Mint‘s founder, Aaron Patzer, was at the White House today to consult with top officials in the Obama administration. Patzer joined the founders of innovative Internet startups including CollegeHumor, Daily Candy, Kiva.org, Threadless, Twitter, and Zappos.com on March 6 for the summit.
Patzer went to the White House with a few ideas on how to revitalize the US economy by better supporting the innovation and productivity of small businesses. Mint has learned a lot through its experience as a fast moving startup in a slow moving economy. Here is some of what he shared with Obama’s economic team today.
“People have not learned the most basic principles of personal finance: spend less than you earn, invest what you save wisely, and be prepared for the unexpected. The solution to changing the national savings rate, and generating more capital for business formation, is education,” says Patzer. “Ultimately, the subjects we learn in school – math, science, history, social studies – are taught such that we might actually use that knowledge to improve our daily lives. Personal finance is a crucial life skill for every adult that is not being taught, that ought to be required for high school graduation nationwide.”
“Starting a business is hard, running it is even harder, and finding the right people is the hardest task of all,” Patzer says. “While the downturn in the economy has meant a flood of resumes for sales, marketing, and general business positions, the engineers, scientists, and researchers who actually make the next innovations possible are still in very short supply.”
Patzer’s recommendation for increasing the supply of technically skilled workers included increasing the quotas for H1B visas.
“One common technique startups use to attract top talent is to offer them equity,” says Patzer, “With equity, employees become an owner and investor in the business. Unfortunately, due to the Alternative Minimum Tax (AMT) rules, whenever this equity appears to increase in value, employees must pay the resulting tax on that increase – even though they often cannot sell that stock.” Employees may end up paying hundreds of thousands of dollars in AMT taxes, only to see their startup ultimately fail before a sale or public offering. Their paper wealth never materialized but their taxes were all too real.
Patzer’s recommendation to the new administration is to eliminate the AMT for full time employees of qualified small businesses. This will allow small businesses to grow more rapidly and lead us out of our current economic crisis more quickly.
Stay tuned for our next Update post covering Aaron Patzer’s recap of the conversations and outcomes of his day at the White House.