Introduced to Congress by six Republicans and five Democrats, Startup Act 2.0 is a startling example of how Congress can still come together –across the aisle — to tackle an important issue. And in an election year at that !
Building on the President’s JOBS Act — another Silicon Valley-friendly piece of legislation, Startup 2.0 is an additional building block for economic recovery and eventually growth. If passed, the bill will continue to create much-needed jobs for the economy, and usher in the immigration reform for highly skilled workers that Silicon Valley and other high-growth regions urgently want.
As we wrote last week:
So, properly framed, the debate must center on what is best for business. One of the issues that reveals itself quickly in this debate is the strange way America treats highly skilled immigrants.
Writing for the Atlantic, Adam Ozimek, an associate at an economics consulting firm and Noah Smith, a PhD Candidate in Economics at the University of Michigan put it this way:
More than half of the start-ups in Silicon Valley…were started by immigrants, along with 25% of venture-backed companies that went public between 1990 and 2006…
In fact, immigrants have founded or co-founded nearly every legendary American technology company, including Google, Intel, Facebook, and of course Apple (you knew that Steve Jobs’ father was named Abdulfattah Jandali, right?)
Taiwan alone gave the United States the man who revolutionized AIDS treatment (David Ho), as well as the founders of YouTube, Zappos, Yahoo, and Nvidia.
And there’s more:
A report by the Technology Policy Institute found that visa restrictions kicked out enough foreign graduates of U.S. universities to slice $13.6 billion off of our GDP from 2003 through 2007.
After the JOBS act, and the President’s immigration directive sparing hundreds of thousands of young immigrants from deportation with work permits, Startup Act 2.0 is the next bill that seems to be taking these facts into account.
The shortage of STEM
According to the National Science Foundation and new research, American universities are not creating anywhere near enough STEM (science, technology, engineering, mathematics) graduates to meet the demand of American businesses. Currently, the number of jobs that require STEM degrees are increasing at three times the rate of the rest of the job market, yet science and math departments are still struggling to attract new college majors.
So, Startup 2.0 will create a visa for 50,000 foreign STEM graduate and Ph.D students. In 2012, 60% of foreign-born graduate students were studying science and engineering, but under the current laws, many of them will likely be forced to return to their home countries after graduation.
Why is this a good idea? Each foreign-born advanced degree holder who stays in the United States to work in a STEM occupation will create an estimated 2.6 American jobs !
Help for budding entrepreneurs
In this high tech world, STEM graduates (many foreign born) create great entrepreneurs. As also noted by Adam Ozimek and Noah Smith, more than 40 percent of all Fortune 500 companies were founded by an immigrant or the child of an immigrant.
Startup 2.0 therefore proposes conditional visas for 75,000 budding immigrant entrepreneurs — to be distributed irrespective of country of origin.
Incentives for investors
Rebuilding an economy not only means starting businesses and creating jobs but really building businesses — and to do that, capital is key. Instead of tax policy rewarding flash trades on Wall Street, Startup 2.0 will encourage investors to make a five year (or longer) financial commitment to a startup by lowering their effective tax rate.
With capital, the budding entrepreneurs can innovate, expand, and hire more Americans. And speaking of innovation, the act also lays out the plans for a research and development credit to offset some early taxes for entrepreneurs and to help universities transfer cutting-edge ideas from campus to the marketplace.
Representative Grimm (R-NY), co-sponsor of the bill, had this to say:
Startup 2.0 is about creating American jobs. Too often we educate the world’s best and brightest in STEM fields, only to send them back to countries like India and China to open businesses and compete against us. This bill will keep top talent here in the U.S. to build businesses that hire Americans, and drive U.S. innovation and competitiveness. I thank Senator Moran for his leadership on this legislation in the Senate and thank my colleagues in the House for working together across the aisle for the greater good of the American people and the U.S. economy.
The introduction of the Startup Act 2.0 shows bipartisan agreement that America can no longer afford to wait. With our national economy still struggling, immigration reform would provide a vital, immediate, and cost-free stimulus that would help put more Americans back to work.
There are, however, some pointed criticisms of the Act.
Yuri Ammosov, writing in TechCrunch explains that while Startup 2.0 is great for foreign graduate students, it’s not so great for foreign tech entrepreneurs:
Professions that require a graduate degree like MBA, JD, MD, architecture and so on, are not eligible, as well as STEM disciplines that are not listed (no “storage” or “cloud”, for example)…
Startup Act 2.0 is not worthless. There are still many science and tech graduate students who will be able to take advantage of it. But it would be more appropriate to rename it to STEM Masters’ and Doctors’ Visa Act. This will be a better description of what’s inside.
And The Atlantic, also mostly supportive of the act, questions why we aren’t focussing on building entrepreneurs right here at home:
The Startup Act can help tackle this problem by incentivizing and funding public schools to bring computer programming — or coding — into classrooms. The goal would not be to mold every child into the next Mark Zuckerberg, but to ensure everyone in our society can better understand the code that affects their lives. Thinking like a programmer is not only helpful to succeed in any technical career, it will also become integral to simply navigating our increasingly digital world. Code consists of languages that can be taught just as we already teach the “language” of math, the language of music, and the language of Spanish vocabulary and grammar.
As with any piece of government legislation, this Act is not perfect. But, it’s better than what we have now (the numbers speak for themselves), and with members on all sides uniting behind its provisions for growth and jobs, who are we to say pooh?
- Congress Should Pass The Startup Act 2.0 (techcrunch.com)
- Startup Act’s economic benefits (politico.com)
- David Leopold: The Startup Act 2.0 Offers Immigration Solutions That Will Create American Jobs (huffingtonpost.com)
- Reps. Grimm, Sanchez Introduce Startup Act 2.0 to Create U.S. Jobs and Reform High-Skilled Visa Policy (grimm.house.gov)