The USA's greatest economic strength for decades has been the extent to which Americans strike off on their own with new ideas and turn them into new companies and products, or work for themselves doing things they love. This country makes it easier, in many ways, to start new companies or go into business for oneself than most.
However, we still have some antiquated financial and legal structures the discourage this kind of innovation:
- People fear that leaving their job means they won't get health care.
- Self-employed people pay higher FICA taxes and file paperwork more frequently.
- Traditionally-employed people are protected against recession by unemployment insurance, entrepeneurs are not.
These and other things push potential innovators into staying in traditional jobs for economic security. What if we changed the incentives to encourage people to take risks with their new ideas? Sure, some would fail, but some would succeed, to all of our benefit.
With this in mind, I submitted an idea on Change.Gov. Please vote for it!
Here's the full text of my suggestion on change.gov. Notice that one of the things I'm trying to do here is to reframe some economic justice issues, such as health care and unemployment insurance, as economic growth & innovation issues. Because they are also that.
Change Financial Incentives to Encourage Innovation & Entrepeneurship
Our greatest economic strength for a long time now has been the extent to which Americans strike off on their own with new ideas and turn them into new companies and products, or work for themselves doing things they love. This country makes it easier, in many ways, to start new companies or go into business for oneself than most, and makes it easy for new ideas and businesses to succeed.
However, we still have some antiquated financial and legal structures the discourage this kind of innovation, and push people into sticking with traditional jobs.
- Foremost among these is our reliance on employer-sponsored health care. People fear that if they leave their job, or try to go into business for themselves, they'll lose their health care coverage, won't be able to find something they can afford, or won't be accepted due to pre-existing conditions. We must make people feel secure about their health care coverage without a job, to remove this very strong obstacle to innovation.
- Taxes are also structured under the assumption that everyone works for an employer. If you're self-employed, you have more paperwork, have to file estimates four times a year, and have to pay twice as much FICA tax on your income. This is a clear financial incentive against self-employment.
- Unemployment insurance provides some financial security against economic downturns, but only for people working for traditional employers in full time jobs. People who take the risk of starting a new business have no such security in the face of recessions. That greatly, and unfairly, increases the risks of innovation to the individual. People learn to stay with secure traditional employment out of fear.
In general, please look at the way our economy is structured and find places where we unfairly give advantages to people working in traditional corporate jobs, over people who are innovating and taking the risks that will create the most value for all of us. We need to change these incentives, and we need to provide economic security for people who can make our lives better while they pursue their ideas and dreams.
Got any other suggestions to add to my list of 3?