We're so used to Congress trying to muck up the internet, that it's rare we hear about cases where they're actually looking to make things better. While the idea has been floating around for a little while, (and the actual bill
was introduced back in December when we were focused on the whole SOPA/PIPA debate), the Startup Act is starting to get some attention, with co-sponsors Senators Jerry Moran and Mark Warner taking to the WSJ to explain why the Startup Act is important
. The basic idea behind the bill is to remove some of the regulatory hassles of starting and building
a new company. As we've pointed out repeatedly, studies have shown that pretty much all of the net job growth in the US comes from startups
, and a bill like the Startup Act should help make it easier for startups to get going. To be honest, the bill could be even stronger in a bunch of places, but as a starting point, it's definitely nice to see. The focus is on making it easier for startups to be startups by doing the following:
- It will make permanent a capital gains tax exemption on the sale of certain kinds of small business stock that is held for at least five years. In other words, it will encourage long-term investment in startups, which is just the kind of investing we should be encouraging (rather than quick flip type investing, which is more about gambling on changes, rather than investing in economic growth).
- It decreases corporate taxes on new businesses during their first three years of profitability -- again making it easier for young companies to grow and to reinvest their own profits in jobs and growth.
- While it doesn't do away with crippling government regulations for small businesses, it does require a cost-benefit analysis of the economic impact of many of those regulations on startups.
- It implements a simplified form of the startup/founders visa -- which is about helping non-Americans start companies and create jobs in the US. We've talked about the startup visa in the past and why it's a good idea. No matter how you feel about other immigration issues, this one is pretty clearly about having immigrants create jobs in the US (rather than elsewhere).
There are a few other things in the bill, but overall the key point is to basically get overbearing regulations out of the way. These are regulations that bog down many startups (or prevent them from getting started at all), and really put a drain on the key part of the economy that is contributing to both job growth and economic growth. It's rare to see Congress trying to do something that helps the internet, rather than mucks it up, so we should certainly highlight when such efforts are being pushed forward. I have a few quibbles around the edges on pieces of the bill, and really think it should go further in other areas, but on the whole it's a really good start.