WASHINGTON — U.S. Representatives Phil English (R.-Pa.) and Robert Matsui (D.-Calif.) plan to re-introduce legislation Thursday to provide tax credits to telecommunications companies that deploy broadband in rural and underserved parts of America. The bill would give a 10 percent tax credit on current-generation broadband expenditures and a 20 percent credit on spending for next-generation services.
English said the bill was “platform neutral,” proposing that the tax credits be available to companies deploying satellite, fiber-optic, coaxial cable or copper wire. To encourage telecom providers to act quickly, the credits would be limited to broadband expenses deployed in the next five years.
According to the Joint Committee on Taxation, the cost of the legislation will be $2.2 billion over five years, but English quoted a Brookings Institute study that says expanding broadband deployment would generate $500 billion in economic growth annually.
Known as the Broadband Internet Access Act (H.R. 267), English has twice before attempted to get the legislation passed, but each time it has died in the House Ways and Means Committee due to Democratic opposition to tax credits to large corporations.
“This year, we introduce this legislation in the context of a weak economy. Expanding high-speed Internet service to all segments of our population will bring the disenfranchised into the domestic and global marketplace,” English said. “And, last not but not least, this legislation will give a much-needed boost to investment in the technology sector, something seriously lacking since the tech bubble burst in 1999.”
English and Matsui also hope to improve the chances of the legislation by making the bill part of President Bush’s tax incentive package although English said, “I haven’t sought the administration’s explicit support.” The two congressmen also claim a “broad array of support” for the bill with 227 members of the House and 65 senators co-sponsoring the legislation in the 107th Congress.
More than 100 different telecom, telemedicine, agriculture, civil rights and public interest organizations have endorsed the legislation.
Dave McCurdy, president of the Electronic Industries Alliances (EIA), said a broadband tax incentive is one of his organization’s top tax priorities this year, along with accelerated depreciation schedules, an enhanced and permanent research and development tax credit, tax relief for overseas profit repatriation and exemption of FICA taxes on severance payments.
“It is so important that we get affordable broadband access to communities all across the country,” McCurdy said. “The U.S. essentially invented this technology, but we have to continue to invest in it if we want to ensure our citizens’ role in competitive global economy.”
Pointing to the fact that America now ranks sixth in the world in broadband penetration behind Korea, Canada, Sweden, Denmark and Belgium, McCurdy said, “We’ve seen that countries that recognize technology as a critical part of their economic future and that designate broadband deployment a national priority make huge strides.”
McCurdy added, “We have the potential to do the same through a national strategy that includes elements such as the broadband tax credit proposed today.”
Responding to previous criticism that the legislation was a type of corporate welfare, Matthew J. Flanigan, president of the Telecommunications Industry Association (TIA), said, “This bill is not a corporate handout, but a sensible approach to improving an industry that once led, and can once again drive our nation’s economy.”
