SPONSORS OF BROADBAND TAX BILL SAY THIS IS YEAR FOR PASSAGE

English and Matsui believe bill will advance quickly now because it fits with focus on economic stimulus legislation. That measure will begin moving in early to mid-March, Matsui told reporters Wed., and he predicted broadband tax language would “either be part of the chairman’s [House Ways & Means Committee Chmn. Thomas (R-Cal.)] package or an amendment to that package.” Unsuccessful effort was made to attach similar language to last year’s stimulus bill, when Thomas made it clear he didn’t want any provisions benefiting particular industry. But Matsui said “this is not special interest legislation” but rather way to kick-start economy. He said bill would cost U.S. Treasury $2.2 billion over 10 years but English cited Brookings study predicting it would boost economy by $500 million annually.

Conceived by then-Sen. Daniel Moynihan (D-N.Y.) in late 1990s as way to turn around economy in moribund upstate N.Y., broadband tax bills have been popular ever since. In last Congress, English had 227 co-sponsors, while Sen. Rockefeller (D-W.Va.) had 62 co-sponsors for his bill (Rockefeller took mantle after Moynihan’s retirement). Bills always have been backed by major high-tech groups, and leaders of Electronic Industries Alliance (EIA), Telecom Industry Assn. (TIA) and Information Technology Industry Council (ITI) all were present to support new legislation. But skeptics have wondered whether modest tax credits would truly give companies incentives to invest in deployment in sparsely populated areas and have suggested bill instead would go only to service providers already planning deployment.

“This will have some effect on behavior in the margins,” English said. But ITI Pres. Rhett Dawson and TIA Pres. Matthew Flanigan said even if bill didn’t have dramatic impact they hoped, at least it was unlikely to be harmful. “If it doesn’t work, it still doesn’t cost you anything,” Dawson said. Traditionally, legislation has been framed as way to close so-called digital divide, but that topic barely came up at news conference. Instead, EIA Pres. David McCurdy framed measure as way to catch up to other countries in broadband deployment, saying that U.S. had fallen to 6th from 3rd among Organisation for Economic & Cultural Development (OECD) countries. Rep. Hayes (R-N.C.), co-sponsor, said bill was “a huge step forward in homeland security.”

President Bush’s stimulus package is devoid of tech- specific language. English said he had met with Administration official about his bill, but official wasn’t at level where he could speak to White House’s take on bill. English said he believed tax credit shared same philosophy as Bush package and was optimistic of its inclusion. Flanigan agreed: “The timing is right for this bill.” TIA and EIA also are promoting its inclusion in stimulus package of accelerated depreciation of capital goods, permanent R&D tax credit, tax relief for overseas profit repatriation and exemption on Social Security and Medicare taxes on severance payments, something high-tech workers have seen lot of recently.

Bill has 70 co-sponsors, including House Rules Committee Chmn. Dreier (R-Cal.) and many Ways & Means Committee members. Thomas wasn’t on list. Bill introduced Wed. replaces HR-267, introduced by English last month with no co- sponsors. English will have his hands full lobbying Ways & Means Committee; he already has introduced 5 other bills involving tax reform, including one (HR-269) that would “restructure and replace the income tax system of the United States.”