"Attracting $12 Billion to Create 1,080,000 Million High Paying Jobs"

The Great State of Maryland is #1 in Education & #1 Richest State in USA

Now...

Let's make Maryland the #1 State for High Tech Startups in USA and Worldwide!

I. Why A High Tech Jobs Initiative for the State of Maryland?

Let's Propel the Great State of Maryland to #1 in USA and Worldwide!

I. The Great State of Maryland is #1 in Education and #1 Richest State in USA

Today, I invite you to reinvent the startup community in the Great State of Maryland to make it the #1 State in the United States and region worldwide for high tech startups.

Well, you might say...Why? And I say why not... the paramount reason is that 90% of new jobs growth in the United States are from high growth high tech startups.

I am very excited because we can produce the following results:

#1. increase Maryland's State, Counties & Local Governments taxable income over 10 years by $26,439,300,000 Billions

#2. engage accredited investors to attract $12 Billion in Venture Capital (VC) and create 5,800,000 million (1/4 high paying) jobs in Maryland over 10 years.

I need your help. No, I am not asking you for ANY money. Also, there is NO monetary investment needed from anyone or the State of Maryland except the goodwill of forward thinking individuals who can

• Phase I
  help move forward this initiative to seek the enactment of a 25% High Tech Investors Tax Credits law by the Maryland Legislature 

• Phase 2
  help propel the State of Maryland to the #1 State in the United States and region worldwide.

I. Uniqueness or Differentiation

This initiative is different from the Maryland Rise program, InvestMaryland and the existing Maryland's 50% Biotech and 30% Cyber Security tax credits for businesses. 

II. Aim of High Tech Investors Tax Credits

This High Tech Investors Tax Credits initiative focuses on the following premises:

#1. entrepreneur greatest challenge is raising capital 

#2. government needs to increase tax revenues & create employment

#3. government should provide incentives to risk capital investors to stimulate investment in high tech startups

That is why I am engaging the Maryland lawmakers and accredited investors to support this initiative for a 25% tax credits for High Tech Angel Investors and Venture Capital firms to produce the following results:

#1. increase tax revenues for the State, County & Local Maryland's Government as opposed under the current system.

#2. create a potential of 5.8 million (1/4 high paying) jobs in the State of Maryland over 10 years

#3. increase the availability of risk capital for Scalable High Tech startups in Maryland by $12 Billion over 10 years

In addition, I believe we should designate non profit and for profit incubators and accelerators as Tax Free Zones hubs for startups formations.

Here are the List of NAICS Codes for High-Tech Industries 
 
A. High-tech manufacturing industries 

3254  Pharmaceutical and medicine manufacturing 
3333  Commercial and service industry machinery manufacturing 
3341  Computer and peripheral equipment manufacturing 
3342  Communications equipment manufacturing 
3343  Audio and video equipment manufacturing 
3344  Semiconductor and other electronic component manufacturing 
3345  Navigational/measuring/medical/control instruments manufacturing 
3346  Manufacturing and reproducing magnetic and optical media 
3364  Aerospace products and parts manufacturing 
3391  Medical equipment and supplies manufacturing 
 
B. High-tech services industries 

5112  Software publishers 
5121  Motion picture and video industries 
517    Telecommunications 
518    Internet service providers, web search portals, and data processing services 
5191  Other information services 
5413  Architectural, engineering, and related services 
5415  Computer systems design and related services 
5417  Scientific R&D services 
6215  Medical and diagnostic laboratories

III. National Impact of Venture Capital

In the last few decades, the high tech rates of business formation and new firm growth have exceeded those  firms across other sectors of the United States economy.

Around $50 billion per year of private capital is currently invested in emerging U.S. companies. 

Approximately 90% of angel investment funds, in contrast to only about 20% of Venture Capital funds, are placed in start-ups and early stage companies.

The impact of venture capital on job creation and the economy is compelling.  For example, from 1970 to 2000, U.S. VC firms invested over $270 billion in more than 16,000 companies. 

