In the late 18th century, Alexander Hamilton called for tariffs to protect America’s infant industries. The idea was that emerging domestic industries couldn’t compete with mature foreign competitors, and so they needed an edge. Jay Fishman is calling for something vaguely similar for young firms:

New small businesses, and the U.S. economy, would benefit significantly from a three-year incubation period during which they would face lower taxes, fewer regulatory requirements and fewer penalties for first-time and harmless paperwork violations.
An obvious way to promote small business would be to reduce or entirely eliminate their taxes during the first three years of operation. While there are no reliable statistics showing how much in federal and state taxes new businesses pay, it is clear that taxes can be a burden on these enterprises. The average, profitable small business pays an effective tax rate of about 20 percent, according to a study commissioned by the U.S. Small Business Administration. Although many startups aren’t profitable in their initial years, those that are would be able to plow back earnings into their companies and, in turn, hire more workers.
By granting temporary relief from the cost of regulations not related to public health and safety, these businesses could focus on survival during their greatest period of vulnerability.

A few obvious problems come to mind: firms that can survive during this incubation period might not be able to survive once they’re obliged to pay “big boy” taxes, so we’ll create firms that are essentially hothouse flowers. Other firms might have a relatively easy time of it during their first three years yet face serious economic headwinds come their fourth or fifth year. And as for the burden of regulatory compliance, which is real, one has to wonder: if regulations not related to public health and safety aren’t of vital importance, why impose them on firms of any age? Though I’m very sympathetic to Fishman — he is essentially calling for the creation of an age-based “special economic zone” for American firms — I’d much rather we embrace lower taxes and deregulation for all firms.

That said, it’s possible that Fishman is making this recommendation precisely because young firms will experience the dramatic difference in compliance costs between years three and four and be radicalized to press for a broader deregulation effort.