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This limitation is too vague.
Any electronic data processing
machine that can accept programs can be used for educational applications.
Even programmable electronic game machines can accept educational software,
such as basic arithmetic, state capitols, etc. Therefore this limitation adds nothing and should be eliminated.
Three languages. A qualified data processor must "support at
computer's micro-chips are only programmed in one computer language, software
can be written so the user can program the computer in different computer
The software in effect translates from one computer language to
the other. Thus, so long as the computer can accept programs it can support
other computer languages. Therefore, there is no need to specify a number of
3. Capacity. A qualified data processor must have "a random access memory with a capacity for at least 16K bytes, expandable to at least 48K bytes". (S.1194, proposed new Section 174A (c)(1)(B)(i)(III)).
A computer with memory expansion to 16K bytes can perform
numerous demanding educational
Requiring more memory
discriminatory in favor of Apple and other high end computers, and does not
contribute to the educational purposes of the Bill.
Furthermore, there is no need to distinguish between on-board
memory and capability to accept memory expansion devices.
If there is to be any memory requirement, the Bill should simply state this memory must either be built-in, supplied by an expansion device which is also donated, or
supplied by other computer equipment which the recipient already owns.
Any memory requirement at all is probably counterproductive.
For example, a long-term trend may be for each student to have a portable
computer terminal that can "plug in" to large data bases at school and at
These terminals may have no built-in memory capability, since the
central processing unit would have all the memory capability required. Under
the Bills these remote terminals would not be included in the definitions of
"data processors" or "ancillary computer equipment". As another example, some
applications may require modest memory or computing ability if the computer is
connected to a bulk storage device (disc drive, etc.) which can be searched
for relevant information.
A qualified data processor must be "accompanied by a
television sets that could be used with donated computers, or they may be able to purchase television sets cheaply. Manufacturers should not be required to
supply displays if they are not a built-in part of the product.
Ancillary computer equipment.
Ancillary computer equipment
shall mean "a display screen, a printer, a disc drive" (s.1194, proposed new
Section 174A (c)(1)(B)(ii)).
This definition excludes valuable peripheral equipment such as
telephonic communication interface devices (modems), data storage and retrieval devices that are not disc drives ("stringy floppies"), terminals that do not satisfy the definition of a "qualified data processor", etc. A
definition of ancillary computer equipment by examples will be obsolete even
before a Bill is enacted, because the computer industry is changing so fast.
6. Assembled by the taxpayer. "Such transfer is of property which is assembled by the taxpayer, and the taxpayer is regularly engaged in the business of assembling, and selling or leasing computer equipment of the same kind as such property". (S. 1194, proposed new Section 174A (c)(1)(D)).
Many computer companies do not assemble their own products, but
purchase product assembled by affiliated companies. Assembly by corporations
under common control with the taxpayer, as such affiliation is covered by
Internal Revenue Code section 482, should be sufficient under the Bill.
Furthermore, since many computers are designed for use with television sets
which the computer manufacturer does not assemble, assembly of the visual
display unit should not be required if video displays must be included in the
limitation would disqualify the great majority of personal computers sold
(including those already used in schools) despite their educational value.
calculators cost several hundred dollars when first introduced, but the price
fell to $10-$50 in just a few years.
These new calculators are more powerful,
more compact and easier to use than their more expensive predecessors.
same type of legislation had been enacted for calculators 20 years ago, these
new calculators would have been excluded and the older, more bulky, less
powerful ones covered.
The same is happening today in personal computers.
Any dollar minimum will be obsolete before a bill is enacted.
If the purpose of this dollar value limitation is to reduce revenue loss (and not simply to favor Apple Computer and other high-end
computer companies), there are better ways to do it.
Deductions could be
limited to $100 per computer, for example, or $1 million per taxpayer.
product-by-product basis, sold by the taxpayer in the ordinary course of its
use, and slow-selling computers may nonetheless be well adapted for school
use, especially computer literacy.
Moreover, this type of limitation will
favor established manufacturers with large sales volumes and discourage entry
into the educational market for new computer manufacturers whose sales volume
Corporations with fiscal years beginning in the second half of
the year could begin to take immediate advantage of the Bill if enacted soon,
whereas corporations on a calendar year could only begin making contributions
under the Bill in January, 1984. Once again, this limitation seems to favor
Apple Computer, whose fiscal year begins in September.
Tax expenditure legislation like the Apple Bills will not get the right computers into primary and secondary schools. There will certainly be a
loss of revenue in a time of great budget problems, but no certainty of
A few high-end computer manufacturers may benefit, but the public
We will be happy to work with the Subcommittee to improve technical
aspects of a bill to insure that it covers all pertinent computer equipment
and computer manufacturers, but we doubt that any tax expenditure legislation can do the job, even if the technical problems are solved.
An indication these Bills will not accomplish their stated objective
is the reaction to them. The tax-paying public views the Bills as special