Congress Actually Helping The Internet, Rather Than Mucking It Up?

from the could-it-be? dept

We're so used to Congress trying to muck up the internet, that it's rare we hear about cases where they're actually looking to make things better. While the idea has been floating around for a little while, (and the actual bill was introduced back in December when we were focused on the whole SOPA/PIPA debate), the Startup Act is starting to get some attention, with co-sponsors Senators Jerry Moran and Mark Warner taking to the WSJ to explain why the Startup Act is important. The basic idea behind the bill is to remove some of the regulatory hassles of starting and building a new company. As we've pointed out repeatedly, studies have shown that pretty much all of the net job growth in the US comes from startups, and a bill like the Startup Act should help make it easier for startups to get going. To be honest, the bill could be even stronger in a bunch of places, but as a starting point, it's definitely nice to see. The focus is on making it easier for startups to be startups by doing the following:
  • It will make permanent a capital gains tax exemption on the sale of certain kinds of small business stock that is held for at least five years. In other words, it will encourage long-term investment in startups, which is just the kind of investing we should be encouraging (rather than quick flip type investing, which is more about gambling on changes, rather than investing in economic growth).
  • It decreases corporate taxes on new businesses during their first three years of profitability -- again making it easier for young companies to grow and to reinvest their own profits in jobs and growth.
  • While it doesn't do away with crippling government regulations for small businesses, it does require a cost-benefit analysis of the economic impact of many of those regulations on startups.
  • It implements a simplified form of the startup/founders visa -- which is about helping non-Americans start companies and create jobs in the US. We've talked about the startup visa in the past and why it's a good idea. No matter how you feel about other immigration issues, this one is pretty clearly about having immigrants create jobs in the US (rather than elsewhere).
There are a few other things in the bill, but overall the key point is to basically get overbearing regulations out of the way. These are regulations that bog down many startups (or prevent them from getting started at all), and really put a drain on the key part of the economy that is contributing to both job growth and economic growth. It's rare to see Congress trying to do something that helps the internet, rather than mucks it up, so we should certainly highlight when such efforts are being pushed forward. I have a few quibbles around the edges on pieces of the bill, and really think it should go further in other areas, but on the whole it's a really good start.


Reader Comments (rss)

(Flattened / Threaded)

  •  
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    Anonymous Coward, Feb 9th, 2012 @ 11:07pm

    I read that somebody in NY had to wait 1 or 2 years to get all permits to open a grocery store and incurred significant costs up front in the 10's of thousands of dollars, now how are those people trying to pursue their dreams to pay for all of that up front?

    I think the US doesn't want to have business of any kind, to open something there you must be a financial genius and Congress is hellbent in transforming the internet in something similar to what happens in meatspace in other worlds a desert since I doubt the government will try the credit crazy angle again anytime soon.

     

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    Anonymous Coward, Feb 9th, 2012 @ 11:20pm

     

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    Anonymous Coward, Feb 9th, 2012 @ 11:26pm

    Just Google "Starting a business in the US horror stories", is just alarming how things are out of control.

    Most people like to open business in Asia this days because it is simple with rules that don't require a PhD or an army of lawyers to understand, everybody knows what they need to do to comply and the barriers are low, very low.

     

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      Anonymous Coward, Feb 10th, 2012 @ 12:19am

      Re:

      Which part of Asia are you refering to? Because here in China, starting up a business is a nightmare of bureaucratic process with rules that are ever-changing and subject to the changing moods of individual government goofs.
      Definitely not easy, simple or cheap.

       

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        Anonymous Coward, Feb 10th, 2012 @ 2:07am

        Re: Re:

        Try Hong Kong, Taiwan, South Korea, Indonesia, Vietnam, Japan, China/India, Philipines. In that order from easiest to harder.

        Also China and Japan has one quirk in common, they actively make it harder for non natives to do business, with the exception of the special zone of Hong Kong.

