What a Non-Partisan Plan for U.S. Entrepeneurship Would Look Like

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The Republican National Convention praised small businesses and the Democratic response will praise the administration's role in helping job creators. But what would a non-partisan plan for entrepreneurs look like?

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The theme of the first day of the Republican National Convention was "We Built It," a rallying-cry from entrepreneurs who insisted that they didn't need government to start their businesses. This week, we can expect the Democratic response to highlight the ways Obama's administration has empowered job creators.

But what would an entrepreneur-first platform, stripped of party politics, really look like? Last week, I asked readers for answers. From hundreds of comments on the original article and  notes on Hacker News, here are 19 comments that paint a big picture, even if some of the smartest comments disagree with each other: First, we need the economy to come back. Second, we need tax reform that both simplifies and refocuses on helping small companies rather than established corporations. Third, there was broad support for a universal health care option -- or at the very least, a move away from employer-sponsored insurance subsidies, which put large and start-up companies on unequal footing. Finally, readers pointed to an array of regulatory, paperwork, and patent rules that needed tinkering. 

Here are your ideas...

FIRST: LET'S FIX THE ECONOMY

It all starts with consumers...
Address the housing/household debt crisis.  Homeowners cannot spend because they have near-record levels of debt (about 90% GDP vs. 50% in 1980).  Businesses are not investing without customers, so the economy is struggling.  The key insight here is that private debt holds back an economy to a much greater extent than public debt. So the government should go big, say $3 trillion in bonds issued for 1.75% over 2 years, and buy mortgages.  It then cuts the mortgage balances say 30%.  Households paying say 4% in interest would help the government recoup a chunk of the write-down.  Even better would be if the Fed just printed the money, but I'll take either. - Farcaster
UNCHAIN HEALTH CARE FROM EMPLOYERS

How health care costs pushed an entrepreneur into government work

Six years into my law enforcement career, I was hospitalized with a major illness. Although I had excellent insurance, my co-pays reached $10,000. Once released from the hospital, I returned to work because I couldn't afford to do otherwise. I paid off the $10,000 and concluded that the stress of my job was contributing to ongoing health difficulties. Although I had the skills and experience to start my own business, I decided that I could not do so because I needed health insurance and, as a self-employed person, I would be forced to obtain health insurance on my own. When I checked into it, I found that I could not purchase health insurance because of my "pre-existing condition". So, I spent the remainder of career working for government instead of as an entrepreneur.

'Universal single payer would cause an explosion of entrepreneurship'

Universal single payer health care would cause an explosion of entrepreneurship the likes of which the USA has not seen in a long, long time. In the current situation, anyone with a family or a chronic condition is pretty much restricted to working a BigCorp job unless / until this happens. - flxmglrb

'The "pay raise" goes to [health] benefits'

I am a small business owner, and each year the medical premium goes up. We haven't even be able to give pay-raises, because the "pay raise" goes to benefits. Give us a level playing field with China, and Europe by creating a single payer system. - lulucaliente

'The last thing employers want to worry about is providing health care'

We need universal health care for everyone, provided by, or at least coordinated by, the federal government. The last thing employers want to worry about is providing health care for employees, let alone themselves. And providing health care for yourself as an entrepreneur, even with a college degree, is no small feat. Many (but not all) states require that a "group" plan involve at least two people. Now that individual health care plans cannot as easily reject applicants on the basis of pre-existing conditions, this isn't as much of a problem, but it's still absurd that entrepreneurs in one state should have to work more or less hard to secure basic health care than entrepreneurs in another, or bring on other individuals too soon. - Aaron Greenspan
TAXES: SIMPLIFY, SIMPLIFY, SIMPLIFY

'Let's get a non-regressive tax system for businesses'

Allow Subchapter S corporations to retain earnings tax free up to ~$250K / year. Today, if a small (sub S) business makes a profit, the owner has to pay tax as though it were income. Despite all the bitching by the 1%, large corporations pay much less. Let's get a non-regressive tax system for businesses that favors startups and small businesses. - Zansfar Ifnif

'Let's tax corporations that source labor or goods overseas'

