Lawmakers To Tackle Tax-Relief Issues

Lawmakers To Tackle Tax-Relief Issues

Doug Upchurch

By Anne Gallagher, Contributing Writer

Before the end of the year, members of Congress will be pushing various legislative tax-relief measures aimed at easing the financial burden the information technology industry faces in recruiting and training skilled workers.

The Republican-drafted tax-cut package includes a five-year extension of the R&D tax credit, which would benefit IT firms. However, that bill appears to be dead in the water given the White House's ardent opposition.

Any possible compromise at this time on the tax-cut package seems out of reach, with neither side willing to give much and a White House veto looming this month.

Meanwhile, there is a core group of lawmakers pushing to devise other tax-credit advantages for IT businesses.

This group believes the key problem facing the IT industry is that the demand for skilled workers is growing so fast that it surpasses the number of graduates from technical training institutions and colleges. At the same time, many smaller IT companies simply cannot afford to pay for training on their own.

Supporters of tax-credit legislation are hoping that the federal budget surplus will offer an opportunity for broad-based tax cuts as well as IT training tax credits.

Before the monthlong August recess, more than 60 industry and congressional members met on Capitol Hill to discuss plans to pass legislation this year that contains a technology training tax credit.

During that meeting, representatives of the IT industry explained how training costs have been a financial burden, particularly for smaller firms.

"I need to spend more on training, but I can't afford it, and I don't have time to track down and go through the paperwork and politics often necessary to qualify for some of the subsidized programs," said Laura Nickerson, president of Annapolis Computer, a computer services firm with 15 employees. "Small businesses like mine are the most challenged in keeping up with their training needs. They need something simple and easy, like a tax credit, to stretch their training budgets."

Both the Senate and House have drafted versions of the IT training tax-credit bill, which would offer federal income tax credits of 20 percent to 25 percent to businesses for their IT training costs.

The bills, S.456 in the Senate and H.R. 838 in the House, would provide the tax credit in addition to other federal or state business tax deductions or credits that currently support IT training.

"This legislation is a market-based and cost-effective approach to help stretch the training budgets of all companies needing IT employees," said Alan Hald, co-chair of the Technology Training Tax Credit Coalition.

"High school students not going to college, displaced workers and people feeling trapped in jobs without a future can master these skills and look forward to rewarding careers critical to the continued growth of the economy," he said.

The Information Technology Training Association reports there are at least 300,000 open IT positions in the United States today.

"Microsoft projects that well over 600,000 positions will be unfilled in 2001," said ITTA Executive Director Doug Upchurch. "Organizations and individuals have stretched their training dollars as far as they can. We have reached the wall in this path to a high-tech work force. Our country's standing as a high-tech leader will surely be challenged in the future if we do not have the trained work force to support it."

While the tax-credit legislation certainly has a lot of industry support, lawmakers warned that getting all the measures passed by the end of the year will be a challenge.

Rep. Jim Moran, D-Va., a co-sponsor of the House bill, said the support in the IT community is a good start but more is needed.

"There are a lot of industries and professions with deserving suggestions for tax cuts to help their constituency and the economy," Moran said. "Congress can't afford to pass every tax-cut proposal this year. If members of Congress don't hear from their constituents in every state and district on this bill, it will not make the cut."

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