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Got a tax credit you can't use? You can sell it

States spend billions on tax incentives for all kinds of business activity. Here’s one example of the growth in state tax credits: In the year 2000, only four states gave film tax credits. Now, almost 40 do.

Still, lots of businesses never rack up enough of a tax liability to actually use the tax credits states give them. Perhaps they’re an out-of-state film company with a low tax bill, or a nonprofit or start-up with none at all. One way for states to entice those groups is with transferable, or sellable, tax credits. So the secondary market for those credits is growing too.

To show you how sophisticated the market for buying and selling state tax credits is getting, let’s follow the path of an incentive named Betsy.

Okay, it’s actually "BETC", which stands for Business Energy Tax Credit – but it’s pronounced Betsy.

BETC is from Oregon. The state said to businesses there: "Invest in renewable energy or energy conservation, and you can get this tax credit."

Our BETC’s story starts at the Port of Portland, an economic hub that relies on a dredge, called  the Dredge Oregon, to clear navigation channels along the Columbia River.

The dredge was getting old.

“It wasn’t particularly environmentally friendly,” says Tatiana Starostina, the Port’s senior finance manager.

So the Port undertook a $20 million project to overhaul the Dredge Oregon’s engine, pump and generators. The Port says the overhaul will reduce the dredge’s greenhouse gas emissions by 40 percent.

To help pay for all this, the Port got a BETC from the state. But there was a wrinkle: “Well, because the Port is a government entity,” says Starostina, “obviously we cannot use the tax credit to its original purpose.”

The Port doesn’t pay taxes, so a tax credit doesn’t do much good unless it can monetize it.

“Monetize means we literally sell it,” says Starostina – at a discount, of course. Then the company that buys BETC gets to apply the full credit to its state tax bill.

“It would be like a Groupon,” says Rob O’Neill, the man the Port asked to sell BETC.

O’Neill is a partner with Moss Adams, an accounting firm that’s helped facilitate the transfer of over $500 million in state tax credits since 2007. He says the firms that buy larger tax credits, those worth more than $1 million, are typically Fortune 500 companies.

He also says the secondary market for tax credits is growing.

By some estimates, there are up to 200 state tax credits that are transferable or directly cashable (called refundable). Companies are selling their unused film credits, credits for historic preservation, job creation, renewable energy, even farmworker housing.

But O’Neill says, until now, the market’s been a bit of a black box.

“A lot of people were calling tax directors, and CFOs, and people they meet on the golf course, and try and sell them a tax credit,” he says. “And no one really had transparency with respect to the market.”

Now, O’Neill was preparing to list BETC on a new digital exchange, kind of like a Craigslist of tax credits. Buyers and sellers would be able to log in, click on Oregon, and then see BETC’s listing: a $647,190 credit available for 73.6 cents on the dollar.

Then, at the last minute, BETC sold the old fashioned way, off-exchange. O’Neill got a call from “a large, public, transportation equipment manufacturer.”

He described the buyer on the condition it not be named.

Still, O’Neill wants to nudge more tax credit business online. Moss Adams is one of at least half a dozen companies starting private exchanges through a platform called The Online Incentives Exchange, which also hosts a new public exchange.

“What’s critical is to bring the tax credit market into the modern era,” says OIX’s co-founder Danny Bigel.

Rob O’Neill agrees. “Everything’s moving to the web, and so I think it’s just a matter of time before the business community starts to accept that this is the way credits will transfer in the future,” he says.

Meanwhile a company with almost $2 billion in revenue gets a deal on a state tax credit. The Port of Portland gets to use BETC’s proceeds for its dredge project. Oregon achieves its energy efficiency goal, although it does lose more than half a million dollars in tax revenue from a business that might not need public help.

That’s all from the path of one little tax credit in a market of incentives worth billions.

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Doh! FXX will air 552 episodes of The Simpsons

In a crowded cable marketplace, FXX is trying to make a name for itself with a little help from Homer Simpson. 

The fledgling cable channel bought the syndication rights to The Simpsons, and on Thursday, it kicks off a 12-day marathon of 552 Simpsons episodes.

In September, FXX will run the episodes regularly, except for those getting their first run on FOX. FXX will also launch an app with special digital access to Simpsons shows.

“For FXX, it's almost like a coup to help them to create an identity early on,” says Tuna Amobi, Equity Analyst with S&P Capital IQ.

