Senate Passes Reconciliation Bill With Spectrum Tax Carve-Out
The Senate passed a revised version of the Inflation Reduction Act reconciliation package as a substitute amendment to the earlier scuttled Build Back Better Act (HR-5376) with language that allows companies to deduct the value of “qualified wireless spectrum ……
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in computing taxable income” under a proposed 15% minimum corporate tax. A qualified frequency holding would be exempt if it’s used “in the trade or business of a wireless telecommunications carrier” and the carrier acquired the spectrum license after Dec. 31, 2007, “and before the date” of HR-5376’s enactment. The Senate voted 50-50 Sunday along party lines on the measure, with Vice President Kamala Harris casting the tiebreaker in its favor. HR-5376 now heads back to the House, which is expected to take it up Friday. The HR-5376 “technical fix” means the wireless industry “will be able to keep the favorable tax treatment it enjoyed when it obtained the bulk of its current spectrum holdings,” New Street’s Blair Levin said in an email to investors. “Spectrum acquired prior to 2007 has already been fully amortized” for tax purposes and frequencies “acquired after the law's enactment will be acquired with the understanding of the new tax treatment.” The U.S. “wireless industry applauds this important technical fix which preserves the industry’s ability to maintain America’s 5G leadership and help close the digital divide,” CTIA President Meredith Baker said in a statement before HR-5376 passed. Baker and several Senate Commerce Committee Republicans raised concerns last week that an earlier version of the corporate tax language would include spectrum assets and could hurt U.S. wireless carriers (see 2208020076). The corporate tax “remains bad policy, but at least one unintended consequence averted” because of the spectrum carve-out, tweeted American Enterprise Institute Nonresident Senior Fellow Daniel Lyons.