Tax Code Reform, So What Did We Get?

Written by, Samuel K. Burlum, Investigative Reporter, and author of The Green Lane, a syndicated column, Published on 8/2/2018, a SamBurlum.com Exclusive

Tags: Business, Community, Economy, Entrepreneurship, Finance, Small Business, Tax Policy

Source: With Tax Code Reform signed into law, there are a number of changes to be aware of. We review the biggest changes to the tax code that have been made since the last set of revisions that were made in 1986.

The largest reform to the current tax code since 1986 was enacted into law at the end of 2017. This reform has come with mixed reviews by skeptics, who sought more resolve to the existing tax code laws. Most of the adjustments to the tax code have been on the personal tax side of the books. Some of the most noticeable changes include:

  • The Child Tax Credit increasing from $1000 to $2000, so families can benefit from this adjustment, which leaves more of the wage earner’s money on the table at home.
  • A significant change to the Individual Tax Rate and Bracketing. Prior to the change, there were six specific brackets in which personal income tax was rated. The 2017 tax code reform has added additional brackets with adjustments to existing brackets. These changes were minimal, however for some wage earners, the changes can mean having a few extra dollars in their pockets for their families.
  • An increase in the standard deduction from $12,700 to $24k for married filing joint couples. The standard deduction has increased from $6350 to $12,000 for single filers. The head of household deduction has increased from $9350 to $18,000.
  • Good news for the small business owner. Small business owners that operate pass through income corporations (S Corps or LLC) were formally taxed at the individual tax brackets. These same pass through corporations now receive an added twenty percent deduction bonus. A benefit for C-Corporations has also been worked into the bill. C-Corporations will see a reduction from a thirty-five percent tax rate to twenty-one percent flat, giving corporations the largest adjustment to corporate tax in decades. In addition to a change in corporate tax rates, the Alternative Minimum Tax (AMT) for corporations has been repealed.
  • Changes to personal exemption allowances. Formerly, the personal exemption allowance was up to $4050 per person, however since the new tax code is in place, this exemption has been eliminated. To compensate for this, an increase in the standard deduction has been implemented.
  • A cap in SALT (state and local tax) deductions. Some property owners may not fare well in the new tax code deal. State and local income tax was formerly deductible prior to tax code reform; however, in accordance with the new tax code, this deduction is now capped at $10,000 in total between both property and income taxes. Some say this hurts property owners who relied on the former allowance to offset the pain they felt when paying heavy burdens on their state and local property taxes.
  • Adjustments to the mortgage interest deduction. In 2017 it was allowable to deduct the interest up to $1 million dollars on your main residence. The new code drops this deduction to $750,000 for new loans that are generated in 2018 and forward.
  • Added benefit for individuals that have 401ks. Such investors have plenty to be happy about. As the new tax code specifies, the cap on employer-sponsored 401k programs has been increased by $500. This also allows for anyone over the age of 50 to contribute up to $24,500 into their 401k. On the other side of the coin, deductions for IRA’s will be phased out. However, some exemptions on this plan will still be allowed. Other adjustments and phase outs include Roth IRA exemptions and deductions.
  • An increase in Earned Income Tax Credit maximums. This tax code rule was increased to assist families with multiple children. Though the increase is not a landmark, the modest increase was made to help struggling families.
  • An unexpected surprise in the area of gifting. An individual can now provide a gift up to $15,000 to any one other person without the receiver having to deal with a tax liability.
  • An increase in the maximum Social Security taxable earnings amount, which affects employees, employers and the self-employed.

So which states benefited and which states were most affected by the new tax code reform? For low income families, the states that receive the least amount of benefit include Alabama, Pennsylvania, Montana, Wyoming, and Vermont.  States that received the most benefit for low income families include District of Columbia, Arizona, Nebraska, Texas, and California.

As it relates to middle class family demographics, the states that received the most benefit include Alaska, Nevada, New Mexico, Delaware, and California. Middle class families on the other side of the spectrum in the states of Maine, Maryland, Connecticut, West Virginia, and Arizona lose out on this round of tax code reform.

For high income families, the states of Alabama, Tennessee, Wyoming, Arkansas, and Ohio gain the most from tax code reform. The wealthiest in the states of Mississippi, California, New Jersey, New York and Arizona stand to lose the most with the new tax code reform bill.

