alliantgroup’s Technology, Economic, Legislative and Policy Summit took place November 8th and 9th at our Houston headquarters. During this event, over 100 VIP guests came to hear from renowned experts in the fields of technology, economics and tax policy.
From panel discussions ranging from the rise of technology and connected devices to new IRS directives, key themes emerged throughout the event:
“Our goal as a company when hosting these events is to ensure our CPA and industry partners have the most current information they need to better educate their clients, businesses and associations. I look forward to these events because I am always so impressed by our panelists’ insights and the great discussions we are able to have.”
First and former U.S. Secretary of Homeland Security Tom Ridge led our keynote discussion on the enormous political, physical and economic risks of cyber-attacks. By 2018, it is estimated that 66 percent of companies will have been hacked or breached—and our growing reliance on technology has only increased the consequences of such security breaches. As Ridge and Chuck Wilson, the Executive Director of the National Systems Contractors Association, passionately explained, the acceleration of technology will lead not only to connected devices, but also connected offices and cities — and additional points of vulnerability.
However, these interconnected devices are not always designed with security in mind, with technology vastly outrunning security measures. John Higginbotham, CEO of the premier cybersecurity firm Blueridge Networks, stressed that every digital connecting point is a vulnerability that can be exploited if it is not secure. Growing interconnectivity and interproductivity leads to increased risk factors and businesses and organizations should be taking steps now to protect their data and systems.
“You have to manage the risk before it manages you,” said Ridge.
Our panel further discussed the role government should play in managing cybersecurity threats and the unintended consequences that can stem from government action. They agreed that technology will always move faster than government, and as such, our government must avoid legislating in a reactive or prescriptive manner. The panel concluded that by and large the private sector would be responsible for building its own cybersecurity protocols.
Our experts also agreed that financial services and solution providers should work hand-inhand with technology companies to perform a cyber-audit. They stressed that while a single measure would never completely protect their data and various security vulnerabilities, businesses nevertheless need multiple solutions and capabilities to ward off cyber-attacks.
“The Internet of Things is reshaping the Internet itself…For every digital connecting point, there is a potential for vulnerability. And it can be exploited.”
Former Secretary of the U.S. Department of Homeland Security
With their agenda largely stalled for much of the last year, Congressional Republicans are currently trying to advance what could be the largest reform of the tax code in a generation. Considering the results of the Virginia and New Jersey elections and other political realities, former Congressman Rick Lazio emphasized the pressure Republicans are under to pass a comprehensive tax reform bill this year.
“Because Republicans have not had a major legislative accomplishment to speak of, they are under intense political pressure to deliver on tax reform,” said Lazio.
The intent of the proposed House and Senate tax bills is to encourage broader economic growth and business investment through across the board rate reductions. During the Legislative Update panel, our tax experts agreed that to stimulate the economy, any tax plan would need to focus on smaller pass-through entities, not just corporations. With lower tax rates for small and mid-size businesses in place, these savings would be invested by businesses into better equipment, new facilities and additional employees.
“Because you’re getting to use only a simple majority, you have to jump through an awful lot of hoops in order to do that. It constrains you considerably to use the reconciliation process.”
Dawn Levy O’Donnell
Former Counsel to the U.S. Senate Finance Committee; alliantgroup Director
As for the contents of the proposed legislation, during the panel former U.S. Counsels to the Senate Finance Committee Dean Zerbe and Dawn Levy O’Donnell took a deep dive into the House’s current tax reform proposal. This included a lively discussion regarding which tax incentives were safe and which ones would likely be repealed to offset proposed rate reductions, as well as the legislative constraints brought on by the budget reconciliation process.
Zerbe, O’Donnell and Lazio also went through various itemized deductions that would be repealed such as state and local tax deductions, the deduction for medical expenses, the dependent exemption, the casualty and loss deduction and more. In lieu of these deductions, the new tax plan would double the standard deduction for both individuals and joint filers. The House plan would also collapse the current seven tax brackets into brackets of zero, 12 percent, 25 percent and 35 percent (the Senate version would however maintain the seven tax brackets, with a modified top bracket of 38.5 percent).
Though both the House and Senate have introduced tax reform bills, O’Donnell warned that there are still many steps left in the tax reform process. Additionally, due to the reconciliation process, many provisions may have later start dates, or phase in then phase out, further complicating tax planning for CPAs and other financial advisors.
On multiple occasions during the event, Jadav expressed his deep concern for the future of the country and the American economy through one troubling statistic: that the U.S. has more clerical and administrative jobs than any other country in the world. During the Economic Update panel, Jadav questioned Lazio and Private Equity and M&A advisor Neeraj Mital on what our labor market would look like in the future once automation and robotics wipes out the need for these jobs.
In response, Lazio pointed out that even though unemployment is at 4.1 percent (the lowest rate since post-WWII), in the near future, entire sectors of our population — primarily older workers in non-urban areas — will have trouble adjusting to this new, technology-based economy. Furthermore, Lazio stated that as a country we are not training people or providing them with the technical skillset that will be needed to participate in this emerging 21st century economy.
The Executive Roundtable session hit upon this theme as well. Due to demographics and other labor variables, more people are leaving the workforce today than coming in, and there are not enough high-skilled workers to meet the current demand. Additional workers with a STEM-based background are needed, but there remains a limited ability to graduate students with technical degrees as well as barriers on keeping foreign technical talent here in the United States.
During the event, our industry partners shared their members’ own difficulties in finding qualified technical talent, with many relating these labor woes to a stigma placed upon their industries.
Executive Director of the Precision Machined Products Association Bernie Nagle explained manufacturing’s image problem. While students may imagine unkempt facilities with smoke stacks, precision manufacturers are working in state-of-art facilities using industrial, high-tech machinery. These industries need labor with electrical, mechanical and technical skills, but many of these students are being pressed into other careers by the educational system.
Many panelists discussed what they are doing to combat these issues. Wilson highlighted NSCA’s Ignite initiative, which focuses on sparking student interest in technology — especially in fields like automation, the Internet of Things, virtual reality and integration. Other partners discussed their outreach efforts to students and partnerships with high schools to raise awareness that these high-paying, technical jobs do exist and can lead to long and lucrative careers.
“We need to grow this country, but we don’t have sufficient skilled workers to do that. We cannot fashion our immigration system to meet that challenge. And the education system you could make the same case.”
Former U.S. Congressman; alliantgroup Senior Vice President
“The people that are posting these jobs now are doing well finding talented people from other adjacent technology systems.”
Executive Director of the National Systems Contractors Association