Senator Dick Durbin at the ITA Monday
On Monday, Feb. 7th U.S. Senator Dick Durbin paid a visit to the Illinois Technology Association (ITA) and met with a panel of Chicago technology leaders. We were all interested to hear the Senator’s thoughts on the local tech scene and how well the federal government understood the community’s needs.
Terry Howerton moderated what turned out to be an excellent conversation. Senator Durbin freely admitted areas he was not an expert in and asked for opinions while offering an assessment for those in attendance of political realities.
He started the conversation recalling President Obama’s “sputnik moment” comment from the State of the Union address and how the Defense department and the nascent IT industry got a bit of a boost back in 1957 when two researchers at Johns Hopkins discovered the “Doppler effect” and learned how to track the satellite’s position by its transmissions which eventually led to satellite communications with nuclear submarines carrying warheads and on through DARPA.
Senator Durbin’s point was that an innovative environment that brings people together can produce results much better than, obviously, those separated. (I’ll be writing on Chicago’s need for a tech hub in the near future). He recognized Chicago’s growing influence in the tech sector and wanted input on how the government can help maintain and promote growth.
As the conversation kicked off, I asked the Senator about the law becoming infamous in tech circles- the “Amazon Tax.” Illinois’ government has passed a law in both houses that basically requires companies doing business with affiliates in Illinois to collect a sales tax and pay it to Illinois’ government. It awaits Governor Quinn’s signature and the entrepreneurial community is vehemently opposed to it. As one entrepreneur said to me, “I can just move to Boulder where they understand how tech companies operate.”
The dilemma is Illinois is the only state in the Union to pass such a law which has made companies like Amazon and Netflix declare they just won’t do business with Illinois’ affiliates. This has the net effect of putting new entrepreneurial ventures out of business that depend on affiliate revenue.
I asked the Senator his thoughts on this issue:
“Senator,” I asked, “the ‘Amazon Tax’ has only been passed in Illinois and as a result small entrepreneurs depending on affiliate sales will effectively be put out of business before they even get started. If it was a national sales tax for every state, the entrepreneurial community wouldn’t object but right now I can list companies threatened by this in Illinois. What are your thoughts on this?”
To his credit, Senator Durbin admitted the situation was not perfect. He (correctly) stated that in the 90’s as the Internet was coming to fruition and online companies like Amazon said excessive taxes would destroy the online economy in its infancy before it got off the ground but now such companies are not only surviving, but thriving.
When I again pointed out that if Illinois is the only state instituting such a tax, he said he is working on something appropriate at the Federal level. “We are in a new world,” said Senator Durbin, “let’s adapt to it.” The entrepreneurs I have spoken to all agree- if a small national sales tax is instituted there is a level playing field for everyone. If Illinois is alone in enacting such a tax, businesses, especially startups, will leave.
The conversation then moved to H1B visas. Senator Durbin said he was “shocked” when he attended a graduation at IIT a few years ago and saw foreign students graduating with multiple advanced degrees that were planning to return to their home countries. “Letting these students leave the U.S. with this talent is crazy,” he said. “Keeping them and their talents here would help the U.S. economy in the long term.”
Senator Durbin faced a double edged sword- he also said that he wanted to understand why the U.S. should grant work visas when so many U.S. citizens are without work.
Jeremie Bacon of Backstop Solutions summed it up perfectly: “There is zero percent unemployment for the types of people we need to hire for our businesses,” he said. “When we take someone from a traditional job, they may be 3 or 4 degrees of separation from being a developer or coder and we need these people now and can hire someone with those skills immediately.” He went on, “In the time it takes us to train someone we have already fallen behind.”
The conversation ended on healthcare. Senator Durbin expressed that Congress has an excellent health care plan and gets to choose their insurer of choice every year and he felt the pain entrepreneurs go through. As Gretchen Goodrich of “A Space Apart” said, “We cannot hire a talented worker because he cannot leave his job due to insurance. He has to stay there if he wants his insurance.”
Having the Senator speak to the community showed that the federal government understands that the technology startup community is not only important but vital to the growth of the economy.
I will be in touch with the Senator’s office again in the near future and I have a question for all entrepreneurs nationwide as Senator Durbin is a U.S. Senator- what do you need to see here in Chicago and at the federal level to encourage growth in the entrepreneurial community? Are there specific questions or thoughts that you have?