The cycle of taxation begins...

  The latest budget out of the Mayor’s office has business and homeowners on edge. The budget has allocated more money on housing and labor contracts with the intentions of increasing the economy by an average of 2.2% over three years. Where is the money coming from you ask? An increase in property taxes. Businesses will be most damaged, as they will have an increase in expenses such as rent, as the landlords will try to make up for tax increases. Mayor Bill de Blasio decided against an increase in people’s income taxes and opted to target the property owners. Either way, businesses will be affected. Higher taxes lead to higher rents for businesses, which leads to an increase in cost of goods and services to customers.


http://www.crainsnewyork.com/article/20140512/POLITICS/305119979/city-halls-spending-worries-business-interests

Sick Leave or Sickening Regulation?

 New regulation mandating paid sick-days for businesses employing five or more employees will take effect in April and will be affecting over 28,000 businesses in NYC. The new law calls for employees to allow employees to have five sick days throughout the year. Many business owners are worried employees will abuse this new privilege and also worried about the financial burden this will have on their businesses.

            Some businesses currently offer paid sick days throughout the year, however, most of these businesses are not retail stores employing five employees. Forcing business owners to have to pay a sick person and pay another employee for the additional work that has to be done seems heavy handed by the City. New York is claiming they are trying to help small businesses prosper in the weak economy. How is this happening when all they are doing is adding to the costs of running their businesses? Big companies are already swallowing up these small businesses daily forcing them to shut their doors. How does this new regulation help put a stop to that and help a small business prosper if all it is doing is forcing business owners to open up their checkbooks?

            Where are the small business owners expected to find this extra money. It is understandable to mandate a big business with 20 or more employees to have to obey by these regulations but is it fair to force a small business such as a café with 5-10 employees. It will surely eat into the profits as the employer is forced to virtually pay double for the sick persons work. Is implementing these new regulations a step in the right direction? It does benefit thousands of employees but is that marginal benefit worth it to the employees if the business is forced to shut down? Which is more beneficial to society a few sick days or more small businesses providing jobs in this tough economy?

Get used to the Peer to Peer economy

Recently, across the country as well as in New York City, the peer-to-peer economy, also known as the sharing economy, has flourished. New start-ups have been created in which New Yorkers can rent out their homes to visitors, give rides to people with their own cars, and even host dinners for travelers looking to experience something new-all for a fee, of course. Peer-to-peer startups are bringing in a significant amount of revenue to the city’s economy; and yet the city continue to serve as hindrances with its outdated regulations .

 

These industries “…combine smartphone applications and cloud-computing services with the belief that sharing conserves resources, builds community and promotes economic development.” Sidecar and Relay Rides are companies that function as personalized versions of taxi-service, have recently had their service halted due to regulations by the Taxi and Limousine Commission. The Commission assures that it doesn’t have a problem with neighborly car-pooling, but that these companies are operating as unregistered taxi services, which is illegal. Similarly, the Department of Health has notified EatWith, a company which lists various home dinners tourists can attend in over twenty countries, because “anyone serving meals for money is required to have a permit.”

It is obvious that the city is not interested in working with these Peer to Peer companies; which is unfortunate because the demand of these peer-to-peer industries is increasing. The city should be spending less time impeding the development of these innovative industries, and should spend more time fostering their growth. 

 
http://www.crainsnewyork.com/article/20130825/ECONOMY/308259963

The consumer loses when Big Business and government team up against the new guy on the block

 

A new alternative for tourists looking to stay in New York City while on vacation is popping up more frequently around the city: New York homeowners are now renting out their homes and apartments to visiting tourists at very reasonable rates.   The biggest company providing this service is Airb&b.  This innovative and inventive company is providing a viable option for tourists looking to stay in New York City without dipping too much into their wallet. One would think this idea would be championed by the city and our mayor who looks for every opportunity to bring revenue and tourism into our city. However, the opposite is in fact happening. The NYC Office of Special Enforcement, which is supposed to focus on quality of life complaints, has been utilized by the hotel industry to investigate “illegal hotels”.  The hotel industry views these rented-out apartments as “unfair competition” but what exactly is unfair about these companies?

The main issues that the hotel industry and the city have with this “shadow industry” are that the apartment-renters do not pay taxes; even though they have provided no proof of this claim.  Anyone who has visited Airb&b’s website, can clearly see that the company is the entity that handles the exchange of money and keys.  If any of the hotel industry’s claims are true, the IRS or NYS Department of Tax and Finance would easily be able to verify tax cheats. 