         

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    Anonymous Coward, Feb 10th, 2012 @ 12:15am

    Nokia Cutting 4000 Jobs, Moving Phone Production to Asia

    Here is the thing, the US is a regulatory nightmare full of exclusive zones, special interests, red tape and costly fees/taxes.

    The government consume a lot of resources and the people don't want less service they want more but there is no money and this cycles continues and we can call that the spiral of death, which means companies will keep moving to other places where governments can make do with less, are more efficient since they don't have success to cover up the mistakes they make and actually are quite open and less complicated in their bureaucracies.

    You can open a business in Taiwan in less than a day and be up and running the next day.

    One problem may be that fear let government grab power and so they use it to enact restrictive rules that impact business at the behalf of big players in that market, instead of making rules to make sure people have the information to make a informed decision and live with the consequences of their own actions they use the excuse of protecting people to exclude competitor s and raise the bar so high that only the big boys can play in that sandbox, nobody else can and the internet is a threat to that business model that has hold back the US for over 50 years now and counting.

    But that is cultural, people get scared and let the government "protect" them when they should take some responsibility for their choices, the only thing one needs is the right information if anybody is lying or hiding something that is the only thing I can think of that could make it a serious enough offense to get punished or burdened by any regulation.

    The same thing happens over almost all the American continent, that is why even Brazil although it is growing it grows slower than China, that is also why Europe is facing the same problems.

    People are just dumping the west side of the planet because is just hard to do business there and the small people can't even start anything because the bar is so high to enter.

    The solution:

    Discriminate against size, different rules for different sizes of companies, the bigger you get the more you need to be aware of things the more rules you fallow, it seems obvious but not for politics, there nothing is obvious.

    80 thousands pages of rules like having to memorize 80 bibles and understand all of them and their resulting effects of every and each rule on each other, nobody can do that, not even people who do this for a living.

    So either the government finance the cost of compliance for startups or they wave rules for smaller companies until they can handle the burden.

    Is like taking care of a garden you don't dump the fertilizer all at once you give it at the right time or everything dies.

     

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    That Anonymous Coward (profile), Feb 10th, 2012 @ 1:09am

    1 small step begins a very long journey of making the US attractive to anyone. The downside being there is so many more things that are toxic to startups.
    We need to honestly assess what the entire system encompasses now and start cutting away at old outdated ideas. Remove the sweetheart deals that favor legacy players and makes them learn how to compete like everyone else needs to.

     

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      Hephaestus (profile), Feb 10th, 2012 @ 7:00am

      Re:

      Agreed. We also need to go after every rule on the books that is their to protect the entrenched monopolies.

       

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        Hephaestus (profile), Feb 10th, 2012 @ 7:08am

        Re: Re:

        ... that is on the local, state, and federal level.

        An example is the telco's and cable companies. We remove local ordinances that prevent new cables from being run on telephone poles or underground, or new lines from being run into buildings. At the state level remove rules that require state approval for new telcom services, and laws that prevent entry into the telcom industry. At the federal level, I do not even know where to start there are far to many rules and organizations.

         

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          tracker1 (profile), Feb 10th, 2012 @ 8:37am

          Re: Telephone/Cable co's

          Unfortunately, in cases where hard wiring/pipes need to be put in place on public easements there has to be a natural limitation on them. As much as I like the idea of competition, utilities and hard wired communications is an area that is probably best served by the government, or at least a government funded non-profit organization. Not that such organizational structures have a history of success in this country.

          Possibly having public (government) ownership of the infrastructure, then outsourcing the maintenance of those resources, and their respective end points.

           

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            Anonymous Anonymous Coward, Feb 10th, 2012 @ 9:05am

            Re: Re: Telephone/Cable co's

            Why limit this to hardwired? The airwaves are owned by the public, and leased to companies. Use the same strategy and make cell towers open to any company that wants to offer a service. That way we could get some competition in that space along with cable, DSL and other services I cannot think of right now.