Amobi says The Simpsons' move to cable was highly anticipated and likely drew lots of bids. FXX, the winner, is another unit of the same parent company, 21st Century Fox. Amobi says the deal, whose terms were not disclosed, probably cost hundreds of millions of dollars.

Jonathan Taplin, Director of the Annenberg Innovation Lab at the University of Southern California, says the average person watches nine cable channels and has 400 to choose from, so FXX faces big odds.

But he thinks the Simpsons could give FXX some legs. And its digital presence could pull in revenue.

“They can attach a lot of advertising to it,” he says.

Taplin says it remains to be seen whether The Simpsons will compel viewers to stick around and watch other FXX shows.

Sam Craig, Director of the Entertainment, Media and Technology program at New York University, agrees.

“If the Simpsons can't do it,” he says, “it's a question of what else is out there that can.”

In more than 20 seasons of "The Simpsons", there are more than a few lessons about business and the economy. So many, in fact, that the show has inspired academic papers on ways to use the show in the classroom and a new book, "Homer Economicus: The Simpsons and Economics." We scoured the web to find a few clips featuring lessons on business and the economy.

In this classic clip, a smarmy Harold Hill type, played by Phil Hartman, tries to convince the residents of Springfield to spend their unexpected surplus on a monorail. The song is a wry comment on mob mentality and public spending, as Marge points out there are many other places the town's resources could be used.

Speaking of trade-offs, Homer and the members of the local 643 (part of the International Brotherhood of Jazz Dancers, Pastry Chefs, and Nuclear Technicians) make one when they nearly give up their dental insurance for a keg at every meeting. Assuming Mr. Burns is being honest about his funds, this could be a lesson in opportunity cost. But of course he's not.

Speaking of Burns, he looks for further expand his energy empire by blocking out the sun. Joshua Hall, editor of "Homer Economicus," writes that Burns' plan presents an opportunity to discuss the nature and advantages of a monopoly.

(Courtesy:MySimpsonsBlogIsGreaterThanYours.tumblr.com)

On a much smaller scale, Bart learns some business basics when he tries to severely undercut bars by selling stolen beer at a nickel a cup. Had Homer not come home and wrecked the scheme, Bart would have soon run out of supplies and jacked up prices anyway.

Finally, for the advanced "Simpsons" economist, R. Andrew Luccasen and M. Kathleen Thomas write in their paper "Simpsonomics" that this clip illustrates — and bends — the law of demand.

Homer is sent to hell for his gluttony and the devil forces him to head "all the doughnuts" as punishment. The marginal benefit should drop into the negative over time, but Homer, of course, is no ordinary glutton.

PODCAST: Macy's settles profiling charge

After the shooting of unarmed teenager Michael Brown and the recent clashes in Ferguson, Missouri, racial profiling has returned to the national spotlight.

That department store chain Macy’s reached a $650,000 settlement Wednesday with the New York Attorney General’s office over racial profiling practices shows how deep the issue runs. This is the second settlement since 2005 for Macy’s, and the deal comes about a week after a similar agreement was reached with the Madison Avenue luxury store Barney’s.

Plus, the Dow could pass $17,000 again by labor day, but amid geopolitical crises all over the world, how is that possible?

And finally, British pubs have been closing at a rate of 31 a week, and that rate is accelerating. The Campaign for Real Ale is warning that a world-famous British institution is in danger of severe decline. The group has called for urgent measures to save the pub and preserve a valuable piece of the fabric of British life.

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Macy's settles up in profiling case

After the shooting of unarmed teenager Michael Brown and the recent clashes in Ferguson, Missouri, racial profiling has returned to the national spotlight.

Department store chain Macy’s reached a $650,000 settlement Wednesday with the New York Attorney General’s office over racial profiling practices, which shows how deep the issue runs. This is the second settlement since 2005 for Macy’s, and the deal comes about a week after a similar agreement was reached with the Madison Avenue luxury store Barney’s.

The most recent investigation has found that African-American and Hispanic shoppers were detained at  “significantly higher rates” for alleged shoplifting than white shoppers.

Retail researcher Paula Rosenblum says racial profiling is frequently an afterthought in the industry.

“They mostly advise their store associates to watch out for people who look suspicious,” she says.

Milton Pedraza, founder and CEO of the Luxury Institute, says retailers have every incentive to train front-line and security staff so every customer feels welcome.

“Even if you didn’t have moral clarity on the issue, at least you should have economic clarity on the issue,” he says.

