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Archive for September 2010

Develop the 4 Qualities of an Inspirational Leader

Here is a very interesting article from HBR regarding the qualities of an inspirational leader. I think this is a great article and should be read by all managers and business leaders.

-DF


Develop the 4 Qualities of an Inspirational Leader

Leaders need vision, energy, authority, and a natural strategic ability. But those things don’t necessarily help you inspire your employees to be their best and commit to you as a leader. Here are the four qualities you need to capture the hearts, minds, and spirits of your people:

  1. Humanness. Nobody wants to work with a perfect leader. Build collaboration and solidarity by revealing your weaknesses.
  2. Intuition. To be most effective, you need to know what’s going on without others spelling it out for you. Collect unspoken data from body language and looks given across rooms to help you intuit the underlying messages.
  3. Tough empathy. Care deeply about your employees, but accept nothing less than their very best.
  4. Uniqueness. Demonstrate that you are a singular leader by showing your unique qualities to those around you.

This HBR tip was adapted from HBR’s 10 Must Reads on Leadership, one of six HBR article collections in the popular 10 Must Reads series.

Written by David Frederick

September 22, 2010 at 8:40 AM

Professor Cracks the Code to Negotiating a Bigger Salary

Interesting article. Check it out.

-DF

Professor Cracks the Code to Negotiating a Bigger Salary

By: Paul Kix AOL News

(Sept. 19) — A forthcoming study lays all out all you need to know about haggling for a better salary: the five tactics people most often use; what works; what doesn’t. Given how meh the economy’s been, it’s probably the most useful academic research you’ll read in some time (next to, of course, this).

“We wanted to open up the black box of the negotiating process, if you will,” Crystal Harold, an assistant professor at Temple’s Fox School of Business, and co-author of the study, tells AOL News.

She succeeded.

Temple’s first point: It’s all right to negotiate. “Avoiding the negotiation,” Harold says, “left people feeling terrible.”

She says that “risk-averse” types often do this — just accept whatever terms the employer offers. That’s a bad strategy. You’ll come to hate the organization, thinking it doesn’t value you yet doing nothing to change its perception of you.

Some of the 149 people Harold and her colleague Michelle Marks polled for the study were academic types, where the risk-averse personality reigns. The universities had to “almost prompt” the academics into negotiating, Harold says, because they didn’t want soured future employees. So Harold says some university administrators showed their hand, basically letting potential academics know they were getting low-balled. (“No, that doesn’t happen in corporate America,” Harold says.)

Point No. 2: Being aggressive is the best way to get the most money. Harold likes to call this the “competitive” strategy, but that’s really just another way to say, “I have a better offer from another firm, can you match it?” Or “If you don’t pay me more money, I’ll go public with your office-hours porn habit.” (Actually, no: The latter wasn’t a tactic Harold studied.)

“The competitive strategy did lead to more money,” she says — on average, about $5,000 more. And every dollar counts. The study points out that a 25-year-old who starts at $50,000 and gets a 5 percent pay increase each year for 40 years will earn a whopping $634,198 less than a 25-year-old who starts at $55,000 a year.

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Point No. 3: The competitive strategy does carry risks, especially if taken too far. Anecdotally, Harold heard from employers who acquiesced to the burn-it-all negotiating tactics of their most “competitive” employees. The employers really resented these people. When they started working, maybe the boss didn’t cut them any slack or assist them with a difficult assignment. And so the employee came to resent the place anyway.

A better tact may be “collaboration,” Harold says. Tell the boss your demands, but acknowledge that times are tough and that perhaps not all the demands can be met. This is a true negotiation and, Harold says, “probably the best tactic.”

Written by David Frederick

September 21, 2010 at 9:12 AM

Holy Cow! Let the Government Decide How Much Money You Make.

Can you imagine if the IRS did something like this in the U.S.? The way we are going, I wouldn’t be surprised to see something like this from the current U.S. administration and Congress.

-DF

UK Proposes All Paychecks Go to the State First

By: Robin Knight
CNBC Associate Web Producer

The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.

Big Ben & London Eye
Sharon Lorimer

The proposal by Her Majesty’s Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid.

Currently employers withhold tax and pay the government, providing information at the end of the year, a system know as Pay as You Earn (PAYE). There is no option for those employees to refuse withholding and individually file a tax return at the end of the year.

If the real-time information plan works, it further proposes that employers hand over employee salaries to the government first.

“The next step could be to use (real-time) information as the basis for centralizing the calculation and deduction of tax,” HMRC said in a July discussion paper.

HMRC described the plan as “radical” as it would be a huge change from the current system that has been largely unchanged for 66 years.

Even though the centralized deductions proposal would provide much-needed oversight, there are some major concerns, George Bull, head of Tax at Baker Tilly, told CNBC.com.

“If HMRC has direct access to employees’ bank accounts and makes a mistake, people are going to feel very exposed and vulnerable,” Bull said.

And the chance of widespread mistakes could be high, according to Bull. HMRC does not have a good track record of handling large computer systems and has suffered high-profile errors with data, he said.

The system would be massive in terms of data management, larger than a recent attempt to centralize the National Health Service’s data, which was later scrapped, Bull said.

