Is Tax Relief on the Way?

By Jim Stavis

     A few months ago Congress passed a huge corporate tax bill known as the American Jobs Creation Act. Next year it will serve to provide tax credits of 3% for U.S. production activities, and will rise to 6% in 2007 and 9% in 2010 when it is projected to cost $11 billion a year. The idea is to reward those enterprises that keep their manufacturing bases here in the United States versus those that have outsourced their products offshore.
     Canada had a similar manufacturing tax preference for nearly three decades but recently scrapped it by offering lower tax rates for all companies. In Canada it got down-right ridiculous. Quebec’s Mont Sutton ski resort argued that it deserved the tax break because it “manufactured” artificial snow and leased it to skiers. It lost its case as did radiologists who claimed to be “processing” X-rays. But a judge agreed with Burger King who claimed they qualified as manufacturers by assembling salads and broiling hamburgers.
     So which industries will get the tax break? Congress included a few that must have included some serious back-scratching such as mining, oil extraction and engineering. But alot was left to the imagination. For example the legislation says tangible products must be made in “significant part” in the U.S. without defining what that means. Since profit from the production of goods gets the tax break, but profit from the servicing of those goods doesn’t, the IRS will have to write all kinds of rules about the allocation of income and expenses. Many companies will have to keep two sets of books.
     There is lots of room here for companies and their accountants to get creative. And who’s to know anyway? In fiscal 2003 the IRS audited just 1 out of 182 corporate returns, down from 1 out of 52 in 1997. Prepare for a production profits boom.

Remember to Push Pause

By Jim Stavis

     We spend so much of our time going Fast Forward; The rest of the time we remain in a Play mode but occasionally we Rewind
Life is nothing more than a complicated VCR with time constantly flashing at you.
     Recently I had an experience that gave me a time to hit the Pause button. You know, the Pause button is the one you rarely push: the button that stops everything. I was recently visiting my daughter who is a freshman at the University of Wisconsin at Madison. My wife and I had been looking forward to this trip since it was our first chance to see our daughter in over three months. When I got off the airplane in Chicago, I realized that I was extremely winded and struggling to catch my breath. When we had landed in Madision, we went from the hotel directly to the hospital for me to be checked out. That was when I hit the Pause button. I was admitted to ICU immediately with a diagnosis of congestive heart failure. Now I am only a few months short of 50 years of age and found myself marooned in a strange hospital in a foreign city away from my doctors, family and friends. It also gave me time to Pause and think about the important elements of my life and in many ways how fortunate I really was. After a miserable week, I was released from the hospital and returned to my life in Southern California. I’m clearly not out of the woods yet with regards to my health, but the experience taught me the value
of Pause.
     I only hope that my life experience will inspire others to take time out of their busy lives to stop and reflect. Think about what is important and what is keeping you from achieving your goals. Think about how fortunate you are to get up each and every day, hopefully being around people you love and cherish. Life as a journey – Take some Pauses along the way.