Many people who heard U.S. President Barack Obama’s State of the Union speech last week found it uncharacteristically uninspiring. One of its few powerful notes, though, was its focus on innovation as the remedy to America’s economic malaise. Recalling the space race with the Soviet Union during the 1950s that unleashed innovation in new technology and ultimately created millions of jobs, the President said, “This is our generation’s Sputnik moment.”
A week later, the White House has followed up on that rhetoric with a program that promises to invest $2 billion in innovative small businesses. Headed by former AOL CEO Steve Case, the new initiative — named “Startup America” – envisages two fiscal measures. First, it seeks to make permanent the elimination of capital gains tax for key investments in small businesses, which was introduced last September as a temporary measure. And second, the program aims to expand tax credits for private sector investments in start-ups. In addition, the Small Business Administration (SBA) is being asked to direct $2 billion in funds over the next five years to “match private sector investment funding for start-ups and small firms in underserved communities, as well as seed and early-stage investing in firms with high growth potential, through its Small Business Investment Company (SBIC) program,” according to a media report.
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