Linkable site. To Hansen's E-Zone overview

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As I sometimes do I use this site as a dump site where I can put word docs and such so they can be linked to from my other sites. The following is from the Hansen for Senate committee and is an overview, background and sallient points of Goeff Hansens soon to be legislative effort to amend the Renaissance Zones bill, to include small business'.

Regards, Live Dangerously Be a Conservative

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Entrepreneurship Renaissance Zones (E-Zone)

Overview

The legislation creates an Entrepreneurship Renaissance Zone for any new, for-profit startup business of 100 employees or less registered in and with this state on or after July 1, 2009.

• The bill follows the general framework of what’s currently in the Renaissance Zone Act with respect to eligibility, geographic parameters, length of Ren Zone status, etc.

• No real property or personal property taxes, and no MBT, for a period of five years.

• MI Strategic Fund may designate additional zones; no limit.

• The parameters for legitimacy and commitment would include operational standards, local economic impact, job creation, capital investment, purchase of local raw materials and an approval of a business plan by a state recognized entrepreneurial support resource. i.e. SBTDC, SCORE, MSU Product Center, Michigan Works, incubators, etc.

General Points

• This bill incentives innovation and creativity. It encourages and supports our state’s small and start-up businesses.

o Ex. There is tremendous growth potential in fish farming in this state. The aquaculture industry can be a source of job creation and local food, and can evolve into a leading industry in this state. This new state financial incentive would allow us to harness Michigan’s greatest natural resource for everyone’s benefit.

o There are numerous small business services that are working every day to help Michigan citizens grow the economy. I believe this tax-free incentive for business start-ups can serve as another tool in the toolbox of economic recovery.

• Alleviating the burden of expensive start-up costs helps entrepreneurs speed up the process of turning their ideas into viable businesses, sharpens their focus on innovation and job creation. Emerging companies should be given every resource to increase their chances of success.

• The “Start-up Business Renaissance Zone” legislation is a strong, pro-active move toward encouraging and supporting our state’s small and start-up businesses.

• Small businesses are the engine of our economy. As a local family business owner, I’ve created jobs for hundreds of local families. I know what works and what doesn’t. I’m a proponent of entrepreneurial revitalization and believe that our current economic condition presents opportunity. In the 1970s, FedEx, Southwest, Microsoft, Apple, Genentech and Charles Schwab were started. Young talent migrated from previously lucrative jobs and toward start-ups.

• Excessive regulations, a burdensome and confusing tax code and high tax rates are stifling business growth and job creation in our state. Through lower taxes and less regulation we can encourage business development and attract new businesses to our state. New policies such as my Tax-Free, Start-up Business Renaissance Zone legislation will promote entrepreneurial efforts.

Background

• The Seidman College of Business at GVSU recently published a report entitled “Entrepreneurship Climate in West Michigan”. It stated that fewer people in West Michigan were starting up their own businesses. One of the barriers includes expensive start-up costs and lack of investment funds from either the state or through lending institutions.

• The process of starting a business may include start-up options, forms of business ownership, financing a new venture, financial management, selecting a location, marketing, regulatory compliance and understanding fundamental principles of business.

• Statistics, from the National Business Incubator Association (NBIA), indicate that new business create a MINIMUM of three jobs, including the “owner”, right at start-up. In fact, they are strongly advised, by business counselors, to seek out partners to cover the “trinity” of entrepreneurship – namely “Product or Service, “Marketing” and “Finance”.

• Summary of a major Kauffman Foundation survey on what “Entrepreneurial America” wants to see from government – it’s NOT what they’ve been getting:

Americans Want Government Stimulus for Small Businesses and Entrepreneurship, Reveals New Survey from Kauffman Foundation

Americans want to see more initiatives that aid small businesses, like the $15 billion package unveiled by President Obama, according to a new poll released by the Ewing Marion Kauffman Foundation.

The survey, conducted by pollster Douglas Schoen, consisted of a random national sample of 2,000 Americans. The survey indicates strong public sentiment that the government should be doing more to encourage individuals to start businesses and create jobs, which is ultimately the long-term solution for the country's economic woes. Three hundred of the 2,000 respondents are entrepreneurs and 300 are aspiring entrepreneurs.

By 63 percent to 23 percent, survey respondents prefer giving individuals the incentives they need to start their own businesses as opposed to allowing the government to create new jobs directly or through big corporations. Further, as a means of leading the country out of the economic crisis, 63 percent of respondents say the United States government needs to encourage the creation of new businesses, which will create sustainable, long-term employment opportunities and economic growth, while only 22 percent favor the government creating new jobs in the public and private sector.

"These two statistics--which produced similar results--underscore the public's deep and abiding belief that the government should facilitate entrepreneurial activity by creating the conditions and policies that make it easier for individuals to take a risk, as opposed to the government itself creating jobs," said Carl Schramm, president and CEO of the Kauffman Foundation.

More findings are available from the full survey, which is available for download at
www.kauffman.org/recoverysurvey. Other statistics about entrepreneurs and the economy are available at www.kauffman.org/researchfacts.

Fiscal Impact questions:

The fiscal impact is indeterminate. There would be no less impact to local/state govn't since they're not currently receiving this tax base.

• Within the last three years of a Renaissance Zone period, the Michigan Renaissance Zone Act requires the eligible entity to begin paying 25% of their annual tax obligation, followed by 50% and 75%. Under this bill, the first two years would be tax free and thereafter, the state and local unit would begin to receive tax revenue.

• The bill requires that the business provide an annual report of their activities to the Strategic Fund Board.

• The bill does allow for the city/village/township to consent to the creation of a ren zone for an entrepreneurial business facility.

• Also, if the start-up does not meet the bill's benchmarks, the MSF may revoke the ren zone.

• If the foregone tax base remains a concern, the MSF may consider this within the larger context of total economic impact of an "e-zone" within the community.

• If, for the first 5 years, these entrepreneurs can direct all available capital towards job creation and successfully executing their business plan, the foregone revenue from real/personal/MBT will have been worth it.