Explaining MRA

Traditional IRA

You can open a traditional IRA as long as you have earned income and are under age 70 1/2. Contributions are tax deductible and you may contribute up to $5000 per year (as of 2008). Earnings are not taxed as long as they remain within the account. After age 59 1/2, withdrawals are subject to regular taxes. Early withdrawal is subject to taxes and a 10 percent penalty unless it qualifies as an exception under IRS rules (for large medical expenses, purchase of a first home or certain educational expenses) or in the event you are disabled or have inherited the IRA.

Roth IRA

You may contribute $5000 per year (as of 2008) to a Roth IRA, but cannot deduct the money from your taxes. Anyone with earned income can open a Roth IRA with no age restriction. After 5 years or age 59 1/2, whichever comes first, you may withdraw earnings without penalty and they are not subject to federal taxes. Contributions can be withdrawn at any time. The exceptions that allow early withdrawal are similar to the traditional IRA, except that withdrawals for buying or repairing a first home are limited to a total of $10,000.

MRA

The legislation would provide manufacturers with the option of establishing a manufacturing reinvestment account (MRA), similar to an individual retirement account (IRA), at a local community bank, and to make annual pre-tax contributions into these accounts of up to $500,000 over a period of seven years.

-Hugh F. McCann Jr.

Help Us Pass the MRA Bill in Congress

· Extend the Bush era tax cuts for 2 years for incomes up to $1million dollars

· Pass MRA now

MRA is a perfect offset for smaller manufacturing companies that are the backbone for the U.S. supply chain and who face the prospect of a 39.6% tax rate reset. The majority of companies in this category have less than 500 employees.

Profit should not be a dirty word. Most business models are built to throw off 4-8% pre-tax profit. Not an unreasonable margin for a company with a headcount of 50 employees and $5,000,000 in sales. The current upper 35% marginal rate confiscates earned income and cash flow that could be better deployed and re-invested. Business owners understand how to grow their companies. We do not need the government to compete with us for our working capital.

New cutting edge capital equipment can easily cost $200-700,000. Debt service at this level makes for a lot of sleepless nights particularly during wild swings in the economy and government regulation uncertainty.

As companies win back global market share, payrolls will eventually grow and some business owners may commit to expand their manufacturing footprint. New brick and mortar projects are the perfect answer for cities and communities facing tepid local free market investment.

MRA is a smart, optional, re-investment strategy to help boost U.S. manufacturing sector competitiveness in the global marketplace.

Over time, if we are patient, disciplined and focused, re-investment will lead our economic recovery.

Let’s get this passed in the new congress. Seize this moment in history.

-Hugh F. McCann Jr.

Healthcare costs will creep up, forever, because of normal economic inflation trends and new technological breakthroughs.

No one wants to remain sick or die. There is no way to “bend the cost curve” over the longer term. We should in fact embrace this growing demand, and through Smarter Tax Policy, pursue Universal Health Care for all, (with deductibles), and strive for the expansion of this sector.

This IS an economic engine and should be exploited!

An across the board national consumption tax will capture dollars which we can then redeploy back into the healthcare industry. This will drive demand, R&D, job growth and national economic prosperity. The demographics are ripe and the simple reality is we can not export our sick and aging population.
Attempting to conjure up ways to control a natural, national trend will be an exercise in futility. Instead, embrace this growing (business) sector and create new jobs.
Think about it!

Please visit this website to learn more about how we can grow our economy for the longer term.
We need a focused, disciplined, consistent and patient vision for our country. It starts with Smarter Tax Policy.

Happier New Year,

Hugh F. McCann Jr.

We require a disciplined, focused, patient, consistent and Smarter Tax Policy for the Industrial Sector.

Demand will remain anemic globally because people do not have any money. WE must prevent any further erosion to our manufacturing base to save jobs and then we must pursue policies to grab global market share through LEAN operational initiatives. HFMJR2010 is a path for reinvestment into our industrial base.

This is the best way to ensure that we SAVE and GROW jobs.
As the global demand increases we must grow our exports and to do that we must make world class products at a lower unit cost. Efficient capital equipment, lower energy costs and a healthy investment climate, with fair return on risk, will jumpstart our economy.
If businesses improve their global market share and profits, job growth will follow.

