Senators Jerry Moran (R-Kan.) and Mark Warner (D-Va.) recently introduced legislation to exempt federal broadband grants from consideration as taxable income for private ISPs who received them. This would be a sensible move to prevent waste in new federal broadband programs.
These grants are currently considered part of a firm’s gross income for taxation purposes, which essentially requires grantees to kick back a portion of their award to the Treasury without using it. Given the choice between running out of money for a buildout project and requesting more than they need, most reasonable ISPs will go with the latter option and almost certainly waste taxpayer money.
The Broadband Grant Tax Treatment Act would fix this by exempting federal grants for broadband expansion from taxable income consideration, enabling more cost-effective deployment of new broadband connections. It will also benefit the taxpayer by ensuring that broadband providers can use every dollar in grant funding for necessary expenditures to connect all Americans to high-speed internet service. The Broadband Grant Tax Treatment Act compliments the ongoing bipartisan effort to expand broadband in rural, unserved communities by making it easier for smaller firms to get into the fight for broadband access and for larger firms to get as much broadband built as quickly as possible. While states wait for the FCC to complete its updated broadband coverage maps by next spring, Congress will have numerous chances to consider this fix in the new year.