Address the trade deficit/globalized off-shoring model.  A trade deficit must be borrowed by definition. It wasn't a big deal at 1% GDP in the 1990's, but at 6% in 2008 it created so much borrowing (and the funds were diverted into houses) that it created a bubble, which has since burst. Bernanke has argued that a trade deficit pushes money into a country, which lowered interest rates. All of the countries in Europe that are struggling have significant trade deficits, while Germany has a sizable surplus. So let's tax corporations that source labor or goods overseas for the wage differential.  If a foreign company wants to sell here, it can build a plant here to employ our workers or else pay the tariff for the wage differential.  We allow our corporations to circumvent our labor laws, generating record profits for them and huge safety net costs for the government. We don't know about them because we are borrowing rather than taxing to pay for these costs. - Farcaster

'Abolish the payroll tax'

The number one most entrepreneur-friendly (and worker friendly and economy friendly) policy would be to abolish the payroll tax. Second one would be cheaper healthcare, as David Ryan points out. Third one would be to, if not lower taxes, at least drastically simplify the tax system. (Loopholes favor big companies at the expense of smaller ones.) - Pascal-Emmanuel Gobry

'All I need is for the tax code to stop trying to do hundreds of things (most of them badly)

The best thing we could do with the tax system to encourage entrepreneurs?  Simplify it.  At the moment, I have a choice of spending my money on an "expert" who can navigate the mess, or paying way more than I theoretically should because I don't have time and expertise to study tax law for several years so I can do my own. I don't need special tax credits.  I don't need special tax rates for capital gains.  I don't need subsidies.  All I need is for the tax code to stop trying to do hundreds of things (most of them badly), and just raise revenue.  Nothing more.  It doesn't even need to be a flat tax; probably shouldn't be.  It just needs to be simple enough that a normal person can figure it out.  I've got better things to do with my time and money than mess with the tax laws. - wjca

'Simplify the tax code'

The best way to help entrepreneurs is to simplify the tax code. Cut the tax rates to 1 or 2 tax rates. Eliminate virtually all personal deductions. The government should quit trying to play God in funneling where income should go. Specifically:

-- Find the income tax rate that raises the right amount of money. Maybe 2 rates. Give the practicability of low rate of tax to the government and stop all of the activity designed to lower taxes.

-- Equalize tax treatment for wages and benefits. Why should one form of income be tax free while another be taxed. This distortion makes companies find a way to transfer income via benefits instead of cash. Full taxation to individual for medical and other benefits provided by companies.

-- Elimination of large personal tax deductions, especially the mortgage interest deduction. A huge part of the entrepreneurial class is the guy who owns a single rental house. But distortions of the housing market due to deduction of interest increases prices of real estate makes it harder to purchase one.

-- Eliminate double taxation of dividends. There's absolutely no reason for income to be taxed both at the corporate and the individual level.

I'll stop there. But there's lots more in the tax code. Every carve out by powerful interests hurt entrepreneurs (although some fit in both categories). Get the government out of the way so the entrepreneurial class can flourish is the best way to help them. - Buckland
EDUCATION: ENCOURAGE A START-UP MENTALITY

'Plant the seeds of entrepreneurship'

[We need] some way of planting the seeds of entrepreneurship into the minds of young people. Maybe more ways to get school credit for work. More skills training that's relevant to entrepreneurship, like make business mandatory and make PE an elective.  Something in the education part of the platform. [We also need] community college or local education offerings to help small business owners get a handle on the parts they are not good at. Most of the successful business owners I know are really good at whatever generates revenue and had to learn a lot about running a successful business. Another education plank in the platform. - Joe Lessard

'Foster entrepreneurial capacity'

The real issue: fostering an entrepreneurial capacity within the population. As David Brooks pointed out in his brilliant piece, The Organizational Kid, the meritocracy does not really measure merit, but measures the ability of kids to configure their lives and personalities to optimally perform the tasks given to them. This social conditioning, from early childhood, robs this generation of the ability to challenge authority, think unconventionally, and take risks. Their ambition, drive, and intelligence is focused on getting 4.0 GPAs, to get to right college, to get to the right career, with the right firm... they're (we're) just looking for the next hoop to jump through, the next goal to achieve. If kids can't brawl in the sandbox, say "hell" in their graduation speech, or cross the street, in middle school, without a safety officer, can you really expect them to build a business? Is there a policy solution for that one? Well, let kids sell their lemonade without health officers shutting them down. That'd be a start. -A_Lee