To find out how the tax code reform directly affects you, refer to your tax attorney or certified public accountant for additional information. This article was not intended to provide tax or financial advice, but to provide awareness by highlighting some of the most noticeable tax code changes.

Samuel K. Burlum is an Investigative Reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Samuel K. Burlum is also a career entrepreneur, who currently lends his expertise as a Consultant firm to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of “The Race to Protect Our Most Important Natural Resource-Water,” and “Main Street Survival Guide for Small Businesses.”

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“It must be a Triangle Scheme…”

Written by, Samuel K. Burlum, Investigative Reporter and author of The Green Lane, a syndicated column, Published on 7/11/2018, a SamBurlum.com Exclusive

Tags: American Free Enterprise, Business, Direct Marketing, Multi-Level Marketing, Network Marketing, Opportunity, Small Business, Sales

Source: One of the most common at-home business opportunities is the direct sales network marketing of products and services offered by a parent organization. Many of these network marketing companies utilize a multi-level marketing and compensation structure as their business model. Multi-level marketing has received a bad rap, where advocates and adversaries share their pros and cons about this popular and controversial business model. So what are some of the controversies of the industry?

In a recent discussion with an individual starting out their entrepreneurial career, they expressed the options of their future career pathway. Expressing their options, they said, “I am open to many types of business and career opportunities, as long as its not one of those triangle schemes.” Sounds familiar?

Chances are, you’ve experienced (at least once)… a friend, family member, or neighbor who approached you with “The opportunity of a life-time”… to get in on a business that has unlimited growth. What happens when the commentary sounds so convincing (or you just want to appease your friend), and you agree to view a video or attend a meeting where a presentation related to the product and opportunity are explained? The video, full of luxury lifestyle perks and energized individuals sharing their rags to riches stories, piques your interest and entices your human nature. Before you know it, you agree to get involved and become one of the network marketers for the parent company.

Then reality sets in. Months goes by of attending meeting after meeting with potential prospect after prospect; and you become discouraged and doubtful that the lavish lifestyle advertised could never be yours. You decide not to write one more check for an auto-ship product, marketing materials, or to attend any future events. After investing a few hundred or even a few thousand dollars, and your time, you decide to call it quits after the latest prospect says “no” to the product line up or to the business opportunity. Because “it” did not work out in the time frame of your personal expectation, you think it’s one of those “pyramid schemes.”

After a self-evaluation, you come to your own perceived conclusion that the multi-level marketing opportunity was nothing more than hype. It was the people at the top that were making all the money, and all of the flash and excitement was nothing more than showmanship to steal your hard-earned money, free labor, and network connections. But is this really true about most multi-level marketing business opportunities?

According to Black’s Law Dictionary, the legal definition of a pyramid scheme is a scam which is usually carried out on the general public, by making promises of high returns in a short period of time; a system that is based upon paying off the early investors first and the long term liabilities later on. Similar to a Ponzi scheme, one person recruits another person to “invest” into the scheme, then that new recruit duplicates with new recruits, and so on. Usually, each person pays a fee to join, and the only people to make money are the very first people to get involved. These schemes involve no product ownership, no defined compensation plan, and usually crumble under their own weight.

Many people, when hearing of multi-level marketing opportunities, think of the triangle or pyramid scheme, because there is usually an up-front cost or investment for the new recruit. What makes the multi-level marketing business opportunity unlike the pyramid scheme is that the new recruit’s initial membership fee is pledged toward an initial commitment to purchase the parent’s company’s products. At the end of paying the fee, the new recruit has product or service in their hand in exchange for money.

The perception that all multi-level marketing opportunities are pyramid schemes derives from the fact that many multi-level marketing companies focus most of their attention on having new network marketing recruits build out a “downline”, and when you review the downline behavioral organizational chart, they do, in fact, look like a pyramid. What many people don’t know, however, is that a recruit is often not required to build a downline. A recruit can choose to solely focus on product or service sales. Unlike Ponzi or pyramid schemes, whose recruits’ only hope in making anything is based on the recruitment of new investors, multi-level marketing provides earnings within the compensation plan via product sales commissions.

