FCC weighs tax breaks to diversify telecoms

Kennard pushes for minorities, women

By CHRISTOPHER STERN

WASHINGTON -- Telecommunication companies could collect significant tax breaks by selling their media properties to minorities, women or fledgling entrepreneurs under a proposal outlined by the Federal Communications Commission.

FCC topper William Kennard announced Thursday that he would like to resurrect the tax certificate program that would eliminate the capital gains tax for companies sold to minorities, women and even "small-scale entrepreneurs."

Congress eliminated a similar tax certificate program five years ago after legislators became concerned it was being abused by so-called minority front companies. But in a speech Thursday to the Citizen Education Fund, Kennard insisted that safeguards could be created to protect against abuse. Among his proposals is a limit on the number of times a company can take advantage of the tax break.

"A new tax certificate program should level the playing field by allowing small businesses of all types to have the same tax advantages that large corporations have," Kennard said.

For Kennard, the first African-American chairman of the FCC, increasing the presence of minorities among the ranks of telecom stakeholders has been a priority: Minorities and women currently represent less than 3% of all broadcast industry owners.

But several recent court rulings have made it tough for agencies like the FCC to implement affirmative action programs such as the tax certificate program; at the same time, he noted that media is increasingly being taken over by big corporations. For both reasons, Kennard hopes to expand the program to include small business, not just minority-owned companies.

Senate Commerce Committee chairman John McCain (R-Ariz.) made a similar proposal in April, but people close to McCain have said there has been no discussion between McCain and Kennard about the tax certificate proposal.