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Nov 07

5 Election-Day Decisions That Will Impact Startups and the Web

When it comes to picking between Barack Obama and Mitt Romney in Tuesday’s presidential election who will be best for the economy going forward is a huge part of the decision-making process for most casting their vote. And it’s hard to argue against the notion that it’s who’s sitting in the White House next year who will have the greatest impact on business and the economy overall.

But there is more on state and local ballots to be decided that also affects business. We’ve identified three city and state measures, as well as two races for elected office whose outcomes are likely to affect startups, some very large tech companies and the future of free speech on the internet. When the voting is all done, we’ll let you know how it turns out.

California’s 30th Congressional District

After a bipartisan committee redrew the boundaries of California’s 30th Congressional District in Los Angeles’ San Fernando Valley, incumbent Democratic U.S. Reps. Howard Berman and Brad Sherman were forced to race against one another to see who would keep his job. The race has turned into one of the country’s nastiest, and a key issue at stake is both candidates’ support for the Stop Online Piracy Act, or SOPA. Widely reviled by techies but heavily backed by Hollywood, the bill to protect digital content was co-sponsored by both Berman and Sherman along with Texas Republican U.S. Rep. Lamar Smith. Sherman has since said SOPA was poorly written. Berman has raked Sherman for his dissent and says he remains committed to SOPA’s original mission. A Berman victory in particular could mean bills like SOPA would still have a strong voice of support in the House, though it remains to be seen if Sherman could withstand pressure from his movie industry constituents to give up the fight.

Washington State’s Referendum 74

Voters in Washington state will decide Tuesday whether to legalize same-sex marriage. Key backers of Referendum 74 in favor of same-sex marriage include the state’s twin titans of technology and their spouses. Bill and Melinda Gates donated $600,000 to support the measure, while Amazon CEO Jeff Bezos and his wife MacKenzie have given $2.5 million. Bezos donated in support of one of Amazon’s earliest employees, gay marriage advocate Jennifer Cast. For Amazon, Microsoft, and other companies in Washington looking to recruit in-demand workers, supporting the measure could make good business sense. After all, if you’re a code jockey and you want to marry your partner, would you choose a job in California (where same-sex marriage remains illegal) or a state that supported your rights? In the war for tech talent, companies need every incentive they can fit in their arsenals.

Photo: NeitherFanboy/Flickr

San Francisco’s Measure E

If passed, Measure E would replace San Francisco’s unusual and contentious payroll tax with a gross receipt tax. In English, that means startups and larger companies alike would pay taxes on their revenues rather than an employee’s earnings. In the startup-heavy city, many businesses do not pay any taxes because their payroll comes in under the $250,000 minimum set by the current law. But once they start growing, the tax kicks in, which Measure E supporters, including politically connected angel investor Ron Conway, say discourages startups from hiring.

The move to overhaul the current system started when it came to light last year that the city considered stock options part of taxable payroll. Mayor Ed Lee promised Twitter an exemption from the tax on options in a deal to keep the company from moving to Silicon Valley. Other San Francisco tech companies, including Zynga, pushed to get in on the deal, and city lawmakers eventually placed a moratorium on taxing options. San Francisco is the only major California city to rely on a payroll tax rather than a revenue tax for businesses. Backers of Measure E believe the initiative can secure San Francisco’s reputation not just as one of the country’s most liberal cities but also one of the most business-friendly.

California’s Proposition 30

Proposition 30 is California Governor Jerry Brown’s legacy-defining attempt to secure more funding for K-12 education in budget-ravaged California. The measure includes a temporary quarter-percent sales tax increase. More significant to Silicon Valley is the temporary income tax increase on those who make at least $250,000 per year — also known as star Google engineers, Palo Alto venture capitalists, and other top players in Silicon Valley’s workforce. If Proposition 30 passes, four new tax brackets will be created for Californians who consistently earn $250,000 or more annually. At the low end, those with take-home pay of $250,000 to $300,00 will pay 10 percent income tax (up from 9 percent now). Those that make more than $1 million each year would get a 29 percent hike, from 10 percent to 13 percent. The higher rates would last for 7 years.

Barack Obama

In the most important race of the year, support of small businesses and innovation have figured prominently in the rhetoric of both campaigns. Obama supporters point to the passage of the JOBS Act and the creation of the White House’s Startup America initiative as signals of the president’s support for tech startups.

Obama is also a firm believer that government intervention can help lift people out of poverty and become the next great entrepreneur. “We believe the little girl who’s offered an escape from poverty by a great teacher or a grant for college could become the next Steve Jobs, or the scientist who cures cancer or the president of the United States,” he has said.

Photo: Pablo Martinez Monsivais/AP

Mitt Romney

Thanks in large part to Romney’s prior business experience, many small business owners have lined up behind Romney’s pledges of lower taxes and smaller government. Though Romney might have hurt himself by comparing thriving electric car company Tesla with failed solar company Solyndra. During the first presidential debate Romney told Obama “You put $90 billion — like 50 years’ worth of breaks — into solar and wind, to Solyndra and Fisker and Tesla and Ener1. I mean, I had a friend who said, you don’t just pick the winners and losers; you pick the losers.” Tesla CEO Elon Musk would disagree that his company is a failure.

On the side of technology regulation, Romney and his democrat counterpart are unsurprisingly divided. Obama has shown support for net neutrality — whether or not internet service providers can charge different rates to different users based on what and how much data they move. Obama has shown support for keeping the internet neutral.

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