In 2000, the surviving VC-backed companies employed 7.6 million people, representing 5.9% of all U.S. jobs, and generated sales of $1.3 trillion, accounting for 13.1% of the U.S. GDP.  

Historical results show an annualized return of 16.7% to investors in some 1,860 U.S. venture capital and private equity partnerships.

IV. Attracting $12 Billions in Venture or Risk Capital 

With regard to job stimulation, the proposed 25% tax credit would likely stimulate gross investments by over 33% (1/[1 - 0.25 = .75]=1.33).

1. Angel Investors
Maryland Angel Investors probably currently invest an average of $450 million per year.    

Based on the above figures, $450 million per year x 10 = $4.5 billion over 10 years for angels.

If Angel Investors are eligible for 25% tax credit, then they might invest $1.5 billion more capital over 10 years.

2. Venture Capital (VC)
$450 million per year x 10 = $4.5 billion over 10 years for VC firms.  

If VC firms are also eligible for a 25% tax credit, then they too might invest $1.5 billion more capital over 10 years.

3. Total of Venture Capital
So, adding $4.5 billion + 4.5 billion + 1.5 billion + 1.5 billion = $12 billion.  

Thus, a total of $12 billion might be invested over 10 years.

V. Jobs Growth in High Tech Sectors

According to Technology Policy Coalition Engine and the Ewing Marion Kauffman Foundation, new high-tech companies typically grow rapidly, add thousands of jobs and successful startups make up for the job loss from the high rate of startups failures.

"The high-tech sector and the information and communications technology (ICT) segment of high-tech are important contributors to entrepreneurship in the U.S. economy. 

During the last three decades, the high-tech sector was 23 percent more likely and ICT 48 percent more likely than the private sector as a whole to witness a new business formation.

High-tech firm births were 69 percent higher in 2011 compared with 1980; they were 210 percent higher for ICT and 9 percent lower for the private sector as a whole during the same period. 

This is important because the productivity growth and job creation unleashed by these new and young firms—aged less than five years—require a continual flow of births each year."

Source: Kauffman Foundation Research Series: Firm Formation and Economic Growth Tech Starts: High-Technology Business Formation and Job Creation in the United States, August 2013

"This has been especially true for high-tech and ICT, where surviving young firms create jobs at twice the average rate across the entire private sector."

For medium-age firms, net job creation rates are lower, but the rates for high-tech and ICT are about four times the rate for the private sector as a whole. 

Figure 1 &  2

Taken together, Figures 1 and 2 show that, while older firms are the major source of employment, new and young companies are responsible for net new jobs. 

Once again, this fact hold true for high-tech and ICT firms where job creations among young businesses have offset job losses from early-stage startup failures.

Source: http://www.kauffman.org/newsroom/2013/08/young-hightech-firms-outpace-private-sector-job-creation

VI. 1 New High Tech Job Creates 4 Jobs in other Sectors

For each new high-tech job, approximately 4.3 jobs are created (multiplier effect) according to a report by the Bay Area Council Economic Institute commissioned by Engine Advocacy.  

In addition, "high-tech jobs have been more resilient over the past 10 years to economic downturns than other private sector industries, pay more, create more indirect jobs by far than any other industry and hold the most promise for continued growth."

Here are the key findings: 

– Employment growth in tech jobs — defined as those most closely related to science, technology, engineering and math (STEM) — outpaced gains in all other occupations by a ratio of 27 to 1 from 2001 to 2011.

– For each job created in the high-tech sector, approximately 4.3 jobs are created (multiplier effect) in other local goods and services sectors across all income groups, including lawyers, dentists, schoolteachers, cooks and retail clerks, among many others.

– The jobs multiplier effect in the high-tech sector is significantly higher than for almost any other sector. 

By comparison, traditional manufacturing has a multiplier effect of 1.4 jobs.  Demand for high tech occupations will be considerably stronger than demand for other workers.

VII. Applying the 80/20 Rule 

Based on the facts mentioned above, I have combined the principle of logic in conjunction with the reverse of the 80/20 rule or the pareto principle.