Pedraza says stealing a shirt is insignificant compared to the additional sales that come from building a reputation as a kind and generous merchant. 

For its part, Macy’s has agreed to make several changes, including an effort to improve its anti-shoplifting practices and plans to distribute an anti-racial-profiling memo to workers.

Simma Lieberman, who works with retailers on diversity and what she calls "cultural intelligence" says employers should know profiling is often unconscious. Lieberman trains her clients to monitor their own personal biases. Often, she says, shop clerks are quick to make assumptions, and “they don’t get to behavior, they just look at what somebody looks like.”

The danger, says Lieberman, is in our rush to judgment, when we “assume someone is going to have a certain behavior, which they may not have.”

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Ferguson Killing Inspires Young Black Activists

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A 'Different Dynamic' In Ferguson, But With 47 Arrests

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Who created that app? A teacher

Marketplace - American Public Media - 10 hours 27 min ago

Laura Fenn was teaching fifth grade in North Carolina when her school cut back on physical education and recess. "They actually started to count time walking from the classroom to the cafeteria as physical activity time," Fenn says.

That gave her an idea:  create podcasts that students can listen to, and learn from, while they walk. You can find audio samples here.

Fenn’s nonprofit, The Walking Classroom Institute, is now her full-time job.

She’s one of many current and former teachers developing digital classroom tools.  

NoRedInk, BetterLesson, SmarterCookie are just a handful of education tech companies founded by teachers.

"It’s not until you’re in the classroom until you realize and really understand the pain points," says Benjamin Levy. He was teaching eighth graders in California and got frustrated that educational videos weren’t more interactive.  Now he’s CEO of eduCanon, which lets teachers add questions to online videos.

High school physics teacher Peter Bohacek was stymied by teaching physics from a book. "Physics is about the analysis of an event, not an abstract, contrived text description," he says. So he and Dr. Matthew Vonk created “Direct Measurement Videos,”which allow teachers to illustrate the basics of physics from the speed of sound to Newton’s Second Law.

Bohacek’s videos are free online. He wants to keep them that way.

But others see the booming market for education technology and want a piece of it. It's an $8 billion industry.

There's also a new distribution model that bypasses administrators and school districts.

"As a teacherpreneur it can be easy to get it in the hand of teachers, especially if it’s free, which appears to be the most teachers will pay for an app these days," said Frank Catalano, an edtech industry consultant.

He says the challenge for teachers is the challenge for most educational tech start-ups: how to turn a good idea into a sustainable business.

U.S. Authenticates Video Of Militants Beheading American Journalist

NPR News - 10 hours 59 min ago

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British pubs: popular but disappearing

British pubs have been closing at a rate of 31 a week, and that rate is accelerating. The Campaign for Real Ale is warning that a world-famous British institution is in danger of severe decline. The group has called for urgent measures to save the pub and preserve a valuable piece of the fabric of British life.

Stephen Langdon is one of a group of regulars trying to save his local — The Maiden Over in Reading — from closure.

“It will damage the community no question about it.” Langdon says. “ The pub has been a real focal point for the families and local community. If we lose it, there will be nowhere else for us to have a social evening in our neighborhood. There is no other pub within easy, convenient walking distance from where we live.”

Langdon's pub is scheduled to be turned into a supermarket. A similar fate befell Gareth Epps’ local pub, with negative consequences for his social life.

"I don’t see my friends so often now, I don’t see my neighbors so often." Epps says. "It means I lose the chance to pay cricket for my pub team. It diminishes the quality of life in our neighborhood."

Many of the pubs that have closed their doors were making money but not as much money as the supermarkets that replaced them. Indeed, supermarkets now pose a big competitive threat to pubs as retailers of booze.

"Supermarkets are selling beer so cheap that people on low incomes are driven into the arms of the supermarkets because pub beer is so much more expensive." explains Roger Protz, author of "300 Beers to Try Before You Die." "So people buy cheap beer from the supermarket and drink it at home.”

Adding to the plight of the British pub is a corporate malaise. The handful of big companies that own most of the pubs are heavily in debt and they need to sell off more of their assets. The supermarket chains are willing buyers.

CAMRA used the occasion of its annual Great British Beer Festival last week to highlight the threat to the British pub and to call for closure of what it calls a loophole in UK planning law.

"Something that is as intrinsic to British culture as the British pub can be closed down, can be knocked down, it can have its use changed, with no reference to the local community." CAMRA’s spokesman Tom Stainer says. The group wants a planning application to be required before a pub can be demolished so that the local community has a chance to save it.

