Obama pushes tax changes to help small businesses but doesn’t budge on immigration


U.S. President Barack Obama delivers the State of the Union address to a joint session of Congress on Tuesday, Feb. 12, 2013. (Joshua Roberts/BLOOMBERG)
February 13, 2013

President Obama challenged lawmakers in his annual address to overhaul the tax system and improve infrastructure in ways that will bolster new and small businesses, but he didn’t budge on his bid for comprehensive immigration reform, an area in which many entrepreneurs hoped he would warm to smaller, targeted proposals.

In his fifth State of the Union, Obama renewed his pledge to build a stronger middle class and accelerate the economic recovery, and he urged legislators on both sides of the aisle to “forge a reasonable compromise” on contentious matters like reducing the deficit and reforming the tax code. On the latter issue, he acknowledged that the system has become far too complex for small business owners.

“The American people deserve a tax code that helps small businesses spend less time filling out complicated forms and more time expanding and hiring,” he said in the first of two specific references to small businesses, a group that came up nearly two dozen times in each of the domestic policy debates during the fall campaign.

Obama also proposed spending more federal money on clean energy, manufacturing technologies, better education and new roads and bridges — investments he said will “help entrepreneurs and small business owners expand and create new jobs.”

“But none of it will matter unless we also equip our citizens with the skills and training to fill those jobs,” he added, touching on a sore subject for a growing number of business owners who say they cannot find enough talented workers to fill their firms’ openings.

However, education reform wasn’t the remedy some of them had in mind — many were hoping the president would throw his support behind targeted immigration reform; namely, proposals to allow more highly educated, foreign-born workers into the country.

“Issues concerning immigration, specifically special visa programs for entrepreneurs and high-tech workers, were not addressed in any significant manner,” Rohit Arora, chief executive and co-founder of Biz2Credit and a small business finance expert, said of the speech, adding that he thought the president “didn’t go far enough to enforce the message that job growth and small business growth is a big priority for the country.”

Instead, though he acknowledged the importance of attracting skilled entrepreneurs and engineers, Obama reaffirmed his push for comprehensive immigration reform and gave no indication that he would support legislation that did not include stronger border security measures and a path to citizenship for undocumented workers. “Send me a comprehensive immigration reform bill,” he told Congress, “and I will sign it right away.”

A multifaceted deal of that nature could be a long time coming, though, and entrepreneurs and investors have been upping the pressure on policymakers to pursue a piecemeal solution. On two occasions last week, start-up founders from around the country traveled to Washington, urging members of Congress and the administration to separate out and address the demand for more highly educated immigrants before they try to hash out a compromise on broader immigration questions.

“An all-or-nothing strategy is a high-risk, high-reward strategy,” Dane Stangler, director of research and policy for the Kauffman Foundation, an entre­pre­neur­ship research group, said in an interview on Wednesday. “The problem is, if it fails again, we could be looking at another half dozen years before the next real attempt at fixing our immigration issues.”

Stangler noted that a series of attempts to address the demand for more foreign-born workers and entrepreners had failed in past years, but a group of lawmakers on Tuesday will give it another shot. Senators Jerry Moran (R-Kan.), Mark R. Warner (D-Va.) and Christopher A. Coons (D-Del.) plan to formally reintroduce Startup Act 2.0, which would create a new class of visa for entrepreneurs who hire U.S. employees and raise at least $100,000 of capital.

The president voiced his support for those so-called “startup visas” when he outlined his immigration proposals during a speech last month in Las Vegas, but he did not specifically reference them in the State of the Union.

Research in the past few months has shown that previously booming levels of immigrant entre­pre­neur­ship have tapered off, and the drop has been especially steep in some of the country’s premier innovation hubs like Silicon Valley. The decline prompted some academics to lobby for quicker, targeted solutions to luring more talent away from other countries.

Two of the nation’s most visible entre­pre­neur­ship advocates, however, applauded the president for continuing to swing for the fences on the immigration front. Scott Case, co-founder of Priceline and chief executive of the Startup America partnership, commended Obama for going for “the whole enchilada” and emphasized the importance of including provisions for highly skilled foreigners in any grand bargain.

“Correct or incorrect, there’s a belief that there’s momentum right now for a comprehensive deal,” Case said in an interview Wednesday. “I can completely appreciate the president’s approach, and if he can get it done, good for him. But if the whole thing can’t get done, I still think there’s a good chance it could get broken into pieces.”

Steve Case, a member of Obama’s Council on Jobs and Competitiveness and co-founder of America Online, threw his support behind the pursuit of a comprehensive deal, too.

“At this critical time, I believe the best way to win adoption of high-skilled immigration reforms is to make them a part of a comprehensive immigration reform package that also addresses a path to citizenship for undocumented workers living in our country, border security, and sanctions on employers who break the law,” Steve plans to say during testimony before the Senate Judiciary Committee on Wednesday.

Ultimately, though, no combination of immigration packages, tax reforms or infrastructure investments can solve entrepreneurs’ biggest concerns coming out of Washington, according to Scott Case, who said the top policy priority should be balancing the budget and finding a long-term solution to repairing the deficit.

“It struck me last night watching the president that literally every decision maker needed to address that issue was in the same room,” Scott said. “If you had an entrepreneur who had all the decision makers he needed to take his business to the next level in the same room, he’d lock the doors and tell everybody they weren’t allowed to leave until they did.”

“So when I think about the speech through an entrepreneurial lens, sure, there were a lot of good nuggets in there that could play out,” he added. “But none of that matters if we can’t get our fiscal house in order and give start-ups enough vision down the line to navigate.”

What did you think of the president’s speech? Please share your thoughts in the comments.

Follow On Small Business and J.D. Harrison .

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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