PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Entrepreneurship Key to Opportunity and Wealth Creation in America

By at 6 August, 2014, 10:21 am

A new analysis by the Tax Foundation finds that entrepreneurial skill - not inherited money - is the driver of  wealth creation on the Forbes 400 list of America's richest people.  Entrepreneurs comprised 69% of the list in 2011, compared to 40% in 1982.

A new analysis by the Tax Foundation finds that entrepreneurial skill – not inherited money – is the driver of wealth creation on the Forbes 400 list of America’s richest people. Entrepreneurs comprised 69% of the list in 2011, compared to 40% in 1982.

By Karen Kerrigan-

A new analysis by the Tax Foundation affirms the importance of entrepreneurship and the need for greater startup activity in America.

Entrepreneurial activity has yet to fully rebound from pre-recession levels. In fact, according to data from the Department of Labor, self-employment in June 2014 reached its lowest level since 1986. The decline has been occurring for some time, and is the reason why SBE Council continues to push for policies that will create an enabling environment for startups and entrepreneurial activity: abundant and affordable access to capital, regulatory certainty, tax reform, investment in energy and broadband, and lowering barriers to markets.

Of course, entrepreneurship drives innovation, job creation and competition, but also plays a significant role in wealth creation. Starting and growing a business has been the path to financial security for millions of Americans. Some of these entrepreneurial pursuits make it big, and their founders end up on the Forbes 400 list of America’s wealthiest people. In fact, a historical analysis of the Forbes 400 by the Tax Foundation finds that the wealth generated by the list is largely the result of entrepreneurship, not inheritance, as some have asserted.

According to the Tax Foundation, “most people on today’s Forbes 400 were not there a generation ago, nor were their forebears. 327 people have dropped off the list since 1987. Of the remaining 73 people, those with the highest annual rates of return are generally self-made entrepreneurs and investors—not heirs—with an average annual real rate of return of 5.6 percent over the last 26 years.”

The report found that wealth today is largely generated by entrepreneurial skill, “with the number of entrepreneurs on the Forbes 400 list rising from 40 percent in 1982 to 69 percent in 2011.”

Success stories of Forbes 400 people – Jeff Bezos, Bill Gates, Mark Zuckerberg, Patrick Soon-Shiong, Gayle Cook, Diane Hendricks, H. Ross Perot and Oprah Winfrey, among others – are inspirational to many, including small business owners with big dreams, or women and men hoping to start a new enterprise. These successful entrepreneurs followed their passion and worked hard to build amazing enterprises. If you read their personal journeys, you will find that most were not driven by wealth, but were (and remain) wildly passionate about their ideas and building something larger than themselves. That is the American dream. That is what makes America great.

Oh, and along the way, these entrepreneurs helped to create wealth and opportunity for many who toiled along with them – employees, suppliers, partners, contractors, and investors – and within the communities where their businesses are based.

This week, we mark “Startup Day Across America 2014,” which occurred on August 5. Activities and events will take place all month long. Celebrating startups is important and noble, but elected officials need to take action on policies that will encourage higher levels of entrepreneurship.  More than 350 bills have passed the U.S. House in this session (most with bipartisan support), which include dozens of measures to improve the environment for small business growth and startups. Surely there is common ground and compromise that can be forged with the U.S. Senate.  However,  Majority Leader Harry Reid (D-NV) needs to get moving. He controls the levers of action, and has been handed hundreds of bipartisan bills approved by the U.S. House.

To kick start entrepreneurial activity in America, Majority Leader Reid can begin by identifying areas in the House-passed bills where common ground is apparent. He will find that many of his Democrat colleagues are eager to take action on measures to improve the climate for entrepreneurship and investment in America.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.

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