11 Policy Recommendations to Spur Startups
Now the 12-city road trip taken by John Dearie of the Financial Services Forum and Courtney Geduldig of Standard & Poor’s has resulted in a book. The two have co-authored Where the Jobs Are: Entrepreneurship and the Soul of the American Economy, recently published by John Wiley & Sons. All proceeds of their book will be donated to various entrepreneurship incubators and accelerators across the nation.
Along the way, Dearie and Geduldig conducted roundtables with entrepreneurs and asked them a very basic question: “What’s in your way?” From those conversations, they’ve come up with a list of policy recommendations:
Our remarkable summer on the road meeting and listening to America's entrepreneurs revealed with unprecedented clarity and credibility the major obstacles undermining their ability to launch new businesses, grow those businesses, and create jobs. With those obstacles in mind, we've put together a game plan for unleashing the job-creating capacity of the entrepreneurial economy based on what American entrepreneurs told us they need:
- Cultivate new business formation, survival, and growth by providing fragile start-ups substantial tax and regulatory relief during their critical first five years;
- Rank all 50 states as to their regulatory friendliness to start-ups, with the metrics and rankings published online for easy use by entrepreneurs;
- Create a Regulatory Improvement Commission (RIC), modeled on the Base Closure and Realignment Commission (BRAC) to serve as a procedural mechanism for the regular evaluation, simplification, consolidation, and elimination of selected existing regulations;
- Incentivize badly needed workers with backgrounds in science, technology, engineering, and math (STEM) by awarding new graduates a $50,000 federal tax credit applied up to $10,000 per year during their initial five years of employment;
- Launch an immediate dialogue between business and education leaders to ensure that K-12, college, and university curricula serve both the broad education needs of American students, as well as the skill needs of 21st century businesses;
- Attract and retain the world's best talent by eliminating the arbitrary and self-defeating cap on H-1B visas, awarding green cards to all foreign-born graduates of American colleges and universities meeting security requirements who earn degrees in STEM fields, and by creating a "Start-Up" visa for foreign-born entrepreneurs;
- Incentivize the formation and commitment of "angel" capital—which accounts for more than 80 percent of outside "seed" funding of start-ups—by way of a 25 percent federal tax credit;
- Help more young companies go public earlier—more than 90 percent of new-business job creation occurs after their initial public offering—by restoring the economics of small cap IPOs, severely damaged by the decimalization of stock prices;
- Raise government-funded R&D to its historical high of 2 percent of GDP;
- Restore the commercial R&D tax credit to the most favorable in the world—and make the credit permanent; and,
- Accelerate the growth of exports by negotiating trade agreements with the world's largest and fastest growing economies like China, Brazil, and India.
Read more over at the Economics21 blog. And tell us in the comments section: which policy do you think would stimulate entrepreneurship and economic growth?