The 80-20 or 90/10 rule in economics states that 80% of a country's wealth is controlled by 20% of the population.

Therefore, it is wise for Maryland to focus on Scalable High Tech job creations efforts where 90% of new jobs growth in the United States have occurred.

VIII. Macro Economic Impact to Maryland

Most importantly, the State, County & Local Maryland's Government will experience an increase in tax revenues as opposed under the current system. 
F
For eaimqch new job created in the high-tech sector, approximately 4.3 jobs are created (multiplier effect).

q pnVdiifN1. New High Tech Jobs

A. Historically, $1 million in Angel Investment creates 90 jobs over a 5 YEARS period. 

B. There are 12,000 millions in $12 Billions. 

C. Therefore, 90 jobs times 12,000 millions are equal to 1,080,000 jobs over 10 years.  

2. Derivatives Jobs

1,080,000 jobs times 4.3 is equal to 4,720,000 jobs 

3.  Total Numbers of Jobs Creations

Thus, over 10 years, a potential of 5,800,000 millions jobs will be created.

4. Tax Revenues Assumptions

A. Assuming that the annual average pay for High Tech workers is $60,000 since the average workers in Maryland was $51,860 as of May 2011.

B. Based on the online version of the Form 502D for Maryland and Local Tax Worksheet on the Maryland Comptroller at https://interactive.marylandtaxes.com/webapps/percentage/502for2014.asp, with standard deduction for $60,000 of Estimated Federal Adjusted Gross Income based on Prince George's County...

Here are the Results:

1. Total income expected in 2014: $60,000.00

2. Net Modifications: $0.00

3. Maryland Adjusted Gross Income: $60,000.00

4. Standard deduction: $2,000.00

5. Maryland Net Income: $58,000.00

6. Personal exemptions: $0.00

7. Taxable Net Income: $58,000.00

8. Maryland Income Tax: $2,702.50

9. Local or Special Nonresident Income Tax: $1,856.00

10. Total 2014 Maryland and local income tax: $4,558.50

11. CREDITS  
a. Income tax to be withheld from wages by employers during year 2014: $0.00

b. Credit for tax paid to another state: $0.00

c.  Business tax credits $0.00

d. Total tax credits: $0.00

12. Total estimated tax to be paid by declaration: $4,558.50

Hence, the total taxable income to the State of Maryland over 10 years is:

$4,558.50 x 5,800,000 jobs = $26,439,300,000 Billions

Specifically...

A. Maryland Income Tax:  $2,607.50 x 5,800,000 jobs =  $15,123,500,000.00 

B. Local Income Tax:  $1,856.00 x 5,800,000 jobs =  $10,764,800,000.00 

IX. Tax Revenues Estimates by Counties

The Directors of Economics Development in the Maryland Counties and cities are closer to the sources of innovation than those at the State level. 

According to a McKenzie article entitled "Creating Growth Clusters, What Role Should Local Government Play, July 2014", the following two requirements were highlighted as conditions sine qua non for a successful startups policy:

#1. "The ability to keep pace with the start-up environment. The start-up world is volatile; investors and founders, and their needs and activities, change rapidly. 

Policy makers cannot pick winners in such an environment. Instead, they should focus on enabling structures that can address more fundamental requirements."

#2. "The ability to succeed in a multistakeholder environment. When starting initiatives to spur innovation, there are many competing interests: stakeholders from the private sector, such as venture capitalists, corporations, and start-ups; diverse levels of governments; and universities and research institutes.

Here are some of the questions The Directors of Economics Development at all levels in the Maryland's Governments should ask and find answers to in order to propel Maryland as the #1 State in the USA and region worldwide for startups formations:

1. What can we do to increase capital availability in our County or city? 

2. How can we ensure there are enough coworking spaces at reasonable prices for entrepreneurs?

The State, Counties and Local governments officials cities likely won’t get their initiatives right the first time, no matter the level of precautionary measure since the notion of perfect solution is a fallacy.

