Barbara’s Blog

Some sources say that the U.S. has started to run out of entrepreneurs.

The number of startups among American-born individuals is not growing as in the past.

For example, one study found that entrepreneurship among veterans has been declining steadily over the past two decades.

However, entrepreneurial talent is still abundant in foreign-born individuals. Some foreigners come to the U.S. for college and want to remain to launch businesses; others wish to move here to start businesses.

Still, the number of foreign-born entrepreneurs is slipping. A Kauffman Foundation report found that

“the proportion of immigrant-founded companies nationwide has slipped from 25.3% to 24.3% since 2005. The drop is even more pronounced in Silicon Valley, where the percentage of immigrant-founded start-ups declined from 52.4% to 43.9%.”

One of the main problems appears to be the current U.S. visa system. It is not friendly to entrepreneurs. Sure, there’s an H-1B visa for employees. Companies must prove that they control the worker, with the right to fire him or her (something an entrepreneur working for his own company can’t do).

Then there’s the E-2 visa for investors. It requires substantial investments in order to qualify (again, something that many entrepreneurs may not be able to do). But unlike in countries such as Canada and New Zealand, there is no special U.S. visa for entrepreneurs.

Bill to permit visas for entrepreneurs

Startup Act 2.0 is a bill introduced last year that would allow visas to be issued to entrepreneurs. The requirement for the visa: Invest $100,000 and create at least two jobs within the first year of the visa. The visa would last for four years. As long as the entrepreneur employed, on average, five full-time (non-family) employees during this period, he or she would then be eligible to obtain a green card (permanent residency). The bill calls for the issuance of 75,000 entrepreneur visas and eliminate per-country quotas.

The bill had bipartisan support from the likes of Sens. Mark Warner (D-VA) and Marco Rubio (R-FL). It remains to be seen whether the measure will be renewed in the new Congress.

Tax breaks to encourage entrepreneurship

The Startup Act 2.0 would go beyond visa assistance for foreign-born entrepreneurs. It would give every entrepreneur (native born or foreign born) access to the following tax breaks:

• 100% capital gains tax exclusion for stock in a C corporation held more than five years (a tax break that applied in 2011; currently the exclusion is only 50%). The break would apply only to qualified small businesses, such as tech companies and manufacturers.
• A special research credit for startups with less than $5 million in annual receipts and less than five years old.
• A tax credit to encourage employment. It would be up to $250,000 or 20% of W-2 wages, whichever is less.

Final thought

As the new Congress begins to consider the issue of immigration, let’s hope that attention is paid to the need to create a special entry process for entrepreneurs.

Each year, the federal government celebrates small business. There are awards, speeches, seminars, and luncheons for the men and women who risk it all to innovate, employ, and serve the U.S. economy. This year’s Small Business Week — May 20-26 — is more of the same.

I think it’s great that we recognize the achievements of select businesses and honor them. However, it seems a little off base for the federal government to be participating in the celebration. More small businesses could be starting and growing were it not for some of the policies of the federal government.

A report from the Small Business & Entrepreneurship Council found that small business isn’t happy with Washington. The survey found an intense dissatisfaction with the overall direction of federal policies and what they meant to the economy, with 61% of small business owners saying they not satisfied with economic policies from Washington.

The National Federation of Independent Business (NFIB) found that taxes continues to be a top problem for small businesses because of uncertainty and looming hikes as well as the regulatory burden imposed by compliance. Key findings:

• It costs around 206% more (an estimated $74 per hour) for small businesses to comply with the federal income taxes than for larger companies.

• If changes in tax law are not made before the end of this year, the nearly $500 billion in new taxes will fall disproportionately on small businesses.

• Many of the most popular tax breaks for small business have expired or are about to expire.

• Family-owned businesses are threatened by the prospect of a rising estate tax, which is set to jump from 35% this year to 55% next year.

Getting back to the dream of owning one’s own business? Entrepreneurs want to innovate, hire, and thrive. To do this, they need a climate of certainty about the rules within which they operate. Taxes have to be fixed for the foreseeable future. Regulations have to be eased. Lending policy has to stabilize. Right now, we’re living the nightmare.

What can small business owners do? Congress should not wait until a lame duck session to address tax and other matters. Small business needs certainty now. Make your voice heard.

The President has proclaimed November as “National Entrepreneurship Month.”  Now is the time to cheer for ourselves, existing entrepreneurs, and help others achieve their dreams of entrepreneurship.

SBA activities

In celebration, the Small Business Administration is pushing three programs:

• Student start-up plan to help graduates manage their student loan debt so they can start businesses. This income-based repayment plan for federal student loan debt can limit repayments to 15% of discretionary income.
• Young entrepreneurs series is a live program held at various locations around the country. The program educates young people about entrepreneurship; connects them to each other and other successful business owners; and supports them by providing better access to tools, resources and information on how to start, grow, and manage a business.
• Apps for entrepreneurs contest will award prizes of $20,000 for apps created to help small businesses and entrepreneurs navigate the federal government more effectively. Entry deadline: November 20.

Kauffman Foundation activities

There are a number of events highlighting global entrepreneurship week, which starts on November 14. In the three short years since the Kauffman Foundation helped to get Global Entrepreneurship Week started, it has expanded to more than 100 countries—empowering nearly 20 million people through 95,000 activities.

Find a list of what is happening globally here.

Representative Robert Dold (R-Illinois), who ran a small business before coming to Congress, became the first new representative in this session to get a bill passed. The FHA Refinance Program Termination Act (H.R. 830), which passed the House on March 10 with some bipartisan support, would eliminate an ineffective (i.e., wasteful) mortgage restructuring program. The measure is now in the Senate.

It is a good example of how small business owners can identify wasteful spending and know how to get things done.

Rep. Dold’s background:

He ran Rose Pest Solutions, a small business founded in 1860, which is the oldest pest management company in the United States. Dold is one of 33 new members of Congress who are entrepreneurs and small business owners.

Find more information about other members from AOL Small Business.

Now that more members of Congress have a business background, it is hoped that government actions will be sensitive to and supportive of small business needs in particular, and helpful to the country in general.

Historically, most members of Congress had business backgrounds. According to one source: “In the First Congress in the House of Representatives [in 1789], 36% of the members were farmers or planters, 17% were merchants, 5% were ministers and 5% were officeholders…” and in the “Senate of the First Congress, 48% were planters or large landholders, 38% were lawyers and 14% were merchants.”

Support your representatives when they work to eliminate government waste, cut taxes, and reduce spending. Find your representative by zip code from Congress.org.