'Don't tell kids to drop out of school'

In order to build a business you need skilled workers, and it's no secret that workers with modern skills are hard to come by these days. The solution isn't paying smart students to skip college, whatever Peter Thiel might like to believe. It's paying attention to students as individuals, instead of applying cookie cutter templates to wide swaths of people. So if a student is making great progress and is capable of running circles around Google's top engineers after three years, if that student wants to, what's the harm in letting him or her graduate a year early? Or if an elementary student with disabilities is having trouble with writing or any other basic skill, are there resources available to help that student get to the required baseline, or will an arbitrary standardized test dictate that he or she will never make enough progress to live an independent life? These issues are surprisingly simple to solve; they just require funding. - Aaron Greenspan
REGULATION, PATENTS, AND PAPERWORK

'Reduce regulatory uncertainty'

The biggest thing a government, Democratic or Republican, can do to help entrepreneurs is to reduce or eliminate regulatory uncertainty. A great example of uncertainty hurting entrepreneurship is the recently passed JOBS act.  Despite strong bipartisan support, the SEC has yet to rule on how the law will be implemented. I've spoken to many entrepreneurs who are delaying expanding their business or starting a new one because they aren't sure how the law will affect them. - Ilya Lichtenstein

'Roll back the bankruptcy laws to pre-2005'

Roll back the bankruptcy laws to pre-2005 to reduce the cost of risk. This is a big one. The change of bankruptcy laws to benefit huge financial institutions, that then got bailed out by the same tax payers against whom they lobbied to get these draconian changes to bankruptcy laws passed was... well not just shocking... not just a demonstration of how corrupt and off-track our political system has become... not sure what the word is but it goes beyond hypocrisy. I remember growing up outside of the US learning quite explicitly that one of the geniuses of the American system, a key factor in its dramatic success compared to other countries, and a competitive advantage, was its bankruptcy system that allowed people to try things; put in best efforts; but in the worst case scenario get a fresh start. Getting rid of that was insane and I worry about its long term consequences. US entrepreneurs already face additional risks versus their overseas counterparts - like lack of a healthcare system not tied to employers - and taking away a major structural advantage they had is almost certainly going to have a detrimental effect. - richardjordan

Stop drowning small businesses with paperwork

Something as simple as payroll is a gigantic administrative issue.  Has anyone looked at a federal form 944 that must be filed quarterly if you have any payroll? Sure -- you can have an ADP do it for you, but the complexity of the government filing for doing something as simple as paying somebody to work for you is a bit much.  I am not sure people fully understand the amount of Fed, State and Local paperwork filing that must be done regularly, even for small businesses ---- all of which generally bears the legend of "required by law." - marketkarma

'Reduce frivolous patent applications'

As much as meaningful patent reform is sorely needed, so is reform concerning the way in which patents can be enforced. Patent holders should be required to prove that they are using their inventions in commerce in order to file a legitimate infringement claim in court. This single change would drastically reduce the number of frivolous patent applications coming into the USPTO, cutting down processing times for legitimate ones. The treble damages rule should also be amended to avoid incentivizing entrepreneurs to file "blind," only to learn that the same invention has been patented several times over. - Aaron Greenspan

"Patent trolls are killing small innovators." - Zansfar Ifnif

FINALLY: ACCEPT THAT MANY START-UP INCENTIVES ARE OUTSIDE OF WASHINGTON'S CONTROL

Customers and real estate prices are the over-arching challenges

As someone who's lived in Silicon Valley for decades, and has heard many VC pitches, I have to say that tax policy just isn't an issue for startups. Unless and until profitability is reached, taxes don't matter. Nobody mentions tax issues in their VC pitch, unless they're pitching some financial product. Health care is something startups would rather have somebody else worry about. Regulation by government isn't a big deal, either. Arbitrary regulation by the Apple App Store, Comcast Cable, or AT&T/Verizon is much more of an issue. (If your iPhone app is too good, Apple enters the business and kicks you off the iPhone. It's happened more than once.) Issues that matter to Silicon Valley startups are finding customers with disposable income, overpriced local real estate, and being crushed by cheap imports from China.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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