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7/16/2004
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A Vote For I.T.

The message from both candidates is clear: IT matters in business, the economy, and the upcoming election

Bush Illo
Kerry Illo

In one unusual day last month, President Bush delivered his most concise address to date on the topic of business technology to a gathering in Washington. On the other side of the country, Democratic presidential challenger and Massachusetts Sen. John Kerry made technology the focus of an address at San Jose State University. The message from both candidates was clear: IT matters in business, the economy, and the upcoming election.

Both Bush and Kerry have taken positions on several IT-related issues, including offshore outsourcing, broadband access, digital health care, cyber-security, and data privacy. That isn't surprising, given each campaign's focus on job growth, the economy, and homeland security.

While both candidates understand that business technology is a primary driver of the economy, they may be less familiar with how politically aware IT professionals are. In an informal InformationWeek.com poll, three-quarters of 541 respondents say they're somewhat or highly familiar with the Democrats' IT platform, and 80% said the same about the Republicans'. (For more on the InformationWeek.com poll, see "It's The Jobs, Stupid: The Priorities Of Outsourcing".)

IT execs, like all business leaders, "want to know they can count on a president who will set the right tone and make the right investments in high tech," says Jeff Raikes, group VP of Microsoft's Information Worker Business and a Kerry adviser.

Kerry's stance is that government should be the catalyst for technological innovation through tax breaks that encourage investment in startup companies and research and development spending. He would eliminate taxes on capital gains from investments in small businesses held for at least five years, currently taxed at 15%, and extend the 20% tax credit on R&D spending that expired last month. At the same time, he would eliminate tax advantages for companies that move jobs overseas. Kerry's tax breaks--along with more money for agencies that fund R&D in nanotechnology and other emerging technologies--would cost $30 billion, which he expects can be paid for with revenue generated from selling unused TV transmission spectrum after the country moves from analog to digital television.

"We need to open the floodgates of entrepreneurship and venture capital by eliminating capital-gains taxes for new, long-term investments in small businesses," Kerry said in last month's speech. "The jobs of tomorrow depend on discoveries today, so we also need to extend the research and development tax credit."

Bush is more hands-off, particularly when it comes to using tax policy to restrict the use of offshore labor. "If we want to be a nation of innovators, we don't want to overtax industry and commerce and the entrepreneurial spirit," the president said in last month's speech at the Commerce Department.


Bush favors of a tax environment that rewards risk takers and a balanced regulatory environment, Raul Fernandez, a member of the President's Council of Advisors on Science and Technology and CEO of ObjectVideo Inc. says

Bush favors of a tax environment that rewards risk takers and a balanced regulatory environment, Raul Fernandez says.

Photo by Jonathan Saunders
"President Bush is in favor of a tax environment that rewards risk takers, a regulatory environment that's balanced between end users and technology vendors, and an intellectual-property environment that protects assets," says Raul Fernandez, a member of the President's Council of Advisors on Science and Technology and CEO of ObjectVideo Inc., which makes video-surveillance software.

In an April speech in Minneapolis, Bush said he would raise federal R&D spending to $132 billion, a 44% increase over the spending when he took office. He proposed making the R&D tax credit permanent rather than just extending it. Bush also has proposed eliminating the double taxation of dividends as part of his tax package last year but failed to get that through Congress, ending up with the compromise of a 15% tax rate for both dividends and capital gains.

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