If you change it to visa bidding based on the cash value of total compensation, you can eliminate some of the startup penalty without a huge bureaucratic nightmare. A startup would first hire a noncitizen remotely and give them equity, and then by the time they're ready to bring the remote employee on-site (maybe after a B round or so), the value of that equity will have skyrocketed, making their total comp competitive with big tech companies.

Startups that aren't on that growth curve shouldn't be hiring remotely, or hiring at all really.

I'm not certain that a COL adjustment is necessary either. The higher COL in the Bay Area and NYC reflects the higher productivity of workers in firms in those regions. If you want to allocate foreign specialists where they will generate the most economic value, it makes sense that they go to tech hubs with high average salaries and high costs of living. It also solves the "domestic worker displacement" problem, which seems to be more of an issue in Kansas City than in San Jose.

Also, such a change would be in the interests of major tech companies like Microsoft, Google, and Apple. They already pay their H1Bs close to market rate, significantly more than Wipro/Infosys/TCS pay theirs, and so they would win a lot more of the H1B visas under this system. Someone (any insiders here?) should let their public policy teams know; they may be useful allies.