As the founder of CircleUp, a crowdfunding platform that helps facilitate online fundraising for consumer products companies, I've received lots of questions about how crowdfunding will affect the angel and VC industries. But recently, some of our investors have been picking my brain about Tuesday's presidential election. Of course, equity-based crowdfunding's popularity was a result of the JOBS Act, which for the first time will allow businesses to raise small amounts of money from unaccredited individuals via the Internet. If a bipartisan bill like the JOBS Act can create a great new market for investors, what else can we expect from the Obama or Romney administrations going forward? How should this presidential election affect the way we view crowdfunding and start ups in general?
After looking at both the Romney and Obama campaigns' promises and plans, I am especially excited for crowdfunding's future. Even though they go about it in different ways, both campaigns are making strides in a number of policy arenas that are favorable to the businesses we work with everyday. Here are a few we are especially excited about:
Reduction in Corporate Income Tax: Both campaigns are laser focused on how corporate income tax reform could be a major driver of small business growth. By lowering taxes on productive firms, the government incentivizes companies by providing them with more cash to hire, re-invest and grow. Especially important is that as the world gets flatter, and customer reach is global, reducing corporate rates tax makes U.S. businesses more competitive with foreign ones. Small companies that use crowdfunding proceeds to invest in their product and grow their customer base will benefit greatly from the extra operating cash from lowered tax rates. Both the Romney and Obama campaign are planning to cut the current 35 percent corporate income tax rate.
Small Business Incentives: Small businesses have been one of the key talking points of both campaigns. They know how important small business growth is to the American economy, and they are showing it in their fiscal and tax plans. The Obama campaign plans to extend a number of small business tax cuts they passed in the first term, which included reforms for new equipment expensing, tax credits for hiring veterans, and doubling the deductions allowed for start-up expenses. The Romney campaign is also focused on the Small Business category, focusing on R&D tax credits, healthcare reforms, and removing regulatory impediments to starting-up. When it comes to incentivizing labor hiring and investment, there are many levers to pull. But the important thing here is that both campaigns are focused on job creation and small business growth - things the businesses we work with will benefit from.
Leveling the Tax Code Playing Field: The Obama and Romney campaigns have addressed the enigma that is the US tax code and their plans to hack away at all that complexity. Both campaigns have expressed commitment to simplifying the tax code for small businesses, which do not have the same resources to hire experts to help them navigate the complicated rules and regulations. After working with thousands of small businesses in our careers as former private equity investors, and as entrepreneurs ourselves, we know firsthand that time is a management team's most precious commodity. A less complex tax code that saves time and resources and is something we are excited about as both investors and entrepreneurs. One of the biggest operational headaches for small businesses comes in preparing for tax day, and making the tax code simpler is a benefit for managers and investors.
Support Start-Ups with Skilled Talent: One of the major frustrations we hear from start-ups here in Silicon Valley is the difficulty of finding high-skilled employees, particularly in technical fields, to fill important positions. The Romney and Obama campaigns are addressing these needs as well. Romney's plan focuses both on retraining workers to ensure they have the skills that match the market's needs. At the same time, they also propose raising VISA caps and creating a policy that helps keep talented foreign university students who want to remain in the US to work able to do so, helping American businesses to attract the best and brightest from around the world. Obama also focuses on the Labor force, with a plan to recruit 100,000 science and math teachers, cut higher-ed tuition growth, and invest in community college partnerships and retraining programs. Both campaigns hone in on different ways to make sure these businesses have the labor resources they need to grow and compete.
No matter who ultimately prevails on Election Day, we at CircleUp are excited to see small business policy featured so prominently in the debates and in the candidate's platforms. We agree with both candidates that supporting small businesses not only aids in economic recovery but also encourages innovation and we look forward to changes ahead. Tuesday's vote has a significant impact on the nation's 28 million small businesses, which impacts our national economy as well. Small businesses are responsible for creating two out of every three new jobs over the past two decades. The candidates have both had their say, now it is our turn.