Jun 19 2012
The good news is there is a bipartisan plan in Congress, called Startup Act 2.0, which will help jumpstart the economy through the creation and growth of new businesses. Entrepreneurs and the businesses they create are vital to the strength and competitiveness of the U.S. economy. Research by the Kauffman Foundation in Kansas City found that nearly all net new job creation in the United States between 1980 and 2005 came from companies less than 5 years old. In fact, new businesses create approximately 3 million jobs each year.
Yet recent data suggests the startup engine of our economy is slowing. Companies launched in 2009 are estimated to create one million fewer jobs in their first 5-10 years than historical averages. And America has slipped from 4th to 13th place since 2007 when ranked on “startup friendliness” because of government policies that stifle economic growth and drive innovators overseas.
In order to create more jobs for Americans, we need to create an environment where entrepreneurs are free to pursue their ideas in the United States, start more businesses, and put more people to work. With those goals in mind, I introduced the Startup Act along with Senator Mark Warner of Virginia in December 2011. Since then, we strengthened the bill and re-introduced it as Startup Act 2.0 in May, with the support of 4 more senators. And earlier this month, a bipartisan group of members introduced the bill in the U.S. House of Representatives.
Whether you are looking for a job, have the next “big idea,” or already own a business and are looking to grow, Startup Act 2.0 can help. Given that attracting investors and gaining access to sufficient capital is a significant challenge for new businesses, Startup Act 2.0 makes commonsense changes to the tax code that will help facilitate investment in startups. By eliminating capital gains taxes on investments in startups held for at least five years, Startup Act 2.0 will unlock $7.5 billion in new investment. Our plan also creates a targeted research and development tax credit for startups less than five years old in order to free up resources to help them expand and create jobs.
According to the U.S. Small Business Administration, businesses with fewer than 20 employees currently spend 36 percent more per employee to comply with federal regulations than larger firms. To help businesses use more of their resources on growing the company, Startup Act 2.0 requires all government agencies to conduct a cost-benefit analysis of proposed “major rules” with an economic impact of $100 million or more. This will help determine the value of the rule and its potential impact on the formation and growth of new businesses.
And, because foreign-born entrepreneurs have a strong record of starting businesses and employing Americans, Startup Act 2.0 creates new opportunities for America-educated, entrepreneurial immigrants to remain in the United States where their talent and ideas can create jobs for Americans. According to the Partnership for a New American Economy, more than 40 percent of Fortune 500 companies in the United States – including Apple, Google and eBay – were founded by immigrants or their children. These American companies employ more than 10 million people. It makes no sense to send talented entrepreneurs back home where they become competitors and create more jobs overseas.
Other countries recognize the importance of entrepreneurs to their nation’s economy, and while America falters, they are moving aggressively to attract the highly-skilled individuals needed to generate more companies and create jobs. Over the last 18 months, seven countries have adopted new laws to attract entrepreneurs from around the world, including the United Kingdom, Canada, Russia, Chile, Brazil, Australia and Singapore.
The United States cannot afford to use the November election as an excuse to delay action. Other countries are not taking this year off, and neither should we. I look forward to working with my colleagues to prove the critics wrong: Congress can get something done in an election year when we work together to strengthen the economy and create jobs for Americans.