A primer about online sales taxes and why they matter to startups.
New year, new Congress, same issues. The new year and the new Congress kicked off this week, but many of the policy debates that concerned startups in 2018 will continue on. As the Democrats take control of the House and the gavels of key committees, expect vigorous oversight of the Trump administration across the board, which is likely to impact several of the policy areas startups care most about, including trade, net neutrality at the Federal Communications Commission, and more.
The Big Story: FTC wants more authority, resources for privacy. During a hearing this week, the commissioners of the Federal Trade Commission told lawmakers the agency needs more authority to better protect consumers’ privacy online, including the ability to bring civil penalties against companies that violate privacy rules.
A U.K. tax on online services. The British government has announced a new tax on the biggest companies offering online services in the United Kingdom. The tax, 2 percent of U.K. revenues, will be levied on companies with global revenues of $640 million or more starting in April 2020.
The Big Story: Europe passes online filtering rules.
This week, the European Parliament approved sweeping changes to its copyright regime, including Article 13, which would effectively require all websites hosting user generated content to adopt expensive and ineffective content filters. The proposal also creates a new IP right for publishers that requires websites to pay publishers if the website creates a link to the publisher’s content.
The Big Story: FCC wrong about net neutrality comment ‘attacks.’ The Federal Communications Commission repeatedly made inaccurate statements about supposed distributed denial of service (DDoS) attacks related to last year’s net neutrality proceeding, according to a new report from the agency’s internal watchdog.
After more than 600 startups, investors, and innovators from across the country wrote to lawmakers this week, warning about the devastating consequences of a proposed tax change that could hurt small companies competing for talent, Engine applauds the Senate Committee on Finance for recent modifications to the Senate Tax Plan.
"Engine is proud to support the Support Our Startups Act, a bill that would reduce tax burdens on entrepreneurs in their first year of business. The bill from Sen. Tammy Baldwin (D-Wisc.) would help startups hit the ground running by increasing they amount they can write off as federal tax deductions in their first year.
On Tuesday, the U.S. House of Representatives passed the Helping Angels Lead Our Startups (HALOS) Act by a vote of 344 to 73, an even wider margin of support than when the bill passed the House during the previous Congress. Engine applauds the House passage of the bill, which would clarify regulatory ambiguities around general solicitation to ensure that startups aren't unintentionally running afoul of securities laws when participating in demo days and pitch competitions
Today, the U.S. House of Representatives passed the Empowering Employees through Stock Ownership Act (H.R.5719), which will encourage startup growth by making it easier for employees at private companies to exercise their stock options. The following statement can be attributed to Engine Executive Director Evan Engstrom:
Equity compensation, often in the form of stock options, is a critical tool used by startups to attract, retain, and incentivize quality employees. But stock options have a downside: current tax law requires that employees pay an immediate tax when they exercise their options, usually long before they can sell those stocks to realize their full economic value. Fortunately, a bill being considered today by the House Ways and Means Committee could remedy this problem.
Among the many challenges entrepreneurs face in launching and scaling a startup, recruiting talented employees is one of the most difficult. There’s already a shortage of tech workers in this country (there are currently more than 600,000 open computing jobs nationwide, and last year, only 43,000 students graduated with computer science degrees), and it’s even more dire for startups that must compete with some of the most successful companies in the world to recruit these employees.