Appendix: Summary of Recommendations
Establish a Preferential Tax and Regulatory Framework to Cultivate New Business Formation and Growth
- The Internal Revenue Service (IRS) should be directed to establish a new entrepreneur—or “e-corp”—tax status, whereby newly launched businesses would be subject to a flat 5 percent income tax for the critical first five years after formation. Such favorable and predictable tax treatment will help cultivate new business formation, survival, and growth by allowing new businesses to retain and reinvest most of what they earn, preserving critical cash flow, and eliminating the distraction and burden of tax complexity and uncertainty.
- The Congressional Budget Office (CBO) and the Office of Management and Budget (OMB) should be directed to co-develop a preferential regulatory framework to which fragile new businesses would be subject for their first five years. The framework should be comprised of only the most essential product safety, environmental, and worker protection regulations. To minimize regulatory uncertainty, the new-business framework should also protect new businesses from new regulations for the first five years. Co-development of the preferential framework by CBO and OMB is important since regulation is the implementation of Congressional intent by executive branch agencies.
- To avoid abuse of the preferential tax and regulatory framework—such as business owners simply renaming or reconstituting existing companies every five years—the ...