the future in years.
00:15:39.679 – 00:15:40.359
Thank you.
00:15:40.419 – 00:15:41.03
Thank you.