Last month, Congress and the president passed major legislation (the Jumpstart Our Business Startups (JOBS) Act) aimed at making it easier for start-ups and small businesses to gain better access to capital. It was one of the few bills passed in the last year that wasn’t born out of crisis or in the shadow of a looming government shutdown.
This week, a bipartisan group of Senators has introduced a summer sequel worth watching in what they’ve dubbed “Startup Act 2.0.” This legislation would take one more big step in giving young businesses three crucial ingredients for success: talent, time and money.
Talent. Perhaps the most ambitious and creative proposal put forward by this group—Sens. Jerry Moran (R-Kan.), Mark Warner (D-VA.), Marco Rubio (R-Fla.) and Chris Coons (D-Del.)—is the creation of “STEM visas” for foreign students who come to America and earn advanced degrees in math or science, and “entrepreneur visas” for legal immigrants who start their own companies.
Both proposals are smart efforts to keep talent in the United States and slow the export of education and expertise to our potential global competitors. According to the Kauffman Foundation, fully one-fourth of the U.S. science and technology companies founded between 1995 and 2005 (including more than half of the start-ups in Silicon Valley) have a foreign-born chief executive or chief technologist.
Time. Another promising aspect of Start-up Act 2.0 are its proposals to free up another precious resource for young businesses: time. As PPI has noted elsewhere, the federal government estimates that Americans spent as many as 8.8 billion hours on federal paperwork requirements in 2010 alone. Worse, much of this burden falls on small businesses, who have fewer workers to deal with the hassles of regulatory compliance.
Start-up Act 2.0 proposes a mandatory cost-benefit analysis of proposed regulations that could have greater than $100 million in economic impact. By requiring this analysis, agencies might think twice about imposing unnecessarily burdensome regulations.
Money. Finally, the senators’ bill offers some targeted tax breaks aimed at enabling small businesses to husband their financial resources more effectively while they grow. Among other things, it would create a “targeted research and development tax credit” for early-stage start-ups and make permanent an existing exemption from capital gains taxes on start-up stock that was held for at least five years.
Notwithstanding the recent (mis)fortunes surrounding Facebook’s recent IPO, companies like Facebook and their young, daring brethren are still the engine of innovation and future job growth in America.
Despite all of the recent dysfunction in Congress, it is at least heartening to know that Congress is able to recognize the central role that entrepreneurship plays in keeping our economy going.
With any luck, the Startup Act 2.0 will move quickly from the “beta” version introduced this week and become law.
Photo Credit: Hansco
