Software tax break on table

Legislation to give the software industry a tax benefit enjoyed by other U.S. industries is gaining support and could pass the House in April, making it one of the first bills to win approval this year, sources on Capitol Hill said today.

A status report on the Software Export Equity Act, introduced last month, will be given at a briefing in Washington tomorrow. There, a group of software industry executives and legislators will announce that the bill has won bipartisan support by a majority of members of the powerful House Ways and Means Committee. They also will announce that President Clinton included the bill in the budget he presented to Congress last week.

The bill, authored by Rep. Jennifer Dunn (R-Washington), would let the software industry benefit from the 1971 Foreign Sales Corporation statute, which gave an export-tax exemption to U.S. manufacturers. The statute was enacted to help industries compete with foreign exporters when the software business didn't exist.

"The act will create the same playing field enjoyed by makers of everything from airplanes, toothpaste, and Hula-Hoops," an official of the Software Publishers Association said today.

Microsoft is a big supporter of the bill and made its own case against the tax rule by filing a petition with the U.S. Tax Court in August. Dunn's congressional district includes Redmond, Washington, where Microsoft is headquartered.

Tomorrow's briefing also will be attended by Rep. Robert Matsui (D-California), a member of the House Ways and Means committee; Harris Miller, president of Information Technology Association of America, a high-tech trade group; and software industry executives.