Obama Urges Legislative Action for Start-Ups

In January 2012, President Obama introduced the “Startup America Legislative Agenda” to Congress with the intent to ease financial and tax burdens on new businesses and to accelerate growth in start-ups.

The president’s legislative proposals include:

    • Tax Breaks
        • Permanently eliminating capital gain taxes on investments in certain small businesses to incentivize investors to fund start-ups and companies in the early stages of development.


        • Permanently increasing the tax deduction for entrepreneurs, allowing deductions of up to $10,000 (increased from $5,000) for start-up expenses.



    • Access to Capital
        • Providing start-ups with greater access to capital by creating a national framework for crowdfunding and allowing businesses to raise up to $1 million through that framework.



        • Deferring SEC reporting and auditing requirements for emerging growth companies for up to five years after their initial public offering.  As defined, these companies have less than $1 billion in annual revenues, have issued less than $1 billion in public debt over any three-year period and have a public float of less than $700 million.



    • Elimination of Visa Caps  Attracting foreign entrepreneurs to the United States by eliminating country-specific visa caps.


President Obama hopes that these legislative initiatives will provide easier access to additional capital, lower costs and greater growth opportunities for start-ups.  By increasing incentives for investors and providing a variety of funding and cost-saving opportunities for start-ups and small businesses, the president anticipates an expansion in entrepreneurial activity and concomitant job creation.

While the initiatives have given entrepreneurs and investors cause for optimism, doubt remains as to the likelihood of Congressional approval during an election year.  Time will tell whether the president has the bipartisan support necessary to turn these initiatives into law.

This post on Start-up Issues was authored by Nina Chen.


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