HBS Reunion Presentations
Last month I was fortunate enough to serve on the “Leadership in Public Service” panel during annual presentations for Harvard Business School Reunions. I shared the stage with several incredible Harvard grads who have done great things since leaving school. Below is a brief recap of the day’s events.
Panel – Joining and Serving on Boards
Moderator: Howard Brod Brownstein (JD/MBA 1975), President, The Brownstein Corporation
- Lana Lewin (MBA 1995), Treasurer, Planned Parenthood of New York City; Managing Director, Crédit Suisse
- John T. Mapes (MBA 1995), Managing Partner, Aurora Capital Group
- John F. Ryan IV (MBA 2000), Managing Director, ONSET Ventures
- Eric C. Salzman (MBA 1995), Managing Partner, SarniHaan Capital Partners LLC
Corporate governance is increasingly in the news, including – all too often – the lack thereof. At the same time, serving on boards, both for-profit and nonprofit, is a growing career ambition for many HBS graduates. This panel of accomplished HBS alumni will share their experiences regarding joining and serving on boards and will provide valuable advice about how to join boards and what to expect when one gets there.
Panel – Leadership in Public Service
Moderator: Mitchell B. Weiss, Senior Lecturer of Business Administration, HBS; formerly Chief of Staff to Boston’s Mayor Thomas Menino
- Aaron Chadbourne (MBA 2011), Senior Policy Advisor, Governor Paul LePage, Maine
- Mina Hsiang (MBA 2010), Health Data Expert, US Digital Service at the White House
- Jason Lewis (MBA 1995), State Senator, Commonwealth of Massachusetts
- Ryan Mackenzie (MBA 2010), Member and Deputy Majority Whip, Pennsylvania House of Representatives, Commonwealth of Pennsylvania.
David Linn (MBA 2000), Principal/Cofounder, Oak Point Partners/Cycle for Survival
Cycle for Survival is the national movement to beat rare cancers. Linn founded the high-energy indoor team cycling events in 2007 with his late wife, Jen Goodman Linn (MBA 1999). Cycle for Survival is now the fastest-growing athletic fundraiser in the country with more than $75 million raised for cancer research.
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Let the Maine people vote and decide for themselves.
As you well know, a change to the Maine Constitution requires a vote not only from the legislature but from the Maine people. But the Maine people cannot vote on this unless you pass this resolution. As the Governor has been travelling the state these last several months, he has heard the voice of the people of Maine loud and clear, and he’s asking you to do the same. Give your constituents the respect of letting them decide how they’d like to be taxed. Let the voters decide if it is finally time to eliminate the income tax in Maine. The Governor applauds Representative Fredette and his cosponsors President Thibodeau, Representative Espling, Senator Cushing and Senator Mason for joining him in an effort to let the Maine people take their future into their own hands and prevent future legislatures from reinstating the harmful effect of the State income tax.
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The status quo is unacceptable. Now is the time for bold action.
The Governor believes that now is the time to move Maine from poverty to prosperity. Rather than keep trying the same thing that we’ve tried for decades and expecting different results, it is well past time to stop chasing capital out of the State of Maine and to stop penalizing hard work and investment in our State.
While some critics are using scare tactics to talk about funding gaps, imaginary cuts to education, necessity of increasing property taxes – that’s all they are, scare tactics. The people of Maine know better and can judge for themselves when this is put to referendum. Education funding in Maine has far outpaced inflation while our student population has declined. The Governor and this Administration are committed to raising the bar on the education that local school districts provide to the children in Maine. We stand firmly by our commitment to seniors and to the most vulnerable populations in Maine. The Governor and this Administration reject the idea that the Government knows better than Maine families how to spend your hard earned money. The notion that an income tax cut is a “giveaway to the wealthy,” as some have called it, is offensive. No one is giving away money here. This proposal would let the hard working people of Maine keep the money that they earn. Elimination of the state income tax would provide the largest wage increase in the history of Maine. In all, $1.2 billion would be returned to hardworking Maine families. We need to focus on growing our private sector economy, not growing government spending.
