Why the U.S. needs a new visa for foreigners who want to start businesses here.

Somewhat off topic (bear with me, I do have a point at the end), but he already does pay taxes in the US: http://www.kalzumeus.com/2007/04/15/taxes-dont-have-to-be-pa...

In fact any person anywhere in the world whether American or not can volunteer to pay taxes to the US government even if he doesn't have a single US-based customer. All you have to do is incorporate in the US with an American nominee director+secretary and yourself as the sole shareholder. Then it's up to you whether you want to tell your local government about all the profits your American business is raking in.

Delaware in particular makes it hard for foreign governments to find out exactly who owns a particular corporation there. This is why you sometimes hear America referred to as the world's largest tax haven: http://www.lectlaw.com/filesh/bbg33.htm

However, for an American citizen living overseas and trying to run a small business, the main reason to incorporate in the US (rather than whatever country you're living in) is not to evade foreign taxes, but to avoid American paperwork. American owners of foreign corporations have to file form 5471 and spend all their time worrying whether any of their income can be classified under Subpart F (particularly Foreign Base Company Services Income --- look it up if you'd like your head to explode), in which case it DOES get taxed in the US as if it were a dividend to you personally. If you're Google and you want to pretend that your office in Bermuda with zero programmers and three lawyers is actually a major profit centre for software income, this is easy. If you're one guy selling bingo software, this is much harder, because you don't have the money to hire an international tax lawyer. Thanks President Kennedy!

Right now all the multinational corporations are deferring US taxes on their foreign subsidiaries by using Form 8832 declarations to create "hybrid entities" (ones which different governments disagree are corporations or pass-through entities). This all started back in 1997, when the IRS amended the entity classification rules in response to perceived abuses. Next year that law might get amended to make that impossible (Obama already tried last year, but failed), at which point all the high-priced accountants and lawyers will comb through the new regulation to find some other bright idea, while I hide under my pillow and cry.

Anyway, rant over, here comes the point I promised: US laws, whether in the field of immigration or taxation or whatever, may start out simple, but they inevitably get amended into increasing complexity until they make no sense at all, because unlike, say, the laws of Vanuatu, there's so many people looking for loopholes. Thus the laws manage to ensure that no one abuses process X, by making it damn near impossible for anyone, abusive or not, to get through process X in the first place. So I don't really have high hopes for this startup visa bill. It may pass, and in the first year hopefully some genuine foreign entrepreneurs will grab on to the chance to get a foothold in the US. But then there will be abuses, or maybe only perceived abuses blown out of all proportion by the media (or by disgruntled competitors who use PR agents to plant stories in the media), and then the law will get amended into oblivion starting from year two.

To address your second point, without making any pass at politics: Someone once said that states are laboratories of democracies; therefore, each state conducts its internal affairs differently. Michigan allows the formation of a Limited Liability Company with nothing more than the payment of $175 to the state and an online form (ironically, the link to that form appears broken at the moment). Texas is more expensive--$325 for a LLC or a corporation--but offers the same thing. Both states have minimal requirements for non-residents forming and operating corporations under those states' laws, so if NY doesn't suit your needs, there is "something for everyone," even when creating a business entity.

Sure, neither the Startup Visa Act nor the Dream Act go far enough, but they're steps in the right direction, and if we oppose such measures on the grounds that they aren't big enough, it's going to be much harder to get anywhere. It's always easier to convince people to make 20 small changes than it is to convince them to make 1 big one that's 20x the size.