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Week of July 16 - 22, 2007 |
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Taxing Equity Funds: The Debate Heats Up
Hedge funds are a hot
business topic today, and their growing importance is generating
attention from Congress. The latest discussion concerns proposals to
increase the tax rate on “carried interest” income earned by hedge
funds, private equity, and venture capital funds. At present, this
income is taxed at long-term capital gains rate of 15%. Some in the
Congress, led by Senators Max Baucus (D-MT) and Charles Grassley (R-IA),
are arguing that this comparatively low tax rate may provide an unfair
advantage to these funds while also eroding the corporate tax base.
Baucus chairs the Senate Finance Committee and Grassley serves as the
Ranking Minority Member, so their views hold great weight in tax policy
discussions. The industry, led by the National Venture Capital
Association and others, contends that a change in tax rates may penalize
their funds and limit their abilities to make long-term investments in
risky and innovative ventures. The debate is just heating up. Last week,
the Senate Finance Committee held the first of several hearings on the
topic, and heard testimony from the industry and key Administration
officials. The House Ways and Means Committee is also expected to hold
hearings in the near future. We can expect this topic to receive
sustained Congressional attention in the coming months. |
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When we’re asked to think of
innovative industries, most people conjure up high-tech sectors like
information technology or biotech. But, innovation also occurs in more
prosaic industries like construction or retail banking. A new study from
Great Britain’s National Endowment for Science, Technology and the Arts
(NESTA) examines the role of “hidden innovation” in six so-called “low
innovation” industry sectors. The research makes a bold and important
claim: “the innovation that matters most differs between sectors.” In
other words, innovation in the legal services field looks a lot
different from innovation in the oil production industry. Innovation in
these services sectors depends very little on R&D spending. Instead,
innovation is often more about absorbing ideas instead of creating new
ones. The study also finds that service sector innovations are rarely
affected by traditional tools of “innovation policy.” Framework
conditions, such as tax policy or the local regulatory climate, are more
important factors. Because each sector has unique approaches to
innovation, the public sector will never be able to fine-tune innovation
policies that can support all industries. Only Industry leadership can
provide the type of specialized sectoral knowledge and skills that are
required. |
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Self-Employment Booms... Again
The number of self-employed
Americans has been rising rapidly for years, and new Census Bureau data
indicates that the trend is continuing. Earlier this month, the Census
Bureau released the latest numbers (2005) which show that more than 20
million Americans are now self-employed. A deeper look at these numbers
yields some astounding figures. Each day, 2,356 Americans decide to go
into business for themselves. Their companies account for 78% of all US
businesses, and they collectively obtain annual receipts of $951
billion. Georgia (up 7.6%) and Utah (up 7.2%) showed the highest annual
increases. The national average increase was 4.4 percent. The fastest
growing sector was Web search portals, where the number of self-employed
jumped an astounding 41.2 percent in one year. |
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Fast Company has just
published its annual listing of the world’s “Fastest Cities,” i.e, the
places best suited to support innovation, creativity and
entrepreneurship. The list is very eclectic, broken into categories such
as start-up hubs (Austin, Madison, Tucson and London), creative class
meccas (Shanghai, New York, San Francisco and Buenos Aires), green
leaders (Chicago, Portland, Vancouver and Stockholm) and high-tech
hotspots (Hanoi, Chandigarh, and Boise). The issue also includes
unenviable lists of “slow cities” (Budapest, St. Louis, New Orleans,
Detroit and Havana) and “too fast cities” where future risks outweigh
current upsides (Cairo; Almaty, Kazakhstan; Greenwich, CT; Las Vegas,
and Shenzen). |
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The National Dialogue on Entrepreneurship is 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 entrepreneurship around the world. Subscribe now to receive your weekly copy. Archived issues are available online. |
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National Dialogue on Entrepreneurship
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All
stories © 2007 The Public Forum Institute
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