Instead, the Directors of Economics Development in Maryland must adjust to the needs of startup by copying the approach of start-ups: 

#1. launch the initiative

#2. analyze the launch

#3. learn what went wrong and then

#4. adjust it and relaunch.

Bringing together and managing the public and private stakeholders and interests are essential to successful startup community.

1. Existing non high tech small businesses will benefit from workers disposable incomes and a high concentration or clusters of new high growth high tech startups in Maryland  would also be paying state and local income taxes.

2. Assuming the percentage of County population is equal to the same percentage distribution of the 5.8 million job creations 

I am available on Wednesdays and Thursdays as well as evenings due to my work schedules to meet and discuss this public interest initiative for the High Technology Investment Law.  Thank you.

X. YOUR COLLECTIVE EFFORTS ARE NEEDED... 

Let's Propel the Great State of Maryland to #1 in USA and Worldwide ...

The Great State of Maryland is already

1. #1 in Education
2. #1 Richest State in USA

Now...

3. Let's make Maryland the #1 State for High Tech Startups in USA and Worldwide.

Will you please take part of this collective effort to take the Great State of Maryland to HIGHER HEIGHTS OF ECONOMIC GREATNESS?  

Pierre Richard Augustin, MPA, MBA, Tel: 301-761-4347 |  http://www.paugustin.com

P.S. - I know your support is essential to the success of this Bill Proposal.  

STAKEHOLDERS - LOCAL ECONOMIC DEVELOPMENT AGENCIES

Allegany County Department of Economic & Community Development

Anne Arundel County Economic Development Corporation

Baltimore City Development Corporation

Baltimore County Department of Economic Development

Calvert County Department of Economic Development

Caroline County Economic Development Corporation

Carroll County Department of Economic Development

Cecil County Office of Economic Development, Tourism, & Agriculture

Charles County Department of Economic Development

Dorchester County Department of Economic Development

Frederick County Department of Business Development & Retention

Garrett County Department of Economic Development

Harford County Office of Economic Development

Howard County Economic Development Authority

Kent County Office of Tourism & Economic Development

Montgomery County Department of Economic Development

Prince George's County Economic Development Corporation

Queen Anne's County Department of Economic Development & Tourism

St. Mary's County Department of Economic & Community Development

Somerset County Economic Development Commission

Talbot County Office of Economic Development

Washington County - Hagerstown-Washington County Economic Development Commission

Wicomico County - Salisbury-Wicomico Economic Development, Inc.

Worcester County Department of Economic Development

Worthy Mentioned

I was born in August 11, 1967 in Les Cayes.  At a young age of 12, my parents fulfilled my dream to attend school in Paris, France due to my desires to follow the footsteps of my forefathers.

I had a vision and a desire to help improve the lives of others and to make a difference. Thus, I majored in Political Science at Salem State University, Salem, Massachusetts. 

Thereafter, in just 12-months, I earned a Master of Public Administration from the Institute of Public Service at Suffolk University, Boston, Massachusetts. 

A year later, while working full-time, I completed in 12-months a Master of Business Administration from the University of Massachusetts Lowell, Lowell, Massachusetts.

You can read my plan: Bringing "New Wealth" Initiative to attract new business start-up, relocation, expansion & high paying jobs creation in Maryland at http://www.paugustin.com/business.

EDUCATION

MASTER OF BUSINESS ADMINISTRATION (MBA), 1999. Completed in 12 months, 1-1998 to 12-1998.  University of Massachusetts, School of Management, Lowell, Massachusetts,http://www.uml.edu/.

MASTER OF PUBLIC ADMINISTRATION (MPA), 1997. Completed in 12 months, 1-1996 to 12-1996.  Suffolk University, Institute of Public Service, Sawyer School of Management, Boston, Massachusetts, http://www.suffolk.edu/.

BACHELOR OF SCIENCE in POLITICAL SCIENCE with BUSINESS & ECONOMICS minors, 1992. Salem State University, Salem, Massachusetts, http://www.salemstate.edu/.

DONATE Online Today at http://paugustin.com/contribute

Thank you, Pierre Richard AUGUSTIN, MPA, MBA

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