U.S. Senators Menendez and Toomey introduced a bill entitled the Start Up Jobs and Innovation Act. (A bill number has not yet been assigned.) If approved by Congress, this bill will make several improvements to the U.S. tax code, thereby helping American small business innovators gain access to private investment to incentivize breakthrough research. It will also help these start-up companies create high-quality jobs in the U.S. by stimulating investment in groundbreaking R&D (see attached report entitled the Economic Impact of Tax Proposals for Start-ups that contains the highlights of the incentive tax recommendations being made by the Coalition of Small Business Innovators).

The Start-up Jobs and Innovation Act is intended to promote greater private investment in small business research, encouraging investors to think beyond immediate gains and support the long-term growth of breakthrough innovators. The legislation would allow small companies to partner with their investors via R&D Partnership Structures — an important change that will incentivize early-stage investment and support small business innovation.

An independent study by Ernst & Young (E&Y) estimates that this proposal will create 156,000 jobs while stimulating $10.3 billion in increased investment. The Start-up Jobs and Innovation Act also includes important reforms to the capital gains treatment of small business stock, business expensing for growing companies, and rules governing small firm accounting methods.

By stimulating private investment and allowing investors to partner productively with emerging innovators, the Start-up Jobs and Innovation Act will support vital research and spur job creation across the country.

More information to follow as the bill progress through Congress.

Provided by:
Peter M. Steffes, Vice President Government Policy
National Defense Industrial Association
(703) 247-9470 psteffes@ndia.org

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