Although the Governor is calling for BOLDaction, the Governor is asking you to take responsible action. If the Legislature passes LD 1367 and voters approve the amendment to the Maine Constitution, Governor LePage is convinced that, by working together, the state can develop a tax system free of the individual income tax that will achieve the same objectives he has fought for in each budget proposal, including fairness. In the past, the Governor has proposed mechanisms such as the Property Tax Fairness Credit and the Sales Tax Fairness Credit, and there is no reason similar mechanisms would not be possible in a Maine without an income tax.
The Governor is not linking the elimination of the income tax to eliminating any specific programs or other revenue-generating solitons. There are many other revenue streams the State could consider to fund essential programs and activities – which, by the way, the government should have to continuously justify to the people of Maine who fund the government’s activities. We believe that this committee, in the future, will have the important task of being creative, innovating, and finding responsible ways to fund the government. Rather than spend time debating which exemptions and credits to offer, rather than picking winners and losers, rather than have the government decide what qualifies as something requiring an income tax exemption, let’s exempt all people in Maine from the income tax and let the people who earn the money decide where to spend it. To those who clamor that eliminating the income tax will necessarily increase property taxes – that’s not what we’ve proposed. The income tax is a state-level tax proposal and it would have no impact on local property taxes. That continues to be a local decision.
The Governor is asking the legislature to act. He rejects the scare tactics that we’ve already started to see from special interest groups, and would ask that the legislature engage in this debate thoughtfully and responsibly, in the best interest of the one special interest group we all serve – the people of Maine. This brings me to my final message.
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We Need to Make Maine More Competitive
The Tax Foundation currently ranks Maine as having the 9th highest top marginal individual income tax rate. Were it not for Vermont, New Jersey, and New York, we’d have the highest top marginal tax rate on this side of the Mississippi River. Their top individual rates kick in at more than $400,000; $500,000; and $1 million of taxable income, respectively. Maine’s current top rate starts at $20,900. With this proposed Constitutional Amendment, Maine has the opportunity to become the 10th state in the nation with ZERO income tax.
Maine residents already pay significant income tax to the federal government, and we believe the federal government has cornered the market on it. While US tax policy should ensure we are making the nation competitive globally, we have an obligation to make Maine competitive with other states. We want to attract job creators. When an out of state company buys a growing Maine business, we’d like them to keep the corporate headquarters in Maine and move more high paying jobs into the state, not out of it. When a person at a company gets offered a promotion that requires a move from Dallas, Texas or Chattanooga, Tennessee to Maine – we want those people to come. We want to see the investment and activity that you see in states like Florida, New Hampshire, South Dakota, Wyoming and Nevada. I’ve heard this committee before discuss why people move to Florida and suggest it’s not just for the income tax. Well, I’ve heard from tax accountants and estate planners that there are certainly some that do. But let’s say someone has their primary residence in Maine and a second home in Florida to get away from winters like the one we just had. If you’re already spending 3 months a year in Florida and could protect your pension by increasing that stay to 6 months and a day, I’m pretty sure you’d consider it. We want people to maintain their primary residence in Maine and their second home in Florida, not the other way around. We already have a high share of the second home market – lets grow the number who are proud to call Maine their primary residence. Let’s create incentives for the many young people of Maine who leave home for school and to start their careers to move back to a Maine without an income tax, where they can keep the money they earn and where they can invest, buy homes, raise their families and have fulfilling careers.
The Governor understands that the income tax is not a silver bullet and is not the only step we need to take to make Maine more competitive. You’ve seen him work hard to lower energy cost, advocate for education reform, and continue to ask for business reforms like the Right to Work. I’ll not discuss any of those proposals now other than to note that this Governor will keep fighting on all fronts to help people of Maine move from poverty to prosperity, and he believes that elimination of the income tax is one of the most powerful steps we can take to inject new activity into our economy and give Mainers the most meaningful wage increase the state has ever seen.
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In Support of Eliminating the Maine Income Tax
My name is Aaron Chadbourne. I am a Senior Policy Advisor to the Governor and I am here today to testify in support of LD 1367 “RESOLUTION, Proposing an Amendment to the Constitution of Maine To Eliminate the Income Tax.”
