On Friday, Moran (R-Kan.) and Warner (D-Va.) introduced the fourth version of their Startup Act — a piece of legislation they have been lobbying for and tinkering with for more than four years, and one that, in its latest iteration, would tweak the nation’s tax code, immigration laws and regulatory system in ways intended to help revive America’s entrepreneurial economy.
“It’s new businesses that are going to create new jobs, and there are certain policies that need to be in place for that to occur,” Moran said in a joint interview with the two senators. “We need entrepreneurs and start-ups, and they need this kind of legislation.”
Moran and Warner both pointed to research by the Kauffman Foundation, one of the country’s leading entrepreneurship research organizations, that suggests new and young businesses have historically been responsible for a large share of new jobs created annually in the United States. However, the rate of start-up activity has recently fallen sharply, to the point where business deaths now outpace business births nationwide.
Hoping to reverse that trend, the senators proposed the original Startup Act in December of 2011. Startup Act 2.0, complete with a few tweaks, arrived the following year, and Startup Act 3.0 was pitched the year after that. At this point, the bill’s authors have decided to stop counting, reverting to the original moniker, the Startup Act.
Like its predecessors, this latest version features a number of changes to the country’s much maligned immigration system, including the creation of a new entrepreneur visa that would enable up to 75,000 non-citizens to start and attempt to grow a business in the U.S. Should the company meet certain investment and hiring benchmarks within the first three years, the entrepreneur can eventually apply for a permanent visa.
In addition, the Startup Act would create a new visa for up to 50,000 foreign-born students who graduate from a U.S. university with a degree in science, technology, engineering or math (collectively known as STEM) fields, and it would eliminate caps on the number of work visas that can be granted to individuals from each country.
It’s those immigration-related provisions that Moran believes would be “the most valuable,” to entrepreneurs. However, they are also likely to be the most difficult to push through Congress and the White House, he said.
In part, that’s because critics of proposal to add more STEM-related visas have warned that the change could flood the economy with foreign (and possibly lower-cost) labor, which could threaten to siphon away jobs from American workers. Supporters of the bill have shot back with evidence that the U.S. simply isn’t churning out enough STEM workers on its own to keep pace with growing demand from U.S. employers.
Meanwhile, even among those who see eye-to-eye on these so-called “high-skill” immigration reforms, there remains a difference of opinion in Washington over how to proceed with an immigration system overhaul. Generally, Republicans have been open to a piecemeal approach, while some Democrats, including President Obama, have insisted on a more comprehensive, all-or-nothing legislative approach.
“My guess, and it’s an educated guess, is that 80 percent of the Senate would support the provisions in this bill,” Moran said. “Just because we can’t agree on everything doesn’t mean we can’t do something.”
While Warner still believes “best way to tackle immigration is to take a comprehensive approach,” he says the country must hurry up and revise the rules that prevent foreign-born students who obtain degrees from U.S. schools from working here after graduation.
“Jerry and I may not agree on all the other [immigration] pieces, but we do agree that some of our policies are kind of crazy, where some of the best and brightest come here to study and are then required to leave,” he said.
Coupled with the immigration provisions, the latest Startup Act would make permanent a complete exemption on capital gain taxes on investments held for at least five years in qualifying small businesses (those with less than $50 million in assets), create a research-and-development tax credit worth up to $250,000 for companies less than five years old, and require federal officials to conduct a comprehensive cost-benefit analysis on the likely effects on start-up companies when proposing new rules and regulations.
“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 start-ups, and create pathways for fledgling start-ups to become iconic American businesses,” Steve Case, founder of Revolution Ventures and a former member of Obama’s Council on Jobs and Competitiveness, said in a statement. “The Startup Act encourages that.”
The measure would also devote more federal funding to help American universities more quickly commercialize technology and inventions that spawn from on-campus research.
“It doesn’t get a lot of attention, but I think that’s one of the most valuable parts of the bill,” Warner said.
The initial plan, Moran and Warner said, is to try once again to move the Startup Act through Congress as a complete package. However, both said they were willing to break off pieces and try to move them separately — perhaps as part of a broader immigration package or a larger tax reform bill — if the opportunity presents itself.
“This ought not be a Republican-Democrat fight or a Congress-President fight,” Moran said. “This has the potential to be one of those things where the concentric circles come right together around this legislation.”
The Washington Post
