On December 8th, 2011 Senator Jerry Moran (R-KS) and Senator Mark Warner (D-VA) introduced The Startup Act. This legisslation, stemming largely from the research done by the Ewing Marion Kauffman Foundation, is designed to remove the regulatory barriers that entrepreneurs face when attempting to form a new business.
According to Kauffman Foundation as well as other research, nearly all of the jobs created in the United States come from small businesses, defined as any business worth less than $50 million. The days of large corporations hiring thousands of workers are gone which is why legislation has to transition from focusing on business to assisting in the growth of young, growing companies, according to the bill’s sponsors. The Start Act has five key components.
Reducing regulatory burdens
The bill calls for more scrutiny to be placed on any fiscal legislation. Specifically, look at how it would affect the small business community. If any legislation places unnecessary burdens on small businesses, attempt to craft alternatives that won’t stifle their growth.
Attracting business investment
The cornerstone of this is to make permanent the 100 percent tax exemption that is given to people or companies who invest in a small business for a minimum of 5 years. The bill also extends an income tax credit to entrepreneurs who form a small business. The credit amounts to 100 percent of all taxable income in the first year and 50 percent for the next two years.
Accelerating the commercialization of university research
Commit federal funds to university research, small business centers, and other programs designed to encourage university students as well as community members to start their own business instead of going to work for another company. In addition, community grant programs will eventually be created after research is completed as to how to award funds.
Attracting and retaining entrepreneurial talent
Foreign students are coming to American universities and returning to their countries after graduation. Many of these students would like to stay in America but their visas don’t allow it. The Startup Act would grant up to 50,000 students with advanced degrees in science, technology, engineering, or mathematics visas to stay in the country.
Encouraging pro-growth state and local policies
Examine state and local policies and offer alternatives that make the laws more small business friendly.
The Startup Act will find major headwinds as the tax breaks that come with this program will have to be at the expense of other programs but with unemployment still high and the economy only slowly recovering, the Kauffman Foundation argues that something has to be done.