In town to talk about “angel” investing, U.S. Sen Chris Murphy sparked a conversation about other ways to help Connecticut’s economy—like fixing immigration laws and teaching 9-year-olds to code software.
Those suggestions came out during a square-table discussion at the Grove co-working space on Chapel Street.
Dozens of entrepreneurs and players in the state’s startup scene sat down to talk with Sen. Murphy (pictured) about how the federal government can assist Connecticut’s tech sector. Murphy was joined by U.S. Sen. Dick Blumenthal, U.S. Rep. Rosa DeLauro, and state Rep. Gary Holder-Winfield.
Murphy started the conversation by announcing his proposal for a federal Angel Investor Tax Credit, to create an incentive for investors to support young startups.
Connecticut startups often don’t stay in the state, because it doesn’t have a “culture” that supports entrepreneurs. That’s changing, thanks to places like the Grove, which are building that culture, Murphy said.
“At the federal level we can do more,” Murphy said.
He laid out two proposals he’s working on. The first is a “targeted fix” to the American Jobs Act, to allow for less “onerous” accreditation of angel investors.
The second is a tax credit for angel investors, modeled after an existing Connecticut program. Angel investors would receive tax credits of 25 percent off of qualified investments, up to $250,000.
Murphy acknowledged that it’s a “tough time to pass new tax credits.”
“Here in Connecticut, you are our economic salvation,” Murphy said to the room of techies. Manufacturing is down to only 10 percent of the economy. The states future is tied up in “high tech.”
“You are the job creators,” said Blumenthal (pictured). “We don’t have gold mines or oil wells. What we have is smart people.”
John Seiffer, a business advisor who runs CEO Boot Camp, later took issue with Blumenthal’s statement. Businesses aren’t job creators, he said. That’s a misconception. “Demand creates jobs, not business owners.”
The government can help create demand by reducing economic inequality, Seiffer said. “It’s about creating demand at the middle-class level.”
Seiffer (pictured) said the country needs to simplify the tax code. That’s not to say lower taxes, Seiffer said. Just make it easier for businesses to pay what they owe. He said some businesses pay three times more ensure tax compliance than they do in taxes.
Usually, when people talk about simplify taxes, they want to reduce corporate taxes, Blumenthal said.
That’s not what I mean, Seiffer said. Taxes were even higher under President Bill Clinton, and businesses did great. Businesses don’t worry about the tax level, he said. “That’s not what entrepreneurs think about. They think about, ‘How can I make a profit”’”
Seiffer also suggested taking health care out of the equation. Businesses should not have to think about providing health care as part of the profit and loss statements, Seiffer said. The country should move to a single payer system. As it is, American businesses are at a disadvantage compared with international companies who don’t have to worry about health expenses because their countries’ governments provide health care.
U.S. Rep. DeLauro said the Affordable Care Act is a step in the right direction on that front. She urged Seiffer and other members of the business community to speak out about things like health care and income inequality.
Kathleen Warner (pictured), another business adviser, said the government could also help business by reforming the immigration system. The economy would be bolstered allowing foreign-born entrepreneurs to stay in the country, she said.
Miles Lasater (pictured), founder of Higher One, called immigration reform the “number-one thing the federal government could do” to help businesses. Immigrants are not taking jobs, he argued; they are creating new businesses.
Seiffer urged the elected officials to reframe the immigration debate. It’s not that immigrants are taking pieces of the pie from people who are born here, he said. “When you bring people in, the pie gets bigger.”
Sen. Blumenthal, in turn, urged entrepreneurs to help with that reframing: “A great failing of the immigration reform process has been the silence of the business community.”
Josh Geballe, CEO of Core Informatics, said the government should focus on education as a long-term support to the economy. He noted that his 9-year-old doesn’t learn how to write in cursive in school. That’s outdated. But what will replace it? Kids like him should learn a modern skill instead, Geballe argued. “Software coding should be a mandatory subject in elementary school.”
“Amen,” said DeLauro (pictured).