SIA backs tax code-depreciation bill

Electronic News, May 29, 1995

SAN JOSE, CALIF.--The Semiconductor Industry Association (SIA) is backing a bill introduced last week in the Senate which it says is intended to help stimulate domestic capital expansion and job creation by the global semiconductor manufacturers. The bill, S.833, is also backed by a variety of members of both the Republican and Democratic parties.

Sponsored by Sen. Orrin Hatch (R-Utah) and Sen. Max Baucus (D-Montana), the proposed legislation addresses what the SIA termed an inequity in the U.S. tax code that forces semiconductor makers to depreciate equipment over a period that is much longer than actual economic life.

The measure would reportedly amend the federal tax code to allow semiconductor companies to depreciate the value of chip making equipment over three years, instead of the current five years. Recent accounting studies indicate semiconductor equipment becomes obsolete in a little more than three years, the SIA said, and presently although Japanese law allows 88 percent depreciation of semiconductor equipment in the first year and Germany permits 80 percent depreciation, the U.S. authorizes 20 percent.

"We believe this bill will help encourage semiconductor producers to expand their operations in the United States," said Andrew A. Procassini, SIA president. "This bill will improve our competitive position, stimulate domestic capital spending and job creation, and rectify an inequity in U.S. tax law."

Co-sponsors of the S.833 include: Sen. Bob Dole (R-Kansas), Sen. Robert Bennett (R-Utah), Sen. Conrad Burns (R-Montana), Sen. Barbara Boxer (D-Calif.), Sen. Ben Nighthorse Campbell (R-Colorado), Sen. William Cohen (R-Maine), Sen. Thad Cochran (R-Mississippi), Sen. Larry Craig (R-Idaho), Sen. Alfonse D'Amato (R-New York), Sen. Dianne Feinstein (D-Calif.), Sen. John Kyl (R-Arizona) and Sen. Jay Rockefeller (D-W.V.). A similar bill (HR 1061) was earlier introduced in the House of Representatives by Rep. Nancy Johnson (R-Connecticut) and Rep. Bob Matsui (D-Calif.).

Meanwhile, in another Washington development, House and Senate budget plans for fiscal year 1996 and beyond would cancel the Department of Commerce's Advanced Technology Program (ATP) and perhaps also the Department of Defense's Technology Reinvestment Program (TRP). Eventually the entire Departments of Commerce, Education, and Energy may be terminated.