Senators Introduce Fourth Iteration of the Startup Act
On January 16, 2015, Sens. Jerry Moran (R-KS) and Mark Warner (D-VA) introduced S. 181 (The Startup Act), which is meant to promote new business formation, especially in the information technology industry. This is the fourth iteration of the Startup Act, with previous versions having been introduced in 2011, 2012, and 2013.
The Startup Act would change existing immigration law by creating new visas for up to 125,000 foreign entrepreneurs and students graduating from US universities with advanced degrees in science, technology, engineering, or mathematics (STEM) and by lifting the per-country caps for employment-based visas. Other provisions of the Startup Act would make permanent the exemption of capital gains taxes on the sale of startup stock held for at least five years, create a research and development (R&D) tax credit worth up to $250,000 for startups less than five years old and with less than $5 million in annual receipts, and direct federal R&D funding to support initiatives for the commercialization of university research.
While the Startup Act has bipartisan support — Sens. Chris Coons (D-DE), Roy Blunt (R-MO), Tim Kaine (D-VA), and Amy Klobuchar (D-MN) are original cosponsors — passage into law will be problematic. The House is unlikely to pass any immigration reform legislation if a law is not enacted to improve border security. In addition, President Barack Obama and many immigration advocacy groups have traditionally advocated for a more comprehensive (rather than piecemeal) approach to changing immigration law.
Republicans have also historically opposed increased funding for commercialization activities, and members of Congress with large European expatriate communities have traditionally opposed lifting the per-country cap for employment-based visas.
For more information about the Startup Act, please contact any of the Arent Fox professionals listed with this alert, or a member of the Emerging Companies practice group.