The group has launched an unusual crusade for the sake of the country’s social health: to drive the British people back to drink, in a pub.

China levies record antitrust fines on foreign firms

In its latest effort to wield its power against foreign companies, China has levied more than $200 million in fines against a dozen Japanese auto parts makers for price-fixing.

German and American automakers are also being investigated. They were the largest fines placed on foreign companies in China since the government rolled out new anti-trust laws six years ago, and they're making a big impact on the world's largest auto market.

The investigation is the latest to target foreign companies within a select group of industries from pharmaceuticals to PR firms. CLSA analyst Scott Laprise says the investigation into price fixing among foreign companies in China's auto market is reasonable from a consumer perspective.

"If we look at it from a U.S.-style consumer protectionist view: What would you think if you found out your car was being sold two, three, four [or] in the case of some cars five times more expensive in another country?" Laprise asks. "Aren’t you taking advantage of that country?"

While some analysts may see this as the latest example of China's government unfairly targeting foreign firms, others point out that Chinese consumers are the fastest rising consumer group in the world, and this investigation is an effort on the part of China's government to protect them from unfair business practices.

 

China levies record antitrust fines on foreign firms

In its latest effort to wield its power against foreign companies, China has levied more than $200 million in fines against a dozen Japanese auto parts makers for price-fixing.

German and American automakers are also being investigated. They were the largest fines placed on foreign companies in China since the government rolled out new anti-trust laws six years ago, and they're making a big impact on the world's largest auto market.

The investigation is the latest to target foreign companies within a select group of industries from pharmaceuticals to PR firms. CLSA analyst Scott Laprise says the investigation into price fixing among foreign companies in China's auto market is reasonable from a consumer perspective.

"If we look at it from a U.S.-style consumer protectionist view: What would you think if you found out your car was being sold two, three, four [or] in the case of some cars five times more expensive in another country?" Laprise asks. "Aren’t you taking advantage of that country?"

While some analysts may see this as the latest example of China's government unfairly targeting foreign firms, others point out that Chinese consumers are the fastest rising consumer group in the world, and this investigation is an effort on the part of China's government to protect them from unfair business practices.

 

Urban Farms Build Resilience Within Singapore's Fragile Food System

NPR News - 11 hours 12 min ago

Tiny Singapore imports almost all of its food. From gardens on deserted car parks to vertical farms in the vanishing countryside, a movement is afoot to help boost its agricultural production.

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Urban Farms Build Resilience Within Singapore's Fragile Food System

NPR News - 11 hours 12 min ago

Tiny Singapore imports almost all its food. From gardens on deserted car parks to vertical farms in the vanishing countryside, a movement is afoot to help boost its agricultural production.

» E-Mail This

If You're Born In The Sky, What's Your Nationality? An Airplane Puzzler

NPR News - 11 hours 26 min ago

Suppose two Chinese parents get on an Australian airplane and, while flying over U.S. territory, they have a baby on the plane. Can that baby be an American citizen?

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Uber launches home delivery service

Marketplace - American Public Media - 11 hours 49 min ago

Uber — the company known for on-demand taxi rides — is getting into the on-demand delivery business. Its foray into the delivery world is in Washington, D.C., where it has unveiled an experimental delivery service it calls Corner Store. 

Here's how it works: Say my baby is sick, and I need some infant cold medicine.

Uber will send one of its drivers out to pick up whatever I need. 

“Just think about a mom who’s at home with a sick kid and she doesn’t want to leave the child alone. It’s the perfect opportunity,” says Paula Rosenblum, managing partner at Retail Systems Research.

Rosenblum says Uber is competing with lots of other companies who are experimenting with on-demand delivery: Google, eBay, Walmart. And, of course, Amazon.

How can Uber compete with the likes of Amazon? Think of Amazon as a bus, and Uber as, well, a taxi.

“Amazon is going to have the low-cost delivery because of all those passengers on the bus, whereas Uber is going to have one package on the taxi, ” says Rob Howard, founder and CEO of Grand Junction, a company that provides software for shippers.

Uber is offering its Corner Store delivery service for free at first, although you have to pay for the products you order. If Corner Store becomes permanent, it'll have to charge for delivery.

While Uber may not be able to match Amazon’s low prices, but Howard says consumers may be willing to pay more to get stuff fast. 

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