More detail on the Startup Act (proposed by Kauffman)

August 29, 2011

Edward R. Muller, CEO of GenOn Energy, and Larry Zimpleman, president and CEO of the Principal Financial Group, co-authored a piece in the Wall Street Journal entitled An Entrepreneurial Fix for the U.S. Economy.  In it they provide a little more detail about the previously mentioned “Startup Act” proposed by the Kauffman Foundation.  With early-stage activity at its lowest lever since 1977, any or all of these ideas could only help.

The Kauffman Foundation recently proposed a way to do that with a set of ideas aptly called the Startup Act. Those ideas, which would cost the government virtually nothing, include:

• Letting in immigrant entrepreneurs who hire American workers.

• Reducing the cost of capital through capital gains tax relief for early stage investments.

• Reducing barriers to IPOs by allowing shareholders to opt out of Sarbanes-Oxley.

• Charging higher fees for patent applicants who want quick decisions to remove the backlog of applications at the Patent Office.

• Giving licensing freedom to academic entrepreneurs at universities to accelerate the commercialization of their ideas.

• Having the government provide data to permit rankings of startup friendliness of states and localities.

• Regular sunsets for regulations and a consistent policy of putting new ones in place only if their benefits exceed their costs.

There is no time to waste. The president must meet as soon as possible with congressional leaders to develop a menu of policy initiatives to reignite the startup job machine. Despite the deep divisions on taxes and spending, there is overwhelming support in this country for letting entrepreneurs work their magic without excessive government interference.

Other nations look to the United States as a model for new company formation. Our Treasury debt may not be as valued as it once was, but we can’t let our entrepreneurship brand be tarnished.

We realize America’s larger businesses have their own agendas and ideas for moving our country forward. But all of us know where the energy that drives our economy comes from—new companies with new ideas that build confidence and optimism. We will all profit when our elected leaders understand and act on this fundamental fact too.

The authors make a valid point about the politics of the situation.  Although we are on record as supporting growth-oriented tax policies – with a preference for broad-based measures since they tend to be a more efficient solution than targeted credits – it’s important to support any and all politically feasible means to make early stage investing more attractive.

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