             

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    Anonymous Coward, Feb 10th, 2012 @ 2:32am

    Americans learning how to evade US taxes.

    http://www.incomediary.com/top-entrepreneur-friendly-places-to-live

    Move to a tax haven and enter America as a tourist.

    Singapore keeps ranking high on friendly business as is New Zealand.

    http://www.channelnewsasia.com/stories/singaporebusinessnews/view/374931/1/.html

    Funn y thing the most attractive places to do business are the ones that apparently are not having economic problems today.

    Norway and New Zealand are apparently great places to do business their are friendly and easy to start and New Zealand have a top notch medical infra-structure that is fueling the healthcare-tourism phenomenon that is happening in other places where costs got out of control and people are scrambling to find alternatives wherever those alternatives may be like India, South Korea, Cuba, Brazil or New Zealand.

     

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    Ninja (profile), Feb 10th, 2012 @ 2:38am

    One rare display of sanity in the US Govt. I'm shocked.

     

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    Anonymous Coward, Feb 10th, 2012 @ 3:11am

    WTF? This article has nothing to do with piracy.

    There. My comment should get you a few more hits on this post. You're welcome.

     

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    Anonymous Coward, Feb 10th, 2012 @ 4:51am

    Startup/founder's VISA

    No, Mike, just no.

    If the only reason we want to allow them in is an idea well I can guarantee that an American has the same business idea. The only issue is that maybe the foreign businessperson has capital ready to spend. There are always was for people to immigrate to the US. What we need more and better ways for American startups to find capital.

    For instance, I work for a company that was founded by an Indian gentleman and although he has 15 people working for him in the US, he has 75 working for him in India and he moved his family back to India and sends all of his profits back to India. He came here on a student VISA to get a Masters and then decided to stay here to work for a company until he saw an opportunity to start a company. He spends half of the year in India and half here. So I guess you could say that he's a boon for his US employees is it a big enough of a boon to legislate special VISAs just for startups?

    It's like foreign student VISAs. More than half of the PhD students in the US are foreign-born. And the excuse that I have always heard universities use to justify that is that if we teach these foreign students the American way that they will go back to their countries and spread goodwill for America. However, most of them never go back. They decided that they like it here and don't leave. So the universities have screwed over American citizens with credentials that were just as good or better than a foreign student just because they were Americans.

    As long as the startup/founder VISA was written that the foreign citizen has to deposit a substantial sum in an American bank and that the company was to be audited for it's first 3 to 5 years to ensure they were actually trying to build a legitimate business then I would be for it. But if it was written to just allow more people to come into the US willy nilly then I would be opposed to it 100%.

     

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      Anonymous Coward, Feb 10th, 2012 @ 9:08am

      Re: Startup/founder's VISA

      Quote:

      It's like foreign student VISAs. More than half of the PhD students in the US are foreign-born. And the excuse that I have always heard universities use to justify that is that if we teach these foreign students the American way that they will go back to their countries and spread goodwill for America.


      Than you heard it wrong mate, because the excuse was always to let those students become American entrepreneurs, to create new markets, those are the people who create markets and as Dr. Michio Kaku put it America has a secret weapon.

      Dr. Michio Kaku America Has A Secret Weapon

      90% of PhD US candidates are foreign born, there are no Americans to take their places and the reason is very simple in a global world where you are trying to attract only the best those are not Americans, there are 7 billion people in the world and if you can do simple math you would know that there are no way that statistically there would be more Americans genius than the rest of the world.

      The American government and the American science collective don't want those people to go back to their homes, although many do, the interest is that they get educated and create something here.

