In late September, a group of six U.S. senators led by Sens. Mark Warner (D-VA) and Jerry Moran (R-KS) introduced the Broadband Grant Tax Treatment Act (BGTTA). The bill is designed to amend the Internal Revenue Code so that federal funding previously allocated for the rollout of broadband would not be considered taxable income. 

Due to recent schedule changes to the corporate tax code that will take effect at the beginning of 2023, large sums of money currently set aside for broadband deployment in the Infrastructure Investment and Jobs Act (IIJA) and the American Rescue Plan Act (ARPA) are in danger of being counted as “gross income.” These allotments include over $65 billion in IIJA funds and $17 billion in ARPA funds, in addition to $10 billion for the Capital Projects Fund, a program that provides resources to states, territories and Tribal governments for the development of affordable high-speed internet. 

According to a senior official at USTelecom, the changes to the tax code will require operators to “return as much as 20 percent” of their grant money to the government in the form of higher taxes. This large sum, now set to be unnecessarily lost, could be better spent on closing the digital divide. 

When lawmakers first reserved a portion of IIJA and ARPA federal funds for broadband deployment, they were almost certainly not planning for providers to send a large chunk of it back to the government. To do so would undermine the very reason the money was set aside in the first place: to connect America. 

While still allowing most of the changes in the tax code to take effect, BGTTA would safeguard the original amount of money that was set aside for program grants, including promising programs like Broadband Equity, Access and Deployment (BEAD).

The funds at hand have already been allocated to specific programs as part of a national relief effort to help struggling Americans amidst the economic fallout of Covid-19. Moreover, they represent a one-time investment in America’s future that has the potential to play an important role in fostering economic growth and digital prosperity.

Access to high-speed internet is also an economic necessity for Americans in 2022. It not only connects people over long distances, but also enables them to work from home, participate in remote learning and access services critical to mental and physical health. This situation is especially urgent for low-income Americans and those residing in hard-to-reach places. The many societal benefits widespread connectivity makes possible cannot be overstated. 

The argument for preserving broadband funding is not only economic, but also moral. Closing the digital divide and truly promoting widespread digital accessibility means using all the resources at our disposal – including 100 percent of the money that Congress has dedicated to broadband deployment. 

Fortunately, protecting this money already appears to be gathering broad bipartisan support among lawmakers. Of the six senators who introduced the BFTTA, three were Republicans and three were Democrats. The bill’s bipartisan support suggests real hunger to get something done. It also suggests Americans’ loud and clear demand for broadband access.

Whether BGTTA will have the chance to succeed in providing that access remains to be seen. The current legislative session is nearly over and there is still not a companion version of the bill in the House, meaning the window of opportunity to pass it is closing. Failing to protect all allocated funds would do a disservice to the spirit of past legislation like the IIJA and the ARPA that lawmakers worked so hard to pass. It would also do a disservice to the millions of Americans who have been promised access to cheap and reliable high-speed internet.