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Newsweek
24-06-2025
- Business
- Newsweek
Why Congress Must Pass the AI Regulation Moratorium on States
The U.S. is in a high-stakes race with China to lead in artificial intelligence (AI). The winner will gain a decades-long advantage in national security, economic prosperity, and global influence. But instead of playing to win, some policymakers are attempting to slow us down. In fact, state legislatures across the country have unleashed a tsunami of AI-related bills—more than 1,000 this year alone. Some target algorithms. Others impose documentation requirements or vague liability rules. Few reflect a concrete understanding of the underlying technology. None reflects a national strategy. This patchwork of mandates and rules is creating legal uncertainty and compliance headaches at the exact moment American innovators need to move fast and scale. This is like tying our own shoelaces together at the starting line of a global sprint. Apple iPhone screen with icons of AI apps. Apple iPhone screen with icons of AI apps. Getty Images That's why the House-passed One Big Beautiful Bill includes a 10-year moratorium on new state-based AI mandates. This is a smart move. Under the moratorium, states would still safeguard their citizens and vulnerable populations, enforcing civil rights, consumer protection, and discrimination laws related to AI. But they wouldn't be able to add new, conflicting AI-specific requirements that undermine U.S. national competitiveness. This isn't about shielding Big Tech. It's about empowering small businesses, startups, and local innovators who can't afford 50 different legal playbooks. The moratorium protects them, not monopolies, by giving every American entrepreneur a fair shot to compete. This is not a novel approach. In the 1990s, when the internet was still in its infancy, Congress passed the Internet Tax Freedom Act, temporarily barring state and local taxes on online activity. The goal was to give the internet space to grow—and it worked. As a result of this future-focused action, America dominated the information age, a free and open internet became the global standard, and today, we lead the world in digital services. All because Washington recognized early that a fractured legal map would strangle a network built to connect. AI is no different. In fact, the stakes are even higher. China is moving full steam ahead with a unified, government-backed strategy to win the AI race. The Chinese Communist Party (CCP) has already committed more than $1.4 trillion to dominate AI and other strategic technologies. It is embedding AI in its military, economy, and foreign policy infrastructures at a breakneck pace. And it's flooding the globe with cheap AI models that censor dissent and reinforce authoritarian norms. At home, China is building a national AI ecosystem and coordinating policy across education, infrastructure, and research and development (R&D). Their open-source models already rival, and in some cases surpass, those from U.S. developers. The U.S. can't beat that with a fractured, state-by-state approach. If each state imposes its own rules on how AI is built, trained, and deployed, we won't see innovation—we'll get bottlenecks, legal gridlock, and capital flight. The 10-year moratorium gives Congress time to work with industry, researchers, regulators, and communities to craft a smart, national AI framework. No one is calling for a digital Wild West. But if we don't work from a national strategy, we'll invite chaos and confusion. Guardrails for high-risk AI models may be needed, but they must be grounded in expertise, calibrated for real risk, and updated as the technology evolves. Rushing into a patchwork of uncoordinated state laws will only slow American innovation and give China an opportunity to surge ahead and win this tech race. And if that happens, it would be a strategic failure with generational consequences. AI is the defining technology of this era. The country that leads in developing and deploying it will capture trillions of dollars in economic value, shape global supply chains, and gain a decisive military advantage. If we lose, China will transform the global internet from a platform of freedom and opportunity into a tool for censorship and control. That's not how we secure our future: it's how we lose it. If we want to protect American jobs, families, and values, we must ensure that the U.S.—not China—shapes the future of AI. The U.S. Senate can help ensure this by keeping the 10-year moratorium in place and protecting America's ability to lead in the most important technology of our time. In turn, we will be able to ensure the global digital future is shaped by freedom, not authoritarian control. Doug Kelly is CEO of American Edge Project. The views expressed in this article are the writer's own.
Yahoo
03-03-2025
- Business
- Yahoo
A tax on digital advertising will hurt Rhode Island small businesses and consumers
Rhode Island lawmakers have a choice when it comes to a proposed tax on digital advertising, which opponents say could hurt small businesses and consumers. (Photo by Janine L. Weisman/Rhode Island Current) As a former South Dakota State senator, past president of the National Conference of State Legislators, and a Certified Public Accountant, I've seen firsthand how tax policies can either help or hurt a state's economy. The digital advertising tax that is being pushed in Rhode Island Gov. Dan McKee's proposed fiscal 2026 budget is a clear case of the latter — a misguided policy that threatens to harm every small business and consumer in the Ocean State. Advertising isn't just about flashy billboards or catchy jingles; it's a cornerstone of economic activity. An independent study commissioned by the Association of National Advertisers shows that advertising expenditures generate a whopping $22.4 billion in economic activity in Rhode Island alone, supporting over 106,000 jobs. That's 15.5% of all jobs in the state. Taxing digital ads opened Maryland up to litigation. McKee wants Rhode Island to do it anyway. When you tax digital advertising, you're not just targeting faceless tech giants, you're hitting the local coffee shop trying to reach new customers, the family-run bookstore promoting a weekend sale, and the startup striving to make its mark. You might think you're hitting the big guy but you're really just stepping on the little guy. As I noted in my testimony in front of the Senate Finance Committee, because of this tax, small businesses would face tough choices. That is not the fate that legislators should be rooting for when it comes to Rhode Island's small business community. Proponents of this tax argue it's aimed at billion-dollar corporations, but history tells a different story. In France, a similar digital advertising tax ended up passing 55% percent of its burden onto consumers, according to a Deloitte study. Beyond the straight economic impact, this tax is a double whammy for businesses. Rhode Island companies already pay income tax, now they'd be taxed again just for advertising their products and services. This kind of double taxation doesn't just strain businesses —- it discourages them from growing, investing, and hiring. For a state in which business owners already face significant headwinds, this tax could be the final straw for many entrepreneurs. You might think you're hitting the big guy but you're really just stepping on the little guy. Let's not forget the legal minefield this tax creates. Maryland's attempt to implement a similar tax has been tied up in costly legal battles, draining taxpayer dollars with no end in sight. The proposed tax in Rhode Island could face similar challenges, potentially violating the First Amendment, the Dormant Commerce Clause, and federal laws like the Internet Tax Freedom Act. If the courts strike it down, Rhode Island could be on the hook to refund every cent collected, plus interest. With an already challenging fiscal situation on the horizon, that's a gamble the state can't afford to take. Digital advertising has been a game-changer for small businesses, leveling the playing field and allowing them to reach audiences far beyond their local communities. Over the past decade, it's fueled growth and innovation, helping more than 100,000 small businesses in Rhode Island thrive. Taxing this critical tool doesn't just stifle growth —- it sends a message that Rhode Island isn't open for business. A tax on digital advertising isn't just bad policy, it's a step backward. Rhode Island lawmakers have a choice: they can pursue short-sighted revenue grabs that hurt the very people they're supposed to serve, or they can focus on fostering a business-friendly environment that encourages growth, innovation, and prosperity. I urge lawmakers to reject this harmful tax and instead focus on policies that build a stronger, more competitive state. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
