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Broadband tax credits reportedly stripped from stimulus bill

While the latest version of the economic stimulus package provides $7 billion in broadband grants, it no longer provides broadband tax credits.

Correction at 2:50 p.m. PST: This story was initially posted with an inaccurate headline. Tax credits, not tax cuts, were reportedly stripped from the bill.

Congress is still working on the language of the latest version of its economic stimulus package, but it appears the bill will not include tax credits for broadband deployment.

The House of Representatives and the Senate came to a compromise Wednesday night, agreeing to a $789 billion economic package that is aimed at reinvigorating the economy through government spending and tax cuts. The bill includes $7 billion in grants for extending broadband services to underserved communities, according to a fact sheet (PDF) from House Speaker Nancy Pelosi's office.

A portion of the funds will be distributed through the U.S. Department of Agriculture's Rural Utilities Service, according to various reports, while the bulk of the funds will go through the Commerce Department's National Telecommunications and Information Administration. The New York Times reported about $4 billion would be distributed by the NTIA.

"We're very pleased Congress has made this commitment, and we think it's a great stimulus package," said Derek Turner, research director for the public policy group Free Press.

However, he said it would be wiser to channel all of the money for broadband through the NTIA.

"With a program this massive you need it to be overseen by a single agency," Turner said, "and the NTIA is essentially the policy adviser for the president on telecommunications."

While the broadband grants remain in the bill, the tax credits for broadband deployment proposed in the Senate version of the bill were removed Wednesday, Dow Jones reported. Critics of the tax credits have said they would disproportionately benefit large companies like Verizon that are taxed heavily and ready to deploy faster broadband networks.

"While in theory (tax credits) could be a good way to entice some new deployment, in practice they're very problematic," Turner said. "You don't want to create a situation where a carrier would get a subsidy for something they would do without a subsidy."

The latest version of the bill also provides $19 billion to promote the use of health information technology systems.

It also includes more than $15 billion for basic scientific research, including $3 billion for the National Science Foundation and $1.6 billion for the Energy Department's Office of Science.

"This is really important for us because the NSF supports almost all of university computer research," said Peter Harsha, director of government affairs for the Computing Research Association. "These are the ideas that industry really relies on, that end up in products 5, 10, 20 years out."

The exact provisions of the bill were still in question as of Thursday afternoon, when some Republican congressmen were complaining that they have yet to see a full copy of the legislation. The House is expected to vote on the bill Friday.