The United States attitude towards business taxation has reflected their growing endorsement of Start ups firms. In 1978 Silicon Valley and other high tech firm lobbied successfully to have capital gains tax cut from 49% to 28% which lead to investment trebling in two years. The major source of this additional investment was from venture capital companies who in turn put money into the high tech industries. This paved the way for the 1981 decision by congress to cut capital gains tax yet again to 20%. (Herbig et al., 1994).
The US government, public and private sectors have also come up with a rather innovative way of promoting new business called, incubating. The idea of incubating is that new businesses, to become successful need many elements. What the incubators aim to do is bring the necessary elements such as capital, entrepreneurs, experience and technology together in order to produce a successful business. Herbig has identified four different types of incubators: The University related type for example Georgia Advanced Technological Center, which offers businesses a range of help, The private type such as the Utah Innovation Center, which has a public-private partnership with the University of Utah.
The community type such as the Fulton Carroll Center which was originally intended for urban renewal and operates privately but not for profit, and finally the Corporate/Franchise type such as the Rubicon group which has a panel of advisors for every areas of business. In this case the Rubicon group operate with their start up businesses as a joint venture into which the Rubicon group input the expertises. Such innovative as this helps ensure that the support is there for the firm thus encouraging more people into entrepreneurship. (Herbig et al., 1994).
Although on a personal level failure in business can be distressing, it can on the aggregate have a positive effect on the economy. Storey, (REF) identifies three ways in which businesses failure helps the economy. Firstly, business failure levels help indicate which sectors of the economy are riskiest and which are safer, so if banks and venture capitalists can invest in the safer options steady economic growth is more likely to occur than the riskier option which could facilitate the boom bust cycle.
Secondly in the process of ‘failing’ small business owners are likely to have learned a lot about how to conduct business and what they could/should have done to help their business. If they are able to use this information either to inform others and help them make the correct decisions, then something positive will result. Finally the small business owner may be able to use that knowledge in order to form a more successful business http://www.atimes.com