If there’s a mistake and the HMRC collects too much money, the difficulty of getting it back could be high with repayments of tax taking weeks or months, he said.

“There has to be some very clear understanding of how quickly repayments were made if there was a mistake,” Bull said.

HMRC estimated the potential savings to employers from the introduction of the concept would be about £500 million ($780 million).

But the cost of implementing the new system would be “phenomenal,” Bull pointed out.

“It’s very clear that the system does need to be modernized… It’s outdated, it’s outmoded,” Emma Boon, campaigner manager at the Tax Payers’ Alliance, told CNBC.com.

Boon said that the Tax Payers’ Alliance was in favor of simplifying tax collection, but stressed that a new complex computer system would add infrastructure and administration costs at a time when the government is trying to reduce spending.

There is a further concern, according to Bull. The centralized storage of so much data poises a security risk as the system may be open to cyber crime.

As well as security issues, there’s a huge issue of transparency, according to Boon.

Boon also questioned HMCR’s ability to handle to the role effectively.

The Institute of Directors (IoD), a UK organization created to promote the business agenda of directors and entreprenuers, said in a press release it had major concerns about the proposal to allow employees’ pay to be paid directly to HMRC.

The IoD said the shift to a real-time, centralized system could be positive as long as the burden on employers was not increased. But it added that the idea of wages being processed by HMRC was “completely unacceptable.”

“This document contains a lot of good ideas. But the idea that HMRC should be trusted with the gross pay of employees is not one of them,” Richard Baron, Head of Taxation at the IoD, said in the release.

A spokesperson for Chancellor of the Exchequer George Osborne was not immediately available for comment.


Written by David Frederick

September 21, 2010 at 8:54 AM

Posted in Business, Economics

Obama Added More to National Debt in First 19 Months Than All Presidents from Washington Through Reagan Combined, Says Gov’t Data

I dont event know what to say to this. One word comes to mind. Bankruptcy! Note, this information comes from the Federal Government not a political party!!!

-DF

Obama Added More to National Debt in First 19 Months Than All Presidents from Washington Through Reagan Combined, Says Gov’t Data

By Terence P. Jeffrey, Editor-in-Chief


President Barack Obama speaks in Seattle on Tuesday, August 17, 2010. (AP Photo/Carolyn Kaster)

(CNSNews.com) – In the first 19 months of the Obama administration, the federal debt held by the public increased by $2.5260 trillion, which is more than the cumulative total of the national debt held by the public that was amassed by all U.S. presidents from George Washington through Ronald Reagan.

The U.S. Treasury Department divides the federal debt into two categories. One is “debt held by the public,” which includes U.S. government securities owned by individuals, corporations, state or local governments, foreign governments and other entities outside the federal government itself. The other is “intragovernmental” debt, which includes I.O.U.s the federal government gives to itself when, for example, the Treasury borrows money out of the Social Security “trust fund” to pay for expenses other than Social Security.

At the end of fiscal year 1989, which ended eight months after President Reagan left office, the total federal debt held by the public was $2.1907 trillion, according to the Congressional Budget Office. That means all U.S. presidents from George Washington through Ronald Reagan had accumulated only that much publicly held debt on behalf of American taxpayers. That is $335.3  billion less than the $2.5260 trillion that was added to the federal debt held by the public just between Jan. 20, 2009, when President Obama was inaugurated, and Aug. 20, 2010, the 19-month anniversary of Obama’s inauguration.

By contrast, President Reagan was sworn into office on Jan. 20, 1981 and left office eight years later on Jan. 20, 1989. At the end of fiscal 1980, four months before Reagan was inaugurated, the federal debt held by the public was $711.9 billion, according to CBO. At the end of fiscal 1989, eight months after Reagan left office, the federal debt held by the public was $2.1907 trillion. That means that in the nine-fiscal-year period of 1980-89–which included all of Reagan’s eight years in office–the federal debt held by the public increased $1.4788 trillion. That is in excess of a trillion dollars less than the $2.5260 increase in the debt held by the public during Obama’s first 19 months.

When President Barack Obama took the oath of office on Jan. 20, 2009, the total federal debt held by the public stood at 6.3073 trillion, according to the Bureau of the Public Debt, a division of the U.S. Treasury Department. As of Aug. 20, 2010, after the first nineteen months of President Obama’s 48-month term, the total federal debt held by the public had grown to a total of $8.8333 trillion, an increase of $2.5260 trillion.

In just the last four months (May through August), according to the CBO, the Obama administration has run cumulative deficits of $464 billion, more than the $458 billion deficit the Bush administration ran through the entirety of fiscal 2008.

The CBO predicted this week that the annual budget deficit for fiscal 2010, which ends on the last day of this month, will exceed $1.3 trillion.

The first two fiscal years in which Obama has served will see the two biggest federal deficits as a percentage of Gross Domestic Product since the end of World War II.

