Startup Act – based on research and analysis by the Ewing Marion Kauffman Foundation out of Kansas City – modifies the tax code to encourage investment in new businesses, accelerates the commercialization of university research that can lead to new ventures, and seeks to improve the regulatory process.
Research shows that for close to three decades, companies less than five years old have created almost all net new jobs in America – averaging about three million jobs each year.
“Startup Act is about creating jobs for Americans through the creation and growth of new businesses,” Sen. Moran said. “Entrepreneurs and the businesses they create are responsible for almost every net new job in America, but under our country’s current policies, new business formation and the rate of entrepreneurship among young people have reached historic lows. We must reverse these trends. Startup Act would reduce barriers to growth, encourage investment in new businesses, stem government overregulation, and accelerate the commercialization of university research that can lead to new ventures."
Startup Act also creates both Entrepreneur and STEM Visas for highly-educated foreign-born entrepreneurs who are in the United States legally so they can stay here and their talent and new ideas can fuel economic growth and create American jobs. Foreign-born entrepreneurs have a long history of creating businesses in America.
Of the current Fortune 500 companies – including Apple, Google and eBay – more than 40 percent were founded by a first- or second-generation American. These American companies employ more than 10 million people.
Both American and foreign-born entrepreneurs are needed to jumpstart the economy through the creation and growth of new businesses.
“In order for America to maintain its position as the most innovative and entrepreneurial nation, we must win the global battle for talent, increase access to capital for startups, and create pathways for fledgling startups to become iconic American businesses,” said Steve Case, Revolution LLC CEO and former member of the President’s Council on Jobs and Competitiveness. “The Startup Act encourages that by creating a visa for promising immigrant entrepreneurs and reforming the tax code to incentivize investments in startups and R&D."
The provisions in Startup Act have been endorsed by CEA, CTIA, Engine Advocacy, Computer and Communications Industry Association, the Greater Kansas City Chamber of Commerce, The Technology Council of Greater Kansas City, ITI and Information Technology Industry Council.
Additionally, Startup Act is also supported by Technology Councils of North America (TECNA) and more than 25 regional technology groups.
Startup Act includes the following provisions:
- Makes permanent the exemption of capital gains taxes on the sale of startup stock held for at least five years – so investors can provide financial stability at a critical juncture of firm growth;
- Creates a limited research and development tax credit for young startups less than five years old and with less than $5 million in annual receipts. This R&D credit is designed to allow startups to offset employee taxes – freeing up resources to help these young companies expand and create jobs;
- Uses existing federal R&D funding to support university initiatives designed to bring cutting-edge research to the marketplace more quickly where it can propel economic growth;
- Creates an Entrepreneur’s Visa so foreign-born entrepreneurs in the United States legally can remain here, launch businesses and create jobs;
- Creates a new STEM visa so U.S.-educated foreign students in the United States legally, who graduate with a master’s or Ph.D. in science, technology, engineering or mathematics, can receive a green card and stay in this country where their talent and ideas can fuel growth and create American jobs;
- Eliminates the per-country caps for employment-based visas – which hinder U.S. employers from recruiting the top-tier talent they need to grow;
- Requires all government agencies to conduct a cost-benefit analysis of all proposed “significant rules” with an economic impact of $100 million or more. This new requirement will help determine the efficacy of regulations and their potential impact on the formation and growth of new businesses; and
- Directs the U.S. Department of Commerce to assess state and local policies that aid in the development of new businesses. Through the publication of reports on new business formation and the entrepreneurial environment, lawmakers will be better equipped to encourage entrepreneurship with the most successful policies.