How to save and create new jobs: Industrial Sector Capital Re-Investment Policy

If we buy a new machine from a company in Ohio, CA, or NH, that is a good thing. If we stave off our current reality of losing market share (manufacturing jobs) to countries like China…that would be awesome. It has been said that every automotive manufacturing job creates 9 other jobs.
I believe this to be true. Conversely, lose a manufacturing job and things tumble out of control with additional ancillary job loss.

The neat thing about cutting edge capital equipment is it is the best way to become more efficient, productive and lower unit cost. With lower unit cost we will compete more favorably with China and garner greater market share = job growth! If we get busier making widgets, we will require more UPS and Federal Express pickups…..and so it goes.

Hugh F. McCann Jr.

Making the case for a National Industrial Sector Tax Policy Vision:

I have had occasion to take the train from Bridgeport to Baltimore for business trips and as I pass the backend of the cities and buildings along the route it is apparent that our industrial sector played a huge historical role in the growth of urban communities and our economy at large. As the train would click clack its way along the rail I would peer out the window and visualize what used to be vibrant industrial cities. Still visible are the painted billboards on the side of the brick walls of these aging industrial structures. Looking closer I can trace rusting dormant track extending past the loading docks that a century ago moved value added products, the outcome of applying human labor, to destinations throughout our country.

In our current reality, once productive industrial businesses are for the most part long gone and left in their place is an economic void. Around these pockets of despair and hopelessness are people searching for any means and opportunity to provide for their families. Lacking a secure job families break down from the financial pressure. Many end up in the prison system, undereducated and with little hope to ever live the American dream. This is an extreme waste of human capital. Maintaining a prison system is very expensive and the productive society ends up footing the bill with higher taxes. This is an example of unproductive tax policy. But it doesn’t end there. To fund the schools and services in our stressed out cities government imposes forever escalating taxes on home owners and surviving businesses, dampening investment and fueling a vicious economic downward spiral.
How do we reverse this trend?

In my view we must start with the notion that although taxes are required for the collective well being of society, some taxes are better than others. A smart tax policy is a wealth multiplier. A bad tax smothers the means of production. We need Smarter Tax Policy for the Industrial Sector.

Not everyone is qualified to run a Hedge Fund or be an Investment Banker. Most of us just need a good steady secure job in a factory.
www.helpformanufacturers.org

Our system has always been based on inflation, planned obsolescence, (waste/inefficiency), and the ability to leverage a perceived asset (borrowing). Once that perceived asset is "marked to market" or declines in value in real terms, there is no ability to borrow against the asset or, as it is today, loans become upside down.

When Social Security was first introduced 42 working people paid into the entitlement for every one person collecting the benefit. Today only 3 -5 people pay in.

My mother and father bought their home in 1959 for $31,000, a large sum of money. Today it is worth 25 times more but in inflated dollars.

We have run out of the ability to leverage unless we reinvent how we leverage.

Building “Green” 4 family homes may be a form of leverage. Buying a multi- family home with other family members may be a solution to leveraging immediate and extended family income.

Governments bonding debt is dangerous. It is like applying “Bondo” to a hole in a car. It just plugs a gap but there remains structural damage.

For consideration:

If no one applied to go to college for 10 years, what would happen to tuitions?

If we feed every family in Africa 4 meals a day and provided shelter, what would the birth rate in Africa be?

If Health Insurance is "free" would people shop around for the best price for services?

When demand drops or competition increases, prices will drop. We may experience what Japan is currently experiencing: deflation. And that would end our ability to leverage and dampen our capitalistic system. China has an authoritarian, centrally planned form of capitalism. The USA and other countries employ a democratic free market form of capitalism. The two are very different. The Chinese can manipulate trade and exchange rates to their benefit. Their fear is that the Chinese population, being very diverse and large, will be difficult to control if organic growth and exports slow down. They have a huge problem. And so does the world economic order.

The 1% consumption tax proposal I use in my web site, www.helpformanufacturers.org, is a way to have every American citizen, (and illegal visitors), become an investor and stake holder in our Health Care system. I am confident that all of us waste more than 1% on nonsense that contributes little or nothing to our well being. A lot of this junk comes from China.

The 1% would be linked to the GDP and will by definition provide additional funding as the economy expands. Businesses could then redeploy cash flow for re-investment within their business models. This is an example of Smart Tax Policy.

Hugh McCann