The Big Story: Biden unveils plan to invest billions in education, child care. President Joe Biden unveiled an ambitious $1.8 trillion proposal—known as the American Families Plan—that would, in part, give Americans expanded access to education, create a federal paid family and medical leave program, and extend the expanded child tax credit included in last month’s stimulus package. In a speech before a joint session of Congress on Wednesday, Biden said the plan—along with his proposed $2 trillion infrastructure package—would help keep the U.S. at the forefront of global competitiveness.
The startup community and Americans of all backgrounds stand to benefit from many of the proposals included in Biden’s plan. By increasing access to educational opportunities—including offering publicly-funded schooling from preschool through two years of community college—the plan would provide the next generation of entrepreneurs with the skills they need to succeed. As we noted in comments to the U.S. Patent and Trademark Office (USPTO) earlier this year, it is critical for policymakers to ensure that training and educational resources are equitably distributed so students of all backgrounds can access a quality STEM education. The government must work to guarantee that young people have access to the problem-solving skills needed to turn new ideas into practical solutions through advanced technology. Attracting and retaining more diverse STEM educators will allow for the development of a new curricula that can more effectively highlight accomplished innovators from underrepresented backgrounds.
Additionally, the American Families Plan would fund the March stimulus package’s expanded child tax credit through 2025 and would make it permanently refundable. The high cost and availability of child care present obstacles, particularly to women entrepreneurs, forcing many of them to forego their entrepreneurial aspirations. Even before the pandemic, a 2016 study found that an estimated two million parents made career sacrifices because of child care-related costs. And startup founders in our network have also cited child care as a barrier to launching their own companies. Dr. Grin Lord—the Co-Founder and CEO of Empathy Rocks in Bellevue, Washington—told us that the cost prohibitive nature of child care almost forced her to reconsider her career choice: “Since becoming a parent, I’ve taken jobs that barely made a profit when accounting for the cost of childcare for two kids under 5 years old. … I’ve basically run my startup in the evenings after the kids are asleep, which I think many parents do.” While more needs to be done to ensure that families of all backgrounds have access to needed child care resources, the proposals within the American Families Plan are a needed step towards ensuring that families can securely navigate their work-life balance.
The White House said the proposal would be paid for by raising the capital gains tax to 39.6 percent—up from its current rate of 20 percent—and by raising the top income tax rate to 39.5 percent from its current rate of 37 percent. There are some concerns that raising the capital gains rate could disincentivize angel investment in new startups. The underlying proposals of the plan, however, would help embolden the next generation of U.S. startup leaders. Moving forward, we hope the Biden administration will continue to prioritize the needs of U.S. families and workers, while also ensuring that entrepreneurial Americans have access to the resources, education, and funding needed to launch their own companies.
Policy Roundup:
Senate subcommittee examines Internet companies’ algorithms. Representatives from Facebook, Twitter, and YouTube appeared before a Senate panel this week to discuss the ways in which social media companies’ algorithms can amplify misinformation online. Although members of the subcommittee expressed concerns that Internet companies’ algorithms could magnify extremist and misleading content, the lawmakers largely voiced support for greater transparency from companies about their user engagement efforts.
Markup of Endless Frontier Act Delayed. Lawmakers on the Senate Commerce Committee delayed a planned markup of the Endless Frontier Act this week after more than 230 amendments to the bill were filed for consideration. Republican members of the panel said the legislation would not be debated until after the Senate returns from recess on May 10th. As we noted earlier this month, the bipartisan legislation would invest $100 billion over a five-year period to prioritize research into advanced technologies—helping to spur on the creation of new U.S. startups. Engine and a coalition of 69 trade associations and private sector organizations joined a letter this week to the leaders of the Senate Commerce Committee in support of the legislation.
Florida lawmakers advance dangerous social media bill. Florida state lawmakers this week advanced legislation that would require social media companies to host all politicians’ speech during elections and limit how companies enforce and update their content moderation policies. The bill is expected to be sent to Gov. Ron DeSantis later today. As we previously noted, Republican lawmakers in a handful of states are pushing unworkable—and likely unconstitutional—content moderation bills in a misguided effort to combat supposed anti-conservative bias on the part of big tech companies, despite the outsized impact these measures will have startups.
Courts continue to consider Section 230’s IP carve-out. Earlier this week, Engine spotlighted a case at the intersection of Section 230 and intellectual property law—Hepp v. Facebook—and analyzed why it matters to startups and small websites. Section 230, which provides a critical liability framework for startups that host and moderate user-generated content, includes a carve-out that excludes IP claims. In the Hepp case, however, the plaintiff attempted to circumvent Section 230 by arguing state right of publicity laws are within that IP carve-out. A district court dismissed the argument—finding it was at odds with the statute—but the plaintiff has appealed the ruling to the Third Circuit.
Senate committee advances bill to understand diversity gaps in patent system. Yesterday the Senate Judiciary Committee voted to advance the IDEA Act on to the full Senate for consideration. The IDEA Act would allow patent applicants to voluntarily submit demographic information—such as gender, race, and ethnicity—and would in turn allow the government to better quantify and monitor problems of underrepresentation in the patent system. As Engine noted in a letter supporting the bill, and in comments to the USPTO earlier this year, this is one essential first step toward creating a more diverse, inclusive patent system.
Washington state lawmakers approve new tax on capital gains. The Washington Legislature on Sunday approved legislation that would impose a seven percent capital gains tax on the sale of stocks, bonds, and other high-profit assets above $250,000 for individuals and couples in the state. Opponents of the measure—which has not yet been signed by Gov. Jay Inslee—filed a lawsuit this week arguing that the bill violates the state constitution by imposing a new income tax on residents. Some Washington-based entrepreneurs have voiced concerns that the tax would penalize startups that use stock options as a lucrative draw for early-stage employees who might otherwise shy away from working for a nascent company.
Startup Roundup:
#StartupsEverywhere: Austin, Texas. Jean Anne Booth is a serial entrepreneur who came out of retirement when she and her mother realized an unmet need for technology to promote both safety and independence in aging populations. Booth founded UnaliWear and developed the Kanega Watch to provide vulnerable individuals and their families better alternatives to live with the dignity and support they deserve.
