Today marks the first year anniversary of the White House Startup America Initiative, and of the
Startup America Partnership, a private sector organization led by AOL founder Steve Case. To mark the occasion, The White House announced a legislative agenda to harness the job-creating power of small start-up businesses. Over the past year, the two have partnered to pledge over $2 billion in initiatives to assist with small business growth. The year also saw the creation of Kauffman Foundation’s Start-Up Act, a list of proposals that lay out a “comprehensive agenda for start-ups”. Many of these proposals have made it into the State of the Union last week, including some already part of Start-Up Act:
Tax cuts for small businesses:
In order to encourage entrepreneurs to keep starting the new businesses that are the lifeblood of our economy, the legislation is looking to institute a series of tax breaks for small businesses, including:
- making permanent the zero capital gains tax for small businesses in order to encourage investment in start-ups
- a 10% income payroll tax on new jobs added or raises (with a $500K cap to focus the benefits on small businesses)
- an increase in claimable deductions for start-up expenses
Access to markets and capital:
Startups need access to investors in order to make the business grow and thrive. The legislation agenda follows on from the initiatives the White House championed in conjunction with the Startup America Partnership, including:
- changing the limit on simplified Regulation A “mini-offerings” from $5 million to $50 million, meaning start-ups will have greater access to investment capital with simplified SEC filing.
- a national framework for crowdfunding, allowing start-ups to raise high numbers of small investments through an online platform - the way Kickstarter does.
- making the expensive and time-consuming process of “going public” less difficult for new companies by creating an IPO “on-ramp” - giving “Emerging Growth Companies” a larger window of time to reach full compliance with requirements for becoming public
Skilled Worker Immigration:
The National Venture Capital Association conducted research which shows that foreign-born entrepreneurs are responsible for creating thousands of jobs for American workers and generating billions of dollars in sales. As the President made clear in his State of the Union address, we need to facilitate the hiring of skilled workers from foreign countries. One very simple way to do this (without increasing the overall number of visas) is by reorganizing the current distribution of visas, by lifting per-country caps to ease the huge backlogs for certain countries. Rep. Chaffetz’s legislation to do this has passed the House already, and should be moved quickly through the rest of the legislative process.
The Kauffman Foundation has stated definitively that startups are responsible for almost all new net growth in jobs (you can watch their short video explaining their research findings here). And the White House is taking action in the form of this legislative agenda that addresses some of the immediate needs of startups that organizations like the Kauffman Foundation, and Startup America and our own, have been raising awareness. We hope that this great anniversary for Startup America can serve as a catalyst for Congressional action, and not simply another date on the calendar.