      Besides if you don't allow immigration the US would be in the position of Japan that will have almost half their population being old people putting tremendous strain on the younger generation that don't want to get married or have kids in numbers enough to even maintain the number of people in the country and facing population contraction which again is bad for the economy, since America has a growth rate that is almost organic in nature, the population growth in America is something between 0.5%~5% due mostly because of immigration and economy growth doesn't go higher than 5%, you see there the correlation between population increase and market expansion in the US?
      Would you be surprise to know that although the US population grew a lot since the 70's the US manufacturing capabilities stayed the same? in practical terms this means the US actually shrunk and has been doing so for the last 50 years with some micro-golden-ages which are mostly fueled by internal consumption of goods that is why the government love credit and is so reliant on it and can't stop it, they need to keep giving credit to others so consumption occurs or the economy is going down the toilet, the US exports are a laugh and people only do business with the US and put up with it because they consume something otherwise you would see other countries dumping the US and flipping it and that would be bad, because prices would rise, inflation would become a problem and it is starting to show that it is already becoming a problem in the 70's and 80's things usually stayed with the same price for a long time, that time now is shorter than it was before, now imagine a US that is not growing and is a country of old people all sucking up medicare resources without new blood to pay for it all or consuming, that is why nobody in congress will ever pass immigration laws that curtail the growth of American population.

       

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    John Doe, Feb 10th, 2012 @ 5:08am

    Capital gains tax should be like this for everyone

    It will make permanent a capital gains tax exemption on the sale of certain kinds of small business stock that is held for at least five years. In other words, it will encourage long-term investment in startups, which is just the kind of investing we should be encouraging (rather than quick flip type investing, which is more about gambling on changes, rather than investing in economic growth).

    I am not a soak-the-rich guy, but the current capital gains tax only requiring you to hold the investment for a year is a joke. How is 1 year considered "long term"? Five years sounds about right. That is a real investment and not gambling.

     

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    Anonymous Coward, Feb 10th, 2012 @ 5:22am

    Don't frivolous lawsuits hurt small businesses far more than government regulations and taxes?

     

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    Dave M, Feb 10th, 2012 @ 7:15am

    Is it just me or does this amount to just a short-term tax break? I don't understand how this helps the problem.. in fact it's just another layer of tax exemption wierdness to look at.

    Treat the sickness, not the symptoms.

     

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    Anonymous Anonymous Coward, Feb 10th, 2012 @ 7:18am

    And Then There's Patents

    Yes, the dirty word, and process. If there was some true patent reform, or better yet elimination, there would be a whole lot of startups. The keys to working in a no patent environment are 1)be first to market 2)have a full understanding of and actively listening to your market 3)competing on all three of the price/quality/service variables, by being better in at least 2 out of 3 of those. Yes someone will copy you, but the big companies today do not know how to do service, especially customer service.

     

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    isaac Kotlicky (profile), Feb 10th, 2012 @ 10:16am

    NEWS FLASH!

    This just in...
    Every millionaire in America has just become an LLC.

    Hermn... If corporations are people... then it's illegal to discriminate against my LLC when I transfer my employment status over to it...
    Combined with a severely reduced tax bracket with a three year startup exemption and all the write offs I can take...

    This may explain Romney's 15% tax rate...

     

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      Anonymous Coward, Feb 10th, 2012 @ 8:24pm

      Re: NEWS FLASH!

      I'm sure he's all for a capital gains tax, considering his income's primarily passive. I'm not sure where the anti-capital gains people think they can cover a 43% tax cut to the top 5% if it were eliminated.

       

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    Boo Boo, Feb 20th, 2012 @ 1:45am

    fear

    Right now this will make much difference to potential web Startups. Now they are are more concerned about :

    1) Getting sued out of existence by Big content / music
    2) Getting the door busted down by the feds
    3) Getting their domian names seized
    3) Being treated as a criminal for allowing users to share / upload content
    4) Possibility of massive fines and /or jail time for running a web Startup.

    These fears are real-time now, not sometime in the future.
    Until someone slaps down the content industry this climate of fear will prevail and nobody in their right mind will take the risk of setting up in the US under these conditions.
    So on one side there are members of congress trying to make things better for Startups , on the other they are trying to make the US the least desirable place on earth to start something in the consumer web space.
    Until the ' content industry wing of congress' back the hell off, then any other initiatives are not going to mean much are they ?

     

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