Today is a historic day. We are here to talk about an amendment to the Constitution of the State of Maine. It’s something that has been done over a hundred times in the past and something that should never be done lightly, so I would like to thank the Committee for your consideration today and urge a unanimous Ought to Pass report to send the proposed Constitutional amendment to the voters of Maine.
When Governor LePage was sworn into office in January, he reaffirmed that his long term vision is simple: It’s Maine without an income tax. Today, it is an honor to be here advocating for another step forward toward the Governor’s vision and ask for the legislature’s help in letting Maine people decide for themselves whether it’s finally time to eliminate the State of Maine’s income tax once and for all.
Let me be clear – this effort did not begin with the Governor’s second term. As you’ll recall, in 2011 the Governor proposed and the legislature enacted the largest tax cut in Maine history, lowering Maine’s top income tax rate from 8.5 percent to 7.95 percent and eliminating the income tax liability of 70,000 low-income Mainers. In the biennial budget proposed earlier this session, Governor LePage took the next step in requesting the legislature continue to phase out the income tax by lowering the top marginal tax rate to 5.75 percent – the lowest rate since Maine established its income – tax and proposing the state remove the burden of the income tax from an additional 60,000 low income Mainers. The Governor has repeatedly said publicly that his goal is to achieve reduction in the top marginal tax rate to 4 percent by the end of his second term and have a firm date set for the elimination of the state income tax – a tax that penalizes work, investment, and economic growth in the State of Maine. So as we talk about the proposal and the timeline, I’d like to remind the Committee that this is a nearly decade-long journey we’ve embarked on, to go from 8.5 percent top marginal tax rate in 2010 to 0 percent by 2020. For those who would compare the Governor’s plan to what happened in Kansas, I’d ask you to take another look at the way that the Governor has consistently taken a responsible, measured, balanced approach to phasing out the State’s income tax.
There are three messages that I would like to stress during my remaining time before you today. First, Maine is not competitive. Second, it is time for bold action – we can’t rely on the status quo to promote prosperity in Maine. Third, and finally, we should let the people of Maine decide how they want to be taxed.
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Splitting Equity Between Co-Founders
Annie Webber, founder and CEO of Legal Hero, recently published a 2-part blog on splitting equity between co-founders. You can find the article at Legal Hero.
Starting a new business comes with a lot of excitement, little sleep, and a to-do list that seemingly never ends. Amidst the excitement, it is increasingly easy to avoid a difficult, yet necessary conversation about splitting equity between co-founders. While the topic is easy to postpone, you do not want to deal with the potential fallout and subsequent tougher conversation down the road.
Most assume that co-founders should split equity evenly. This is not necessarily flawed thinking, but there are plenty of reasons this argument does not hold up. Most co-founders divide equity equally for the following reasons:
- Avoiding the awkward conversation, potential arguments, and parting ways.
- Everyone is equal, so they all deserve an equal share.
- An even split simplifies everything. Now they can focus more important things.
- Co-founders want to make every important decision together.
These are honorable positions on the issue, but not exactly the most beneficial for the company. Running a business requires difficult, yet constructive conversations. Learning this early will be vital to your success. It is also important to understand that co-founders ultimately offer different skill sets. As Annie notes in her blog, “to suggest these skill sets and resources are equally valuable is a bit silly.”
Visit Legal Hero for further details on splitting equity, including a detailed framework to help resolve the issue.
Analyzing Governor LePage’s Tax Reform Proposal
As people consider Governor LePage’s tax reform plan for Maine, a good place to start is by checking out the analysis from the Tax Foundation:
The LePage administration is responsible for the largest tax cut in Maine’s history, so it comes as no surprise that Maine Governor Paul LePage has emerged as the first Governor to propose serious tax reforms in 2015. LePage’s historic tax cut resulted in low-income workers pocketing a larger portion of their hard-earned cash.
