Entrepreneurs: Startup Visa is Great. Now, How About Taxes?

The startup world has been buzzing this week after Sens. John Kerry and Dick Lugar introduced the Startup Visa Act of 2010. According to TechCrunch:

“[The bill] would create a two year visa for immigrant entrepreneurs who are able to raise a minimum of $250,000, with $100,000 coming from a qualified U.S. angel or venture investor. After two years, if the immigrant entrepreneur is able to create five or more jobs (not including their children or spouse), attract an additional $1 million in investment, or produce $1 million in revenues, he or she will become a legal resident.”

Paul Graham of YCombinator hatched the visa concept in April of last year. The cause was picked up by Eric Ries, Dave McClure, and several other tech thought leaders, who launched the blog StartupVisa.com and recruited many of the best and brightest in the industry (including Reid Hoffman, Mike Maples, Chris Sacca, Josh Kopelman, and Chris Dixon) to support the cause.

And allowing hard-working immigrants to move to America to create jobs is indeed a good cause. I’m not sure that I’d go so far as the TechCrunch guest writer who implied that only xenophobes could oppose it, but overall importing the world’s entrepreneurs into America is a decent idea. Let’s take all the intelligent, hard-working innovators who want to come here legally that we can get.

Fantastic. But once the congratulatory back-slapping ends, I have a question for the entrepreneurial community: what about taxes? I don’t hear a lot of my fellow entrepreneurs talking about tax rates, and their silence is deafening.

The federal capital gains tax rate is set to rise from 15% to 20% next year, and President Obama previously indicated he’d entertain something in the 25%-28% range. Meanwhile, according to the Tax Foundation, America has the second highest corporate tax rate in the world, trailing only Japan, and 24 states actually have higher rates than Japan. (Thanks to Dave McClure for the link.)

According to the Cato Institute, studies in comparative economics suggest that “total government spending (federal plus state plus local) should be no lower than 17 percent, nor larger than about 30 percent of GDP.” They cite an analysis by the Institute for Market Economics in Sofia, Bulgaria, that concluded that “there is a 95 percent probability that the optimal size of government is less than 25 percent of GDP.”  As of last year, the US stood at 36%.

America is comparatively over-taxing its companies and capital. Importing entrepreneurs is great, but it’s also muted when the government’s punitive tax code undermines incentives to invest.

So, entrepreneurs, what are you going to do about it?

3 thoughts on “Entrepreneurs: Startup Visa is Great. Now, How About Taxes?

  1. If you’ve found a loophole that works, more power to you.But, you’re still boriowrng money and will be paying interest if you hold onto it for any length of time. You’ll be better off figuring out how to live within your means.

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