Senate Dems Blame Lack of Diversity for Decline in New Business Startups
The Senate called on a handful of business experts to testify Wednesday that a lack of diversity is partially to blame for a decline in business startups.
The Senate Committee on Small Business and Entrepreneurship called the hearing to figure out what government should do to promote startup growth. The business experts pointed to issues like high regulatory and tax burdens for why there is a decline in startups. Democratic Sen. Jeanne Shaheen sparked a conversation on diversity when she asserted woman entrepreneurs face tougher obstacles.
“Woman are fairing badly when trying to access capital,” 1776 Founder Donna Harris testified before the committee. “One thing we can do is have woman in the room when discussing venture funding.”
Shaheen noted woman are less likely to get loans and investments when trying to start a business. Her solution is making sure federal grants are being more fairly distributed to female entrepreneurs. She also noted the government can do more to help fund immigrant business owners. Republican Sen. Tim Scott said funds could also be diverted to help underfunded communities.
“I firmly believe this country has enough capital,” Economic Innovation Group Founder John Lettieri stated. “Some portion of that should be targeted towards economic development.”
Lettieri did also add that complex and overabundant tax and regulatory policies have been a huge problem for business startups. He notes such policies tend to hurt startups more than rein in big corporations. Businesses have faced regulations and high taxes for decades, but in recent years the burden has increased significantly.
“Complexity harms new entrance into the market more then it harms incumbents,” Lettieri warned. “One way we can address this is by looking at regulatory and tax burdens.”
Businesses are required to pay a variety of different types of taxes based on their size, among other factors. The federal government requires employment taxes and taxes on what a company sells and buys. Companies also face local and state taxes that further drive up prices. Regulations impose another burden by driving up operational and compliance costs.
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