Federal legislation might have given computer companies a tax break for giving equipment to schools. But the bill stirred up its share of controversy.
Apple Computer Inc. has rung up another innovation. It is the first INC. major public policymaking. Steven Jobs, Apple's chairman, has been spearheading a drive to give special tax breaks to computer companies that donate their hardware to elementary and high schools.
If this move sounds merely self-serving, consider Jobs's rationale. He says: "We are now in the midst of a revolution that is of the same magnitude and power as the industrial revolution of the nineteenth century. It is changing our society, our skills, and the character of employment in the United States. This revolution is driven by advances in microelectronics, transforming the contemporary world from an industrial to an information society." This, of course, is hardly news to two generations raised on similar formulations, from Daniel Bell, through Alvin Toffler, to John Naisbitt.
For Steven Jobs it means we must push to make everyone in this country computer literate. If we don't, we will continue to lag in the international technology competition.
So far, Apple isn't batting 1.000 in its legislative efforts. A move at the federal level failed. The company is, however, batting.500 -- a handsome mark in any league -- by virtue of a parallel law it fought for in California and won. Like the federal law that got away, this measure gives tax credits to computer manufacturers for the units they donate to elementary and secondary schools.
Opinions differ about the value of Apple's approach to closing the technology gap. When I first read about its effort, it seemed to me naive at best, likely to boomerang at worst. But the more I have learned about it, the more it seems to me that, win or lose, Apple has exercised responsible entrepreneurial citizenship -- a regrettably rare quality. What matters most is that its action may force the entire computer industry -- and the rest of us -- to get moving much faster on the computer-literacy front.
Computer literacy was one of the central issues in the discussions of the California Commission on Industrial Innovation, which Jerry Brown, the former governor, set up in November 1981. Besides Jobs, the commission included such heavy hitters as David Packard, chairman and co-founder of Hewlett-Packard, Leland Prussia, chairman of BankAmerica, Charles Sporck, chairman and chief executive officer of National Semiconductor, and Don Gevirtz, chairman of Foothill Group. The commission also included five labor leaders, the chancellors of the University of California at Berkeley and San Diego, and the dean of Stanford University's Business School.
In its 60-page report, "Winning Technologies," the commission summed up the present position:
1. Internationally, we have entered a new era of fierce competition, in which U.S. companies find themselves competing against foreign governments that have targeted their domestic industries to excel over American technology leaders.
2. Domestically, the overall U.S. economy will grow far more slowly and unevenly in the 1980s than it has in the past, as the combined pressures of resource constraints, the maturing of American technological leaders, and tough international competition take their toll. U.S growth technologies and sectors will find it far more difficult than ever before to attract the capital they need.
3. At the state level, diminishing revenues make it more difficult for the needed investment in education and job training to occur [in order] for citizens to be prepared for work and life in a technological society.
The report concluded that national and state strategies should be aimed at accelerating the invention and utilization of winning technologies. One of the specific steps it recommended was the passage by Congress of legislation to offer tax benefits for donations of computers to elementary and high schools. These benefits are currently given for donations of scientific instruments to universities. Specifically, the commission suggested that Congress pass the "Technology Education Act of 1 982, " the Apple-sponsored bill then before it.
Apple then skillfully used both national and state governments to asstire that it made at least some gains. On September 29, 1982, six days after the House of Representatives in Washington approved what was now called the Computer Equipment Contribution Act, Gov. Jerry Brown signed California's own state law, giving Apple some insurance against congressional failure to enact a federal law.
The new state measure allows a credit against California corporate income tax of 25% of fair-market value for donations of computer equipment to schools. Apple is, of course, a California-based company and pays plenty of income tax in the state. If the credit is higher than the tax liability, the donor company may carry over the unused portion as a credit against future state taxes.
These provisions will take effect, because Congress didn't enact H.R. 5573 before January 1, 1983. Had a federal tax incentive been provided, a different section of the California act, which conformed with the federal statute, would have taken effect.
The state law allows the contributor to qualify for the credit within one year of the manufacture of the equipment, rather than within six months, as in the proposed federal bill. For California, the donation period will be 18 months, from January 1, 1983, until June 30, 1984. If H.R. 5573 had become law, California's statute, unlike the proposed federal legislation, would have expressly protected donor companies against disallowance on the basis of "intent." Contributions would have been sheItered from possible federal judicial attack. They would have been allowed even if "developing and maintaining a favorable public image" was found to be one of the company's purposes in making the gift.
The federal round began on February 23, 1982, when the Technology Education Act was introduced in the House by four Democrats -- Fortney H. "Pete" Stark, Don Edwards, and George Miller from California and James M. Shannon from Massachusetts. This was after the California commission began its work, but before it published its recommendations. By last August 10, more than 80 other representatives, most of them Democrats, had joined in sponsoring the bill. On September 17, it was reported out of the Ways and Means Committee with a number of changes. Now called The Computer Equipment Contribution Act, it sailed through the House 323 -- 62, with 47 abstentions.
In the Senate, John Danforth (D-Mo) introduced a parallel bill last March 26, and, on October 1, Robert Dole (R-Kans.), chairman of the Senate Finance Committee, reported out a Senate version of H.R. 5573. By then Congress was leaving Washington for the 1982 election.
When the lame-duck session opened on November 29, less than four weeks remained to pass urgently needed appropriation bills, the gas-tax increase measure, the enterprise-zone legislation, and more. The Apple bill was within steps of becoming law. Those steps weren't taken in the lame-duck session. So it is back to square one in the 98th Congress -- or Apple forgets about federal legislation and uses California as a showcase for what might have been nationally, and still may be California, after all, has nearly 9% of the country's elementary and seconclaryschool population. An experiment there will certainly be significant. And other states may follow California's lead.
Had the bill passed the Senate, it would have gone to a House/Senate Conference Committee and then on to the President, who was reportedly ready to approve it. That was, at least, the signal from the Treasury Department, which filed a generally favorable report on the bill. It seemed that time ran out on the measure -- but in Congress that never happens without help from opponents.
