Congressmen Talk Trade, Taxes

CHICAGO (04/20/2000) - A day after Bill Clinton became the first U.S. president to address a technology trade show, a group of Republican congressmen sat down with representatives of several high technology companies at Comdex to discuss a range of legislative topics that are either now before Congress or will be soon.

The program, held here last night following the second day of Comdex, touched on a broad slate of issues, from privacy to the H-1B visa program to the U.S. government's expenditure on research and development. The Republicans also made a few points to show their concerns about the subject Clinton focused on during his visit to Comdex, the digital divide.

A priority for Congress during the second quarter will be a debate and vote on a bill to grant permanent normal trade relations with China, a measure that high technology companies have wholeheartedly endorsed. A vote on the legislation is scheduled to take place in the U.S. House of Representatives the week of May 22.

At last night's roundtable, most of the eight Republicans participating said they support the bill to make normal trade relations with China permanent and open the huge Chinese market to U.S. trade. Representative Phil Crane of Illinois, whose district includes the headquarters of Motorola Inc., was most emphatic about his support for the bilateral deal, saying it is so advantageous to the U.S. that "your brains have to be scrambled" not to support it.

"It has nothing to do with China accessing our market. It has everything to do with us accessing China's market, and that message has to get out," Crane said.

"We are guardedly optimistic that we can produce ... 60 to 70 votes on their (the Democratic) side of the aisle that are essential to guaranteeing that we grant permanent normal trade relations to China this year. It's going to take a full-court press."

Opponents of the legislation, including the largest U.S. labor unions, say it would cause more companies to move operations out of the U.S. to China, and they say China's record on upholding previous trade agreements, its unknown military goals and its record on human rights make it impossible for them to support the bill.

Dennis Roberson, chief technology officer of Motorola and one of the industry representatives participating in the roundtable, said the best way for the U.S. to influence changes in the Chinese system is to change the way business is conducted there. Roberson said he just returned from China, where Motorola employs 10,000 people.

In addition to trade, taxes were a major concern of the business representatives on the panel.

The congressmen repeated a pledge to do away with a 3 percent excise tax that the federal government imposed more than 100 years ago on telecommunications charges. Elimination of the tax was one of the recommendations of an advisory commission that earlier this month reported to Congress after studying taxation in the era of electronic commerce, and it appears to be the one with the broadest support in Congress.

Representative Billy Tauzin of Louisiana said he planned to schedule a vote on a bill to remove the tax next month in the House subcommittee he chairs.

Another tax issue before Congress involves the way businesses write off computers against their annual income taxes, said Representative Jerry Weller of Illinois. Businesses have complained that, under current tax depreciation rules, it takes five years to fully write off computer purchases.

That should be reduced, because in most cases businesses replace computers every two or three years to keep up with technological advancements, business representatives on the panel said. They consider it a burden that they must now carry computer purchases in their tax accounting records for five years, and they want Congress to revise the policy. One panelist said it was "clear as the nose on our face that this has to be changed."

Weller, however, made no promises about the prospects of a bill he is sponsoring that would reduce the write-off schedule to one year and encourage companies to donate the used computers. The Treasury Department is now in the process of studying all the schedules that deal with tax write-offs, and its report is due out soon, he said.

Some of the Republicans on the panel said the bill could have an effect on bridging the gap between the technology haves and have-nots -- also referred to as the digital divide. It would provide an incentive for donations of computers to underprivileged schools and libraries and to community centers located in impoverished neighborhoods.

Another digital divide suggestion came from Jon "Maddog" Hall, executive director of Linux International, a non-profit association of Linux vendors, who told the panel that Congress should support a "Net Day" patterned on a program sponsored by Sun Microsystems Inc. in which schools are wired for the Internet.

Hall suggested high technology companies commit employees and resources to such a "Net Day," during which low income communities would be equipped with computers and wired to the Internet.

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