The Big Story: New tax deal could impact global startup ecosystem
Officials from around the world are moving forward with a new tax deal that would shift current tax laws and stands to impact both large companies and startups. G20 Finance Ministers this Wednesday endorsed the agreement that 136 countries agreed on last week, which would tax businesses based on where their goods and services are consumed—a shift from taxation based on physical presence. The deal would also set a new global minimum tax of 15 percent.
While the framework has the support of both the Organisation for Economic Co-operation and Development (OECD) and the Biden administration, Congress is still divided on domestic implementation, in part because the deal boosts the tax that American companies pay on foreign profits to at least 15 percent. And while the framework places a pause on new implementation of digital services taxes (DSTs)—measures that largely target big, American tech firms, with trickle-down consequences for startups—the process for removal of current DSTs is unclear.
The OECD deal reflects progress toward setting a global tax framework for the 21st century. But to prevent harm to the startup ecosystem, any agreed-to framework must prevent the implementation of discriminatory DSTs. As we noted in a recent blog post, policymakers should keep startups in mind and support U.S. innovation by combatting policies that increase costs for American entrepreneurs.
Policy Roundup:
A new bill targets Section 230 and algorithms. This week, a group of House Democrats proposed a new bill that would amend Section 230 to remove some liability protections for tech platforms. The bill would apply to platforms with over five million users and would remove Section 230’s liability limitations when a company uses a “personalized recommendation algorithm” that promotes content that leads to harm. Critics of the bill have warned that it ignores the benefits of algorithms “to limit the spread of bad content while allowing positive content to flourish” and that the bill would “undermin[e] human rights and freedom of expression, particularly for marginalized communities.” As we’ve explained, Section 230 is a foundational Internet law that lets startups host user-generated content—from social media posts, to photos, to user reviews, to comment threads, and more—without having to worry about ruinous litigation if someone wants to sue over a user’s post, even if the startup would ultimately win the lawsuit. Anything that changes Section 230 in a way that makes it harder for startups to get lawsuits dismissed early, including by requiring a startup to fight in court about whether it’s eligible for Section 230’s liability shield, undermines the key value of the law.
House hearing covers tech startup, anti-counterfeit bills. A house panel held a legislative hearing this week covering 10 bills on strengthening American competitiveness. One of the bills, the Advancing Tech Startups Act, would require the Commerce Department to study where tech startups operate and how to support them nationwide. Another bill, the INFORM Consumers Act, is intended to target the sale of counterfeit and stolen goods online. It proposes combating counterfeits by improving access to relevant information and requiring online marketplaces to verify information about certain high-volume sellers.
The importance of using patent data accurately to shape innovation policy. As the Patent and Trademark Office is conducting a study about Section 101 of the Patent Act—the law that details what is patent eligible, excluding mere abstract ideas from patentability—stakeholders are gearing up to provide data and perspectives to the PTO. One of the things the PTO wants to understand is how U.S. law compares to other countries’ laws. In that context, we recently explained in a blog post how policymakers need to scrutinize data about patents and applications as they seek to ensure that the patent system (and eligibility law) works for entrepreneurs and innovators across the country.
Broadband boost for West Virginia. The Federal Communications Commission (FCC) is providing West Virginia with $53.5 million over the next 10 years to expand broadband access to residents across the state as part of its Rural Digital Opportunity Fund. Increasing access to reliable, affordable broadband across the country, especially in underserved areas—West Virginia is reportedly the state with the worst FCC accounting for broadband coverage—creates more opportunities, including for innovation.
Join us for our Nuts & Bolts of Encryption event on global policy. Policy debates around encryption are evolving—especially around the world. Join Engine on October 22 at 12p.m. ET where, together with an expert panel, we will explore the evolving global policy landscape around encryption. The panel will include industry representatives who can speak to the competing demands companies face from policymakers who want strong online protections but weakened security, as well as the perspective from the privacy and human rights advocacy community. Register today.
Startup Roundup:
Tell us about the policies impacting startups. Engine is startups’ voice in government. Help us better understand your priorities and the issues impacting your ecosystem by completing our advocacy survey. If you have any questions, contact: ian@engine.is.
Startup Policy Seminar Series: Immigration & Your Startup. Join Engine on October 27 at 4 p.m. ET where, together with an expert panel, we will explore the current landscape of immigration policy, particularly focusing on how high-skilled immigration impacts technology startups, what a startup visa would mean for the ecosystem, and why startups should get involved in the policy conversation. The event will feature a discussion moderated by Engine’s Policy Manager, Jennifer Weinhart, with expert panelists. You can RSVP here.
