A bipartisan group of lawmakers has introduced a Senate bill to spark the creation of startup businesses, with tax breaks and visa opportunities for foreign students, foreign-born entrepreneurs and immigrant employees.
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Senators Jerry Moran, R-Kan., and Mark Warner, D-Va., along with Marco Rubio, R-Fla., and Chris Coons, D-Del., introduced Startup Act 2.0 on Tuesday. The bipartisan legislation follows on the heels of the JOBS Act, which President Obama signed into law last month (see Obama Signs JOBS Act of Small Businesses into Law). Like the JOBS Act, the Startup Act 2.0 aims to jumpstart the economy through the creation and growth of new businesses. Startup Act 2.0 also builds upon the original Startup Act, introduced by Sens. Moran and Warner in December 2011, and the AGREE Act, introduced by Sens. Coons and Rubio in November 2011.
The new legislation would make permanent the exemption of capital gains taxes on the sale of startup stock held for at least five years, so investors could provide financial stability at a critical juncture of firm growth.
The bill would also create a targeted research and development tax credit for young startups less than five years old and with less than $5 million in annual receipts. The R&D credit is designed to allow startups to offset employee taxes, freeing up resources to help young companies expand and create jobs.
Other provisions of the legislation relate to visas for foreign students, entrepreneurs and immigrants. The bill would create a new STEM visa so that U.S.-educated foreign students who graduate with a master’s degree or Ph.D. in science, technology, engineering or mathematics could receive a green card and stay in this country where their talent and ideas could fuel growth and create American jobs.
The bill would also create an Entrepreneur’s Visa for legal immigrants, so they could remain in the United States, launch businesses and create jobs.
In addition, the bill would eliminate the per-country caps for employment-based immigrant visas, which hinder U.S. employers from recruiting the talent they need to grow.
“Our bipartisan economic growth plan sets out to prove the critics wrong: Congress can get something done during an election year by coming together to strengthen the economy and create jobs,” Moran said in a statement. “To get America’s economic engine roaring once again, entrepreneurs—both American and foreign-born—must be free to pursue their ideas, form companies in the United States, and hire employees. Startup Act 2.0 will create jobs for Americans by creating a circumstance in which entrepreneurs can succeed and the United States can win the global battle for talent.”
Many of the principles included in Startup Act 2.0 are based on the research and analysis of the Ewing Marion Kauffman Foundation, and have been endorsed by President Obama’s Council on Jobs and Competitiveness.
Their research shows that for close to three decades, companies less than five years old have created almost all of the net new jobs in America—averaging about 3 million jobs each year. In addition, more than a quarter of technology and engineering companies started in the United States from 1995 to 2005 had at least one key founder who was foreign-born. These companies produced $52 billion in sales and employed 450,000 workers in 2005.
"Startup 2.0 offers smart, commonsense steps to support and encourage America’s innovators and entrepreneurs,” Warner said in a statement. “Working together, we have put together bipartisan proposals that will help us compete and win the global contest for talent. We also propose responsible steps that will help our colleges and universities move taxpayer-funded R&D out of the lab and into the marketplace. Startup Act 2.0 the logical ‘next step’ following enactment of the bipartisan JOBS Act earlier this year.”
Startup Act 2.0 had been endorsed by a variety of business and industry groups, including the Consumer Electronics Association, TechAmerica, the Financial Services Forum, the National Small Business Association, CONNECT, the CTIA wireless association, the Computer and Communications Industry Association, the Greater Kansas City Chamber of Commerce, and the Austin Chamber of Commerce.
The Information Technology Industry Council also said it supported the Startup Act 2.0. “From coast to coast, there is one issue on the minds of all Americans: create new jobs,” said ITIC senior vice president for government relations Robert Hoffman in a statement. “We need bipartisan solutions to policy barriers that are preventing new ideas, new businesses and new jobs from taking root here in the U.S. The Startup Act 2.0 meets those criteria and breaks down barriers to economic growth. It brings together Republicans and Democrats. And it would put more Americans to work.”