For the last 30 years start-ups have been steadily declining as a share of total businesses in the U.S.

This is especially worrisome given that start-ups account for most of the new job creation in the economy.

Entrepreneurship is a key source of innovation in our economy, as well as an important factor driving productivity and real income growth for workers.

That’s why a recently introduced bill from Rep. Vern Buchanan, R-Fla., the “Support Our Start-Ups” Act, could not come at a better time.

The bill aims to reinvigorate the start-up sector by making it less costly to launch a new business.

The U.S. tax code grants new businesses the option of deducting certain “start-up” and “organizational” expenditures when calculating their taxable income in the first year of operations.

Start-up expenses might include salaries for employees in training or for business consultants, advertisements for the business’s opening, or feasibility studies.

Organizational expenditures refer to the direct costs of creating and organizing the business. Examples include the cost of temporary directors or state incorporation fees (if a corporation), accounting fees, or legal fees for negotiation and preparation of the articles of incorporation (corporations) or the partnership agreement (partnerships).

Under the current system, the maximum amount that can be deducted in the first year of operations is $5,000. Any remaining start-up and organizational expenses beyond $5,000 are amortized over a 180-month (15-year) period. This deduction is reduced dollar for dollar once aggregate expenses exceed $50,000.

In principle, all business expenses should be deductible in the year they are incurred—a policy known as “full expensing.”

Amortizing deductions over many years is inappropriate because it prevents businesses from recovering the full cost of their expenses; the delay reduces the value of the cost deductions because of the opportunity cost of capital.

Businesses don’t get to pay start-up and organizational expenses over many years—they pay immediately. So it doesn’t make sense that they should have to wait many years to deduct these expenses from their taxable income. This imposes unnecessary costs on entrepreneurs establishing a business.

Buchanan’s proposal helps mitigate this effect by moving us closer to full expensing. The bill improves the tax treatment of new businesses by increasing the maximum deduction from $5,000 to $20,000 and raising the phase-out threshold from $50,000 to $120,000.

Both changes will allow entrepreneurs to deduct more of their true costs—helping them get their businesses off the ground by leaving additional capital available to be invested rather than paid out to the government.

This prudent policy will promote new business activity, boost employment and foster economic growth.