“CBO currently estimates that the deficit for 2010 will be about $70 billion below last year’s total but will still exceed $1.3 trillion,” said the CBO’s monthly budget review for September, which was released yesterday. “Relative to the size of the economy, this year’s deficit is expected to be the second-largest shortfall in the past 65 years: At 9.1 percent of gross domestic product (GDP), that deficit will be exceeded only by last year’s deficit of 9.9 percent of GDP.”

Written by David Frederick

September 9, 2010 at 8:43 AM

Posted in Economics, General

The Scariest Jobs Chart Ever

This is not a promising picture, and Obama’s latest $50B in infrastructure (trains, planes and roads) investment wont put the majority of American’s back to work. Let’s keep spending money we don’t have! Brilliant. Check this out if you dare.

-DF

The White House Attempts To Refute The Scariest Jobs Chart Ever
By: Joe Weisenthal

Read more: http://www.businessinsider.com/the-white-house-attempts-to-refute-the-scariest-jobs-chart-ever-2010-9#ixzz0ynXu3kYf

You’ve certainly seen the chart that we’ve dubbed The Scariest Jobs Chart ever, which shows how meager the jobs recovery has been since the start of the recession, compared to other recessions.

Here it is, in case you’ve forgotten what it looks like (via Calculated Risk).

According to The White House, this is the wrong way to look about it.

A post on the White House blog offers up a chart they’d prefer you to use.

The idea: If you line up employment at the economic troughs (i.e. the beginning of the recovery), then you’ll see that this recession is above average in terms of the time it took to return to job creation.

Here are the two charts they show:

chart

Image: The White House

chart

Image: The White House

First off, neither of the recoveries are nearly as impressive as 1982, but that’s okay, and well known.

Secondly, only the second chart — hours of production — shows a return to growth that’s at all above “trend” if trend is defined as merely the 1991 and 2001 recessions.

What’s more increased hours of production is consistent with an economy that’s hiring less, but getting more productivity (up until recently) from the existing workforce.

But beyond that, we don’t think you can just ignore the steepness of the decline leading into the trough. We may be creating employment hours faster than in 1991 and 2001, but the decimation just wasn’t nearly as bad.

In the end, with this stuff, you can torture the data to get any story you want. But the jobs situation really is as bad as advertised, and The White House’s attempt to refute this actually just emphasizes that.

Read more: http://www.businessinsider.com/the-white-house-attempts-to-refute-the-scariest-jobs-chart-ever-2010-9#ixzz0ynYPfEgY

Written by David Frederick

September 6, 2010 at 8:18 PM

120 Days to Go Until the Largest Tax Hikes in History

As an advocate of small business, I wanted to share some disheartening, disastrous and upcoming issues that will affect you and your business. Check this article out from Ryan Ellis.

-DF

In just 120 days, the largest tax hikes in the history of America will take effect.  They will hit families and small businesses in three great waves on January 1, 2011:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.  These will all expire on January 1, 2011:

Personal income tax rates will rise.  The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).  The lowest rate will rise from 10 to 15 percent.  All the rates in between will also rise.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.  The full list of marginal rate hikes is below:

– The 10% bracket rises to an expanded 15%

– The 25% bracket rises to 28%

– The 28% bracket rises to 31%

– The 33% bracket rises to 36%

– The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to the single level.  The dependent care tax credit will be cut.

The return of the Death Tax. This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.  A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The top capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The top dividends tax rate will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare.  Several will first go into effect on January 1, 2011.  They include:

The Tanning Tax.  This went into effect on July 1st of this year.  It imposes a new, 10% excise tax on getting a tan at a tanning salon.  There is no exemption for tanners making less than $250,000 per year.

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Brand Name Drug Tax. Starting next year, there will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers.  This tax, like all excise taxes, will raise the price of medicine, hurting everyone.

Economic Substance Doctrine. The IRS is now empowered to disallow perfectly-legal tax deductions and maneuvers merely because it judges that the deduction or action lacks “economic substance.”  This is obviously an arbitrary empowerment of IRS agents.

Employer Reporting of Health Insurance Costs on a W-2.  This will start for W-2s in the 2011 tax year.  While not a tax increase in itself, it makes it very easy for Congress to tax employer-provided healthcare benefits later.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired.  The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million.  These families will have to calculate their tax burdens twice, and pay taxes at the higher level.  The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000.  This will be cut all the way down to $25,000.  Larger businesses can expense half of their purchases of equipment.  In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place.  The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others.  Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available.  Tax credits for education will be limited.  Teachers will no longer be able to deduct classroom expenses.  Coverdell Education Savings Accounts will be cut.  Employer-provided educational assistance is curtailed.  The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Until this year, a retired person with an IRA could contribute up to $100,000 per year directly to a charity from their IRA.  This contribution also counts toward an annual “required minimum distribution.”  This ability will no longer be there.

Read more: http://www.atr.org/days-thebr-largest-tax-hikes-history-a5370##ixzz0yTa0UW2U

Written by David Frederick

September 3, 2010 at 10:19 AM

New Podcasts and Articles posted!

Hi Folks,

Just posted some new podcasts and articles to the http://www.instituteair.org and iairconsulting.com websites. Check it out!

-DF

Written by David Frederick

September 2, 2010 at 12:26 PM

Posted in General, iAIR