[Congressional Record Volume 146, Number 64 (Monday, May 22, 2000)]
[Senate]
[Pages S4238-S4239]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ASHCROFT:
  S. 2601. A bill to amend the Internal Revenue Code of 1986 to exclude 
from the gross income of an employee any employer provided home 
computer and Internet access; to the Committee on Finance.


                bridging the digital divide act of 2000

 Mr. ASHCROFT. Mr. President, I rise today to introduce the 
Bridging the Digital Divide Act of 2000, a bill to make it easier for 
working Americans to obtain computers and computer equipment so that no 
one is left behind in the new Internet economy. This legislation makes 
it possible for employees to accept computers offered by their 
employers without having to pay the IRS taxes on the value of the 
computer.
  Mr. President, the high-tech sector is an increasingly important part 
of our economy, creating new synergies and opportunities for Americans 
of all ages. The more we can do to encourage every American to 
participate in the Internet revolution, the more productive we as a 
nation will be.
  But the benefits of the high-tech revolution, while lucrative, must 
not be limited to only some of our citizens. The great promise of the 
Internet revolution is that the benefits and rewards are accessed at 
the individual level; not just reserved for big businesses or 
multinational corporations. Our government should facilitate, not 
hinder, bringing that promise to each American.
  In the long term, I believe that being hooked up to the Internet will 
be as universal as television. It is important to remember that the 
Internet is a new technology, one that few people had heard of ten 
years ago. We have gone from 5.8 million U.S. households online in 1994 
to almost 40 million in 1999. By 2003, it is projected that 60 million 
households will be hooked up to the Internet.
  In the short term, however, it is important to facilitate the 
availability of the Internet to all Americans. While many citizens have 
been taking advantage of the opportunities the Internet has to offer, 
too many Americans and Missourians have been left behind. Too many 
people are opting out or being left behind by the Internet economy.
  According to Forrester Research, income is the main driver of 
Internet adoption. Americans who earn more, participate more, and 
thereby develop the ability to earn even more. According to a 1998 
study by the Department of Commerce, households with income of $75,000 
and more are over 20 times more likely to have Internet access than 
those at the lowest income levels.
  This divide among income levels also indicates a divide along racial 
lines as well. According to the same Department of Commerce report, 
black and Hispanic households are roughly two-fifths as likely to have 
Internet access as white households. Overall, according to Forrester 
Research, only 33 percent of African American households are on-line, 
ten percent fewer than the national average.
  In my home state of Missouri, great progress has been made toward the 
goal of bringing the state on-line. Since 1989, during my tenure as 
Governor, Missouri has managed a statewide network that connects state 
government departments and transmits voice, data, and video between 
them. The state Department of Administration runs the network, which 
connects government offices statewide over 14 nodes. In addition, 
according to the Department of Commerce, 42 percent of Missouri 
households have computers.
  Despite this progress, there is still more to do. In terms of 
Internet usage, Missouri ranks 32nd out of the 50 states, with only 
24.3 percent of households connected to the Internet in 1998. Clearly, 
it is in Missouri's interest to promote increased connectedness.
  Across the nation, those who appreciate the power and opportunities 
inherent in the Internet continue to increase their involvement in the 
high-tech world. 60 percent of computer sales are being made to 
households that have already purchased a computer, demonstrating that 
these households recognize the importance of remaining current and up 
to date with their computer equipment. At the same time, only 40 
percent of computer sales are being made to households purchasing a 
computer for the first time. If we want more Americans to experience 
the high-tech economy, we should encourage first time computer 
purchases and find ways to make computer ownership easier for families 
who are currently without.
  According to Dr. Mark Dean, a specialist in advanced technology 
development for IBM, the solution to the digital divide is to put 
computers in as many homes as possible. Unfortunately, when employers 
have tried to help bridge this gap by providing their employees with 
computers and Internet access, the Internet Revenue Service has widened 
the digital divide by treating the new equipment as a ``taxable 
event,'' or in other words, requiring the employee to pay income tax on 
the value of the computer.
  Recently, the Ford Motor Company began a laudale effort to increase 
involvement of its employees in the high-tech economy. In February, 
Ford announced that it would give all of its 350,000 employees free 
computers for their homes. Ford is doing this because they recognize 
the value of having a workforce that is computer literate and internet 
savvy. Ford understands that in the digital economy, on-line workers 
are more productive workers--whatever their responsibilities are with 
the company.
  Unfortunately, the IRS does not see things the same way. The IRS 
approach is to tax everything it can get its hands on, including the 
computers Ford is providing to employees to help bridge the digital 
divide. According to the IRS, the employees who receive these computers 
from their employer are liable for tax on the value of the computers.
  Mr. President, this is wrong. When companies make the move to bring 
all of their employees into the 21st century, the government should not 
make it harder on the workers to accept the technology by increasing 
their taxes. Ford's employees should not be penalized for having an 
employer that understands the importance of a computer-literate 
workforce. The fact is that computers are a vital business tool, for 
all employees, and Ford has demonstrated its understanding of this fact 
by providing these computers for every employee, from the newest worker 
to the CEO.
  Ford's employees should not have to suffer as a result of the IRS's 
19th century approach to tax policy. It is for this reason that my 
bill, the Bridging the Digital Divide Act of 2000, instructs the IRS 
not to treat computers provided to all employees by an employer as 
taxable income to the employee. This measure is in the interest of 
employees and employers alike. And because computers in the home will 
help increase our economic productivity and hence our output, we can 
expect that the long term impact of this provision will prove 
beneficial not just to workers and their families but to the nation's 
economy as well.
  Mr. President, many politicians stand up and complain about the 
problem of the ``digital divide.'' The Ford Motor Company has actually 
found a solution--a private sector solution--for its employees. The 
response of the government should be to thank Ford and encourage other 
companies to do what Ford has done--to take action that is in the best 
interest of its workers, not just for today, but for the future as 
well. But instead, the government response is to tax the recipients. I 
hope that other companies will follow Ford's example. By enacting this 
legislation, we may be making it possible for the private sector to 
help solve the digital divide, and will at least be ensuring

[[Page S4239]]

that the government will not put the taxman in the way of the bridge-
builders of the new economy.

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