PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Chairman Brady’s Amendment to “Tax Cuts and Jobs Act” Will Boost Startup Growth and Success

By at 6 November, 2017, 9:22 pm

NEWS

FOR IMMEDIATE RELEASE

Washington, D.C. – House Ways and Means Chairman Kevin Brady (R-TX) introduced an amendment to the Tax Cuts and Jobs Act, which includes an important measure to help startups attract and retain the skilled employees they need to successfully scale their businesses, raise capital, and compete in the marketplace.  Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan applauded Chairman Brady for his continuing efforts to strengthen the tax reform bill for entrepreneurs and small businesses.

“Chairman Brady continues to listen to entrepreneurs and the small business community about their ideas to improve the already strong tax reform package unveiled last week. The inclusion of this measure to ensure that employees of startup companies can effectively share in the success of the promising firms they work for will lead to more successful startups and higher levels of startup activity in the United States. Our economy will benefit greatly from the dynamism and innovation that more successful startups bring to the marketplace,” said Kerrigan.

Startup companies face many growth obstacles, including the recruitment and retention of skilled employees. Employees at startup companies often do not enjoy the higher salary levels offered at established companies, but are drawn to the idea of helping to build an enterprise that is at the forefront of the next innovation. At many startup companies, employees are offered stock options or equity ownership to compensate for lower compensation. Currently, if employees exercise these options, they are required to pay taxes immediately but sometimes lack the resources to do so. That means they may miss out on a potential financial opportunity. This presents a barrier for some individuals to join a startup, which means both the company and individual lose, and so does our economy.  Chairman Brady’s amendment resolves this barrier by allowing employees to elect to defer recognition of income for up to five years, if the corporation’s stock is not publicly trade.  This measure has received considerable bipartisan support in the House in the form of legislation.

“Encouraging more entrepreneurship and helping startups get off the ground and scale successfully is critical for our economy.  Business dynamism needs to rebound, but weak entrepreneurship has been a big drag. A healthy policy ecosystem is vitally important to healthy entrepreneurship and the Tax Cuts and Jobs Act is transforming the tax code to support more investment, which will drive bigger economic growth and give people the confidence they need to start a business,” Kerrigan added.

You can read the summary of the amendment introduced by Chairman Brady here (the amendment includes other measures as well.) 

As noted by SBE Council’s research on the gap in entrepreneurship, the cumulative effect of low business creation over the past decade or more equates to 3.42 million “missing” businesses in our economy.  The latest jobs data released last week, however, finds good news on “recovering entrepreneurship” with three straight months of self-employment gains. Read SBE Council’s release to see the summary of the data.

CONTACT:
Karen Kerrigan, kkerrigan@sbecouncil.org, 703-242-5840

Raymond Keating, Chief Economist, rkeating@sbecouncil.org, 631-909-1122

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For nearly 25 years SBE Council has worked to successfully implement a range of policy and private sector initiatives to strengthen the ecosystem for startups and small business growth. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil

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