Week of February 28 - March 4, 2005

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Subscribe now to receive your weekly copy. Archived issues are available online. Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday on the NDE main page - bookmark it and stay informed about the latest entrepreneurship news. 

Presidential Tax Reform Panel Under Way

The newly created President’s Advisory Panel on Tax Reform began holding its first meetings this month. President Bush created the Panel, chaired by former Senators John Breaux (D-LA) and Connie Mack (R-FL), with the purpose of making America’s tax system simpler, fairer, and more pro-growth. No entrepreneur would quibble with these goals, but, of course, the devil will be in the details. The Panel will be holding a regular series of hearings and is expected to publish its final report by July 31, 2005. The panel is seeking comments and advice from the public. Forms for such comments can be downloaded at www.taxreformpanel.gov/contact/. Many suggestions are already coming in. For example, the National Association for the Self-Employed has urged the panel to support several changes to current tax rules: 1) Allow the self-employed to deduct health insurance as a business expense, 2) Clarify current rules for home office deductions, and 3) Simplify rules for identifying the tax status of independent contractors.

To learn more about the President’s Advisory Panel on Tax Reform visit http://www.taxreformpanel.gov/
To learn more about National Association for the Self-Employed and its agenda for the Advisory Panel, visit www.nase.org

Science and Technology Crisis at Hand?

America’s business leaders are becoming increasingly concerned about the underpinnings of the US’s science and technology sectors. The latest salvos come from two groups: the AeA (formerly known as the American Electronics Association), a trade group of leading technology firms, and The Task Force on the Future of Innovation, a blue-ribbon coalition of science, education, and technology industry leaders. The AeA’s new report is entitled Losing the Competitive Advantage?: The Challenge for Science and Technology in the United States. Its primary message is that other countries are effectively using technology to “catch up,” i.e. to develop world-class technology industries of their own. To bolster this claim, the report includes short case studies of developments in India, China, Russia, and Eastern Europe. Such competition is not necessarily a bad thing, if it forces the US to become more competitive. But, instead, the US is investing less in R&D and suffering from poor quality in its K-12 educational systems. In addition to fixing these problems, the report urges that the country continue to maintain open borders to new immigration, as this is one of the most effective ways to enhance the nation’s base of scientific talent. 

Meanwhile, The Task Force on the Future of Innovation’s report, The Knowledge Economy: Is America Losing Its Competitive Edge, offers a similarly gloomy picture. The report’s authors point to declining Federal support for science and education as a key causal factor in America’s eroding leadership role in innovation. Enrollment in science and engineering training is down and the current science and engineering workforce is aging rapidly. Yet, Washington is not making critical investments in people and technological infrastructure. If the US wants to remain an innovation leader, it can no longer remain complacent about such trends. 

To access the February 2005 AeA report, Losing the Competitive Advantage?: The Challenge for Science and Technology in the United States, please visit http://www.aeanet.org/Publications/idjj_CompetitivenessMain0205.asp?bhcp=1

To access the February 2005 report from The Task Force on the Future of Innovation, The Knowledge Economy: Is America Losing Its Competitive Edge, visit 
http://www.futureofinnovation.org/PDF/Benchmarks.pdf

Bankruptcy Reform Moving Forward

For the past several years, Congress has regularly debated, but failed to pass, a major reform of American bankruptcy laws. It looks like the proposal may clear the final hurdle to passage this year, as both the Senate and the House are already acting on this year’s version of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256/H.R. 685). Earlier this month, the Senate Finance Committee passed the bill where it is now awaiting full Senate action. The House Judiciary Committee has vowed to move quickly in the wake of the Senate’s move. The bill contains a number of key provisions, but its main effect would be to make it more difficult and more expensive for individuals to eliminate their debts by declaring bankruptcy. Supporters of the bill argue that many individuals are using current bankruptcy laws to shield assets and avoid paying off their debts. Opponents counter that tightening current rules will hurt consumers and also make it more difficult for those seeking to obtain financing for new and growing businesses. Regardless of where one stands on the bill, it is certain that, if passed, the new laws will have a strong impact on the ability of individuals to raise funds for new businesses. E-News will continue to track this legislation throughout the Congressional session. 

The text of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256/H.R. 685) is available at http://thomas.loc.gov/

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