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Tech Industry

2HRS2GO: No need for special high-tech tax credits

    COMMENTARY--Let's have a tax credit for small-business advertising.

    Come on, Congress, give a tax gift for all media purchases by companies with less than 100 employees. It will be a great economic stimulus, especially given the slowdown in the advertising market lately. It will boost stock prices for all those shareholders of Yahoo (Nasdaq: YHOO), AOL Time Warner (NYSE: AOL) and CNET (Nasdaq: CNET), the parent of this Web site.

    The proposal sounds selfish and more than a little ridiculous coming from this CNET employee, doesn't it?

    Yet fear of being obviously self-serving didn't stop Intel (Nasdaq: INTC) Chairman Andy Grove from calling for his own tax credit last night. The man who made paranoia a permanent part of business lexicon wants a 10 percent tax credit for technology purchases by small businesses.

    At least he was honest about his motivation. "Our business needs a boon." he said, according to Reuters.

    And he was clever enough to couch it as an aid for the little guy. "The real digital divide in the U.S. economy is between small-business have-nots and large businesses that have made large investments."

    Obviously, most calls for new legislation are born out of self-interest. Fine, let Grove push for domestic tax cuts during a speech made to an organization devoted to foreign relations.

    Other people should take a more critical view.

    If the tech industry deserves a special credit, why not other industries? Let's see federal credits for purchases of transportation, utilities and heavy equipment. Advertising too, especially advertising on online networks for technology news.

    While Congress is at it, give me a credit. I'm writing this column on a recently purchased PC, and sending it over a DSL line. Where's my reward for helping the economy?

    You deserve a special break too. After all, you're probably reading this on a PC, and considering the time of day that this will be published, many of you are probably reading it at work on a high-speed line. If you're on the bleeding-edge, you may even be viewing this on a wireless device. That ought to be good for a few bucks off your 1040 filing.

    Enough. You get the idea.

    Maybe, just maybe, there's a more fundamental reason for the tech industry slowdown: No one needs this stuff.

    Small businesses might buy more PCs, servers and high-speed lines if the companies selling them could demonstrate an immediate and quantifiable return on investment. Perhaps Intel wouldn't be begging for a special tax cut if the company could provide a good reason for upgrading to 1.5 GHz chips.

    Despite all the talk about an IT slump, it's worth noting that most of the major enterprise software vendors--Oracle (Nasdaq: ORCL), Manugistics (Nasdaq: MANU) and i2 Technologies (Nasdaq: ITWO), to name three--continue to expect strong growth this year. Clients believe their products offer rapid returns.

    Those software firms aren't focusing much on small businesses, and for good reason. They know a tiny start-up doesn't need their technology yet.

    Likewise, maybe a business with less 100 employees simply doesn't need a T3 line badly enough to pay for it. A mom-and-pop shop has no use for the fastest PCs, an eight-way server, or, much as it pains me to say it, a gigantic Flash advertisement on a Web site.

    Instead of crying for government handouts, how about creating products worth buying? That would be a real boon for business.>