Another common belief is that only people at the top of the triangle in multi-level marketing make all of the money, leaving those at the bottom nothing for their financial investment, time, or labor. There are two sides to every multi-level marketing company. The executive-administrative side to the company is the parent organization that either developed, manufacturers, and/or distributes the product; and the sales development side to the company, or the multi-level marketing side of the business, promotes both the product lines and the business opportunity. The corporate side can be owned by one founder or by a group of founders; however this same principle would apply to any large or small business or corporation. And yes, for their hard work and investment, they would gain a return on all of the businesses positive gains.

The compensation plan written for the multi-level marketing side of the business is usually developed so that every person who enters the business has the same opportunity and the exact same compensation plan afforded to them as everyone else. In most cases, network marketers that have large downlines make more money than those with smaller downline organizations. This has not always been the result of the direct efforts or successes of an individual, but of the efforts and successes made by members in their downline organization.  In order to dispel this issue, many multi-level marketing firms have begun to cap how much benefit a network marketer can receive from their downline and/or cap how many levels deep compensation will be paid on. Within some multi-level marketing organizations, some of the very first network marketers to sign up in the company are now making less money, while others in their downline are earning more.

Many individuals also perceive that the parent company offering the product(s) and business opportunity abuses and uses people without compensating them for their efforts. However, many network marketing companies do have decent compensation plans in place. Network marketers are compensated for product sales, similar to other sales positions in traditional companies, minus receiving a “base salary” while building a customer base. Ultimately, a network marketer is confined to a compensation plan that only pays when sales are made and new distributors are recruited and assisted in reaching sales goals.

The outlook that multi-level marketing businesses do not work is a belief that is not in line with the financial results that have proven themselves over time. In 2015 alone, network marketing business opportunities grossed $36.12 billion dollars in retail sales just in the United States alone.

Multi-level marketing organizations have been viewed as cultish or a form of religion. The industry of multi-level marketing is far from a cult or religion; but, as many small businesses or large corporations do, most of these organizations do possess a strong sense of company culture, which is a reflection of their core beliefs, values, code of ethics, goals, mission, and vision.

If you are still skeptical of multi-level marketing business opportunities, then I encourage you to continue to perform additional research or to stay tuned for my follow-up article, “It’s a Pyramid Scheme.”

Samuel K. Burlum is an Investigative Reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Samuel K. Burlum is also a career entrepreneur, who currently lends his expertise as a Consultant to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of “The Race to Protect Our Most Important Natural Resource-Water,” and “Main Street Survival Guide for Small Businesses.”

As Seen on TV

Written by: Samuel K. Burlum, Investigative Reporter and author of The Green Lane, a syndicated column, Published on 7/2/2018, a SamBurlum.com Exclusive

Tags: Advertising, Business, Entrepreneurship, Marketing, Media, Sales

Source: Just when you thought the deal could not get any better, just wait, there’s more…call now and your order will be doubled… “As seen on TV,” we review some of the most successful infomercial campaigns and why they did so well.

We have all experienced at some point in our lives, while flipping through the television channels, that moment when we came across a presentation of the latest and greatest widget, gadget or contraption, with a deal we just could not pass up. From products like OxiClean and the George Forman Grill, to exercise equipment and other inventions that seemed like no one would ever buy, infomercials have catapulted sales and brand recognition for a number of inventors and marketers, resulting in millions of dollars in returns on their ideas and inventions.

Not all infomercials or products reach the success of the Thigh Master or the Snuggly, however each product that is pitched on television infomercials has a life cycle that assures the product continues to get exposure. As of recent, specialty retailer stores have sprung up to showcase product offerings once seen on television. Walmart and Target have even dedicated shelf space to offer products that were once pitched on infomercials a second chance to connect with consumer audiences.

Some of the most successful infomercial products include the exercise device called the Thigh Master. The Thigh Master was a simple contraption made up of two metal loops joined by a spring mechanism in the middle that was designed to assist consumers in toning legs, hips, and waist. The pitch was that a consumer could operate the Thigh Master while attending to other activities such as reading, watching television (other infomercials), or just about any other activity that did not require the use of one’s legs at the time of using the Thigh Master. Thigh Master achieved huge success in sales, grossing over $100 million. The Thigh Master incorporated the celebrity endorsement of television personality Suzanne Somers to help pitch the device to “would be” consumers.