Governor LePage is proposing, among other provisions, to lower the top individual and corporate income tax rates while broadening tax bases. This includes expanding the sales tax base to certain services while exempting other business inputs. The provision also includes raising the sales tax rate while providing low-income taxpayers a refund. The Governor has also proposed repealing Maine’s estate tax.
Prior to the LePage administration, Maine ranked 37th according to the Tax Foundation State Business Tax Climate Index. During his first term, the ranking improved from 37th to 33rd. If adopted by Maine’s legislature, the Governor’s proposal could push Maine to a ranking of 23rd.
Other significant findings in LePage’s Tax Reform include:
- Tax cut of $267 million per year as of fiscal year 2019 – plan fully phased in by 2021.
- Flattening the corporate income tax and cuts rates while eliminating preferences favoring specific industries and activities.
- Broadening the sales tax base and raising rates to offset income tax reductions.
- Repealing the estate tax and limiting property tax exemptions, along with the elimination of state-local revenue sharing and adjustments to existing state spending limitations.
- Utilizing a more progressive structure to cut income tax rates for all income levels – this includes additional brackets and a “bubble” bracket designed to phase out the state’s zero bracket for higher income earners.
Visit taxfoundation.org for more details.
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Ring – Video Doorbell
Ring is a video doorbell service that utilizes your smartphone to answer your door from essentially anywhere. From your cellphone, Ring provides users a clear view of their door, day or night. The HD camera with night vision capabilities is motion-triggered and sends notifications of arriving guests via the Ring app. Ring is easily installed with no specific tools or professional help needed.
Ring utilizes one-way video and two-way communication so users can see and communicate with front door visitors. At the moment your doorbell is pressed, you are notified through the phone app. The app allows you to answer directly, view the guest, and choose whether you would like to answer. Future updates will allow Ring to monitor and record motion-activated activity at your front door. The footage will automatically be saved to the cloud and will be available to you for future review. This is beneficial as someone could easily approach your door without ever ringing the doorbell. You can now be alerted by the mere presence of someone on your property.
According to user reports, the voice communication fulfills its purpose and easily allows you to speak with guests. Whether a salesman, plumber, UPS, or neighborhood kid, users are easily able to communicate to their guests. With a quality wide-angled view, you are able to see everything happen at the front door, or wherever you choose to install the product. This is a great product for the traditional homeowner who enjoys being connected to their home through various electronic devices. Simply put, ring is a tool which provides a modern design and solution to an everyday scenario.
Overall, Ring is a valuable and essential upgrade to an old household feature. It is extremely beneficial for the homeowner who needs to monitor their home while away, especially if kids are home, or if you are expecting deliveries. Whether you are in the shower, or at the office, Ring allows you to save any further delay by addressing the delivery guy from your phone.
Check out their website for further details about Ring.
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Economic Recovery in 2015
According to senior economists, Maine may be able to call 2015 its best year of economic recovery since 2007. While this may hold true for the United States economy as a whole, it is undoubtedly welcoming news to all residents of Maine. The country is expecting decent growth as well. This economic momentum, coupled with lower energy prices and lower interest rates will only help propel the overall recovery. As the economy continues to grow, as will job growth.
Maine is expected to add approximately 7,000 jobs this year, the best numbers we have seen since about 2000. Real estate numbers remain positive, but the recovery has been slower since Maine did not experience the same fall in prices as other states when the housing bubble burst. Less upside momentum has resulted in a slower recovery process. Low mortgage rates should allow for a continued housing market recovery.
Retail and hospitality are other areas in which projected numbers remain optimistic. The greater Portland areas retail sector is strong with vacancy rates at about 3.6 percent compared to the 9.7, the national average. Big name retailers are also expected to relocate to Scarborough Gallery. In addition, discount stores can be found just outside of Portland. Up to 22 new stores are expected to open through 2015.
Travelers can find nearly 700 additional hotel rooms in the Portland market, added in the last year alone. Reports show that the city’s downtown area has experienced a shortage of rooms, so the high number of rooms added should not worry. In fact, new hotels should be welcomed with increased demand.
Maine should experience a positive 2015. Let’s hope the numbers and projections are right!
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Aaron Chadbourne 