By Senator Jerry Moran, Senator Mark Warner, Senator Marco Rubio, and Senator Chris Coons
Inside the Beltway, conventional wisdom says that Congress does little during an election year. But Americans are eager to see Congress address our country's challenges -- most important, the economy and job creation.
We are introducing bipartisan legislation, Startup Act 2.0 on Tuesday -- to help jump-start the economy through the creation and growth of new businesses. We want to prove the critics wrong: Congress can get something done in an election year when we work together to strengthen the economy and create jobs.
Companies less than five years old have created nearly all net new U.S. jobs for almost three decades, according to Kauffman Foundation research, averaging roughly 3 million each year. Passing the JOBS Act in March was good news for the young companies now creating jobs. But entrepreneurs face additional challenges beyond access to capital. Startup Act 2.0 picks up where the JOBS Act left off -- by helping entrepreneurs to succeed.
Vital to any new business are the talented individuals who turn ideas into reality -- including foreign-born entrepreneurs. More than a quarter of technology and engineering companies created in the U.S. between 1995 and 2005 had at least one key founder who was foreign-born, according to researchers at Duke and at the University of California, Berkeley. Yet current immigration policies have hurt U.S. efforts to compete in the global contest for entrepreneurial talent.
Startup Act 2.0 creates an Entrepreneur's Visa for legal immigrants, so they can remain in the U.S., where their talent and ideas can fuel growth and create American jobs. It also creates a new STEM visa so that U.S.-educated foreign students who graduate with a master's or a doctorate in science, technology, engineering or mathematics can receive a green card and stay in this country, launch businesses and create jobs.
Our plan also eliminates the per-country caps for employment-based immigrant visas -- which hinder U.S. employers from recruiting the top-tier talent they need to succeed. U.S. future economic competitiveness depends on our winning the global battle for talent.
Another significant challenge facing startups is gaining access to enough capital to get off the ground. So our plan provides incentives to encourage investment in startup companies.
Startup Act 2.0 will make permanent the exemption of capital gains taxes on the sale of certain small-business stock held for at least five years -- so investors can provide financial stability at a critical juncture of firm growth. Our plan also creates a targeted research and development tax credit for young startups less than five years old and with less than $5 million in annual receipts. This research and development credit is designed to allow startups to offset employee taxes -- freeing up resources to help these young companies expand and create jobs.
Startup Act 2.0 also seeks to move taxpayer-funded university research more quickly to the marketplace, where it can propel economic growth. U.S. universities have historically been responsible for groundbreaking discoveries -- spawning new industries and creating countless jobs.
But not every institution is fully equipped to successfully mentor entrepreneurial researchers as they create new companies or work with industry to find innovative uses for the fruits of university-based research. Our proposal will use existing federal research-and-development funding to support university initiatives designed to bring cutting-edge research to the marketplace more quickly.
Another obstacle facing new businesses is the expense and time required to comply with government regulations. Firms with fewer than 20 employees spend 36 percent more per employee to comply with federal regulations than larger firms, according to the Small Business Administration. Our bill requires all government agencies to conduct a cost-benefit analysis of all proposed "major rules" with an economic impact of $100 million or more. This new requirement will help determine the efficacy of the rule and its potential impact on the formation and growth of new businesses.
Finally, Startup Act 2.0 will direct the Commerce Department to assess state and local policies that aid in the development of new businesses. Through the publication of reports on new business formation and the entrepreneurial environment, lawmakers will be better equipped to encourage entrepreneurship with the most successful policies.
In the past 16 months, six countries have implemented new policies to encourage more entrepreneurship, innovation and job creation within their borders. The U.S. cannot afford to turn a blind eye to our competitors or use the coming elections as an excuse to delay action on an issue so critical to our economic future.
Many of these bipartisan ideas are supported by President Barack Obama's Council on Jobs and Competitiveness. We look forward to working with the president and our colleagues to prove that conventional wisdom about Washington won't hold true this year.
Sen. Jerry Moran (R-Kan.) is on the Appropriations Committee and Small Business and Entrepreneurship Committee. Sen. Mark Warner (D-Va.) is on the Budget Committee and Commerce Committee. Sen. Marco Rubio (R-Fla.) is on the Small Business and Entrepreneurship Committee. Sen. Chris Coons (D-Del.) is on the Budget Committee.