Another well-known infomercial product that has transitioned to shelf space at your local retailer is OxiClean. OxiClean was pitched by former Billy Mays, who would claim, “I’m not yelling, I’m projecting,” as he would hook viewers to stay tuned because, “but wait, there’s more.” Billy May’s unique raspy voice and the multitude of scenarios presented on how OxiClean would solve every cleaning situation as the latest miracle for your household, grabbed consumers to gross over $500 million dollars in sales to date. Part of the success of OxiClean is its transition from infomercial to its placement on shelves at selected retailers.

“Set it and forget it,” was the tag line for the device that would promise steamed vegetables piping hot; meats cooked to be tender and succulent. The Ronco Rotisserie Oven also known as the Showtime Pro, steamed rolled its way to the top by having the inventor and marketer Ron Popeil invite celebrity guests to accompany him in infomercial sessions. The Showtime Rotisserie raked in over $1.2 billion dollars for Popeil, putting Ronco at the top of infomercial success. The oven is still available today, and continues to be sold on television, Amazon, and in selected retailer outlets.

Richard Simmons not only had you Sweatin’ to the Oldies and managing your meals; he had consumers dole out over $200 million dollars for his fitness programs, making Simmons one of the wealthiest fitness gurus ever. Sweatin’ to the Oldies was a series of exercise regimens coupled with music to entice baby boomers to want to engage into a heathier life. Over 20 million of these programs were sold. Simmons targeted the “regular” person as part of his campaign, which attracted tens of millions of out of shape people that might have never taken the time out to visit a gym or hire a personal trainer. The business plan worked, branding Simmon’s as a fitness expert and television personality for life.

Then there was the blanket you could wear called the Snuggie. If you doubt anyone would spend their money on this product, you are highly mistaken. Tens of millions of Snuggies have been sold. In essence, this body-length blanket with sleeves was advertised that it could be worn by anyone, anywhere, anytime, and even boasted that it would bring people closer together if they all had a Snuggie. Sadly, it did the opposite, as the Snuggie was designed for a single person to use at a time. The Snuggie would rake in over $400 million dollars can still be found in selected retailers, on the internet, and on the infomercial, which still airs from time to time.

The infomercial product industry is a multi-billion dollar per year industry, and since its inception, the infomercial product world has grossed over $250 billion dollars in sales to date. With the widespread use of additional digital media, television is not the only medium used in pitching a message to would-be consumers. Digital social media platforms allow for a plethora of video content to be made readily available and stream to almost any mobile device, bypassing the conventional television set.

It is estimated there are over 500 products that have been initially developed and marketed specifically for infomercials.

One of the largest companies in the infomercial product sector is Telebrands. Located in Fairfield, New Jersey. Telebrands is responsible for launching over a hundred products alone, and has been doing so since 1983.

Based on these metrics, you wonder why more products don’t go down the infomercial path. Not every product is a good fit. The more technical the product, and the higher the investment a consumer must make, the less advantageous it becomes for the product to be featured on an infomercial. Typically, products marketed on infomercials are similar to the impulse buy at the register of a retailer; where consumers feel comfortable with the risk they are taking. And besides, most infomercials offer a risk-free money back guarantee.

Infomercials have been rumored to get a bad rap. Complaints from consumers include inferior or poor quality in the manufacturing of the product itself, or products that claim they will last a lifetime, but don’t. Some products seem so far-fetched that some people don’t believe they can actually function as advertised. As a result, the Federal Trade Commission has taken aim at infomercial marketers, bringing an average of five cases to court each year.

Some infomercials can be outright comical; as they might pitch a product’s suggested use or durability in situations that a consumer might never intend to use the product. When was the last time you purchased Tupperware to have an elephant stand on it? The next time you mock an infomercial, just remember it’s the inventor and marketing company that is getting the last laugh.

Samuel K. Burlum is an Investigative Reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Samuel K. Burlum is also a career entrepreneur, who currently lends his expertise as a Consultant to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of “The Race to Protect Our Most Important Natural Resource-Water,” and “Main Street Survival Guide for Small Businesses.”

 

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