The hotel and the city have also indicated that the rentals of these apartments violate public safety laws. The city argues that hotels have set evacuation plans and protocol for handling emergencies that these problematic “illegal hotels” do not.  However, the city overlooks the fact that the whole reason for evacuation plans in a hotel is due to volume of people who are unfamiliar with the premises.  In an apartment rental, you are not dealing with the same volume of individuals.  Furthermore this problem can easily be rectified by mandating evacuations plans with each rental thereby alleviating the City’s fear of evacuation plans.     

As the hotel industry seeks to bring down these rental companies, one must consider who is really in the wrong. Is it right for the city to hinder the success of new businesses simply because the monopolist hotel industry feels threatened? Or should the city look to write legislation to support this budding, innovative industry? 

 

http://www.crainsnewyork.com/article/20130819/HOSPITALITY_TOURISM/130819909

Unpaid Internships: Exploitation or Valuable Opportunity?

Judge William Pauley, who sits on the United States District Court for the Southern District of New York, ruled that Fox Searchlight’s use of interns in the production of the movies “Black Swan” and “500 Days of Summer” violated minimum wage and overtime laws. 

While this decision is specific toward Fox Searchlight case, it has general implications that may put students and small business on a dangerous path.  From very early on in my college career, I took on many free internships.  I worked for a small law firm, a non-profit agency, and various other sized corporations.  At each position, I was able to do hands on work and learn about the field that I would eventually professionally enter.  From many of these internships, I still have contact with people I interned under and have developed a mentor relationships.  I can not imagine that I would be given these same opportunities if these small companies or non-profits were forced to then pay young college student. 

 

Furthermore, I would be curious to see if these same rules would be applied to government positions.  How many interns do the local city D.A.'s offices take, the U.S. Attorney's office, NYC Corporate Counsel? 

 

As a solo small firm, I was looking forward to having an intern in the office.  Someone I could mentor to one day to become my colleague.  It is how I learned to be a young attorney, and I believe it is a proven method.  However, this ruling gives me pause.  Especially for summer interns, who would normally take a 9-5 position in my office.

 

If the government pursues this ruling and begins enforcing minimum wages for internships, you may see more young adults without work experience trying to get a job in an already competitive market.  In the end, this ruling benefits absolutely no one.  

 

 

The NYC Streets where $10.00 is the most you can charge...

There was an interesting article in the WSJ this week that caught my eye.  "Good News for NYC Newstands?  Price caps could Rise."  The article, which I am attaching below, explains how the City Council is taking up a bill that would raise the cap on what a newsstand could charge for items from five dollars to ten dollars.

Looking at the article at first glance it seems like what is the big deal with such a small amount of money.  But, after a second read, am I the only New Yorker that doesn't understand why the city should regulate a newsstand?  Here we are in the greatest capitalistic city in the world and we are telling people that open up newsstands they are only allowed to sell items that can be priced under $10.00

Anyone can see why sidewalk newsstands are down from "nearly 1,600 sidewalk kiosks in the 1950s, compared with about 300 now," according to the NYC Newsstand Operators Association.  In a city where most cups of coffee cost more than $5.00, how could you expect a newsstand to make a profit where they are capped at $5.00 an item.

While I applaud the city council for understanding the rise in prices of items and raising the cap to $10.00 why not just get rid of the cap all together.  These small businesses — no bigger than 72 square feet, under city regulations, should be able to sell whatever the general public needs when walking down the streets at a market price.  The market would cap most of the products anyway because no rational person is buying expensive products from a newsstand.  But why mandate a price that you will probably have to change in another 5 years?

http://online.wsj.com/article/APc9ec23cfe19f4373a430ab266aac5127.html?mod=wsj_share_tweet   

Why would any small business want to grow?

Many New York City small-business owners will face a trio of new government regulations in the pipeline that could hit businesses all at once: an increase in the minimum wage, paid sick leave, and the Affordable Care Act (also known as Obamacare).

Out of the three, let us take a look at the paid sick leave. Under the proposed bill, the NYC Department of Health (DOH) would require small businesses (more than 5 employees) to give their employees at least five sick days a year. Business would be required, upon demand, to turn over their employment records to DOH investigators. If the Department of Health finds that an employer fired a worker for calling in sick too many times, they have the right to be compensated for at least $5,000. The proposed rules don’t require employees to provide much besides their word. An employer may not demand a physician’s note until the third day out – and of course, the employer cannot withhold pay if the worker fails to produce even such minimal documentation.

This bill will certainly hurt small business more than any other business. While I understand the desire of the government to protect workers who may fall ill during the work week, what if there was a better way to do it. What if the Government provided incentives for these types of programs for small businesses? Why not provide a tax break to a small business that create a sick pay program. It helps both sides. As you can see with the chart below, the cost of hiring one employee continues to rise, which is preventing business owners from hiring.





http://www.theepochtimes.com/n2/united-states/small-businesses-feeling-the-squeeze-in-new-york-370295.html