Obama Administration Seeks Economic Advice From Young Entrepreneurs

We’re excited to announce that Mint has been selected as an example of successful entrepreneurship and our founder, Aaron Patzer has been invited to the White House to consult with top officials in the Obama administration.

Patzer, 28, joins the young founders of such innovative Internet startups as CollegeHumor, Daily Candy, Kiva.org, Threadless, Twitter, and Zappos.com on March 6 for the summit.

At Mint, we’ve learned a lot through our experience as a fast moving startup in a slow moving economy. Patzer is going to the white house with a few ideas on how to revitalize the US economy through the innovation and productivity of small businesses (like Mint!). Here is some of what he’ll be sharing with Obama’s economic team.

Emphasize education

“People have not learned those 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, thereby having more capital for business formation, is education,” says Patzer. “Ultimately, the subjects we learn in school – math, science, history, social studies – are learned 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, and ought to be required for high school graduation nationwide.”

Encourage innovation

“If 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 stimulating innovation? Increase the quotas for H1B visas for technically skilled workers.

Reward employees

Patzer took a big risk investing half his savings in a new business in a down economy. Over half of all new businesses fail within the first year but Mint is still going strong a year and a half after it began.

“One technique startups use is offering equity to employees,” 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 increases in value, employees must pay the resulting tax on that increase – even though they often cannot sell that stock, and its supposed valuation is based on a very uncertain future.”

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.

AMT adds an additional disincentive to joining a startup whose future is uncertain, and makes it even more difficult to attract talent vs. big company alternatives. Patzer’s recommendation? The Obama administration should eliminate 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.

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