Government policy: Trade group wants R&D tax credit restored

A coalition of trade associations is urging Congress to act quickly in restoring the federal Research & Development (R&D) Tax Credit that was allowed to expire at the end of last year. A group calling itself The R&D Credit Coalition is using an Ernst & Young study on the impact of the tax credit to bolster its argument for its restoration.

06/04/2008


A coalition of trade associations is urging Congress to act quickly in restoring the federal Research & Development (R&D) Tax Credit that was allowed to expire at the end of last year.
A group calling itself The R&D Credit Coalition is using an Ernst & Young study on the impact of the tax credit to bolster its argument for its restoration.
The R&D Tax Credit, initially enacted in 1981, was a temporary measure designed to spur economic growth in the early days of the Reagan Administration. It allowed companies to offset a certain amount the costs incurred pursuing discoveries that were technological in nature and intended to be used in the development or improvement of a product. In addition, to be eligible for the credit, the expenses had to relate to research conducted within the United States.
Senate Finance Chairman Max Baucus (D-MT) and Senate Finance Ranking Member Charles Grassley (R-IA) introduced a bill in early May—the Alternative Minimum Tax and Extenders Tax Relief Act of 2008—that would restore the credit.
The credit expired 12 previous times before last year, but each time it was quickly extended. And the R&D Tax Credit Coalition says the Ernst & Young study proves that trend should continue.
According to the study, the credit has spurred more than $ 6 billion in innovation-producing investments since its inception. Because those investments were for work performed in the U.S., the report says, they have funded high-wage jobs at more than 17,700 small and large companies in all 50 states.
“For 25 years, the R&D Credit has helped to foster the domestic growth of highly-skilled jobs,” says Monica McGuire, executive secretary of the R&D Credit Coalition. “The fact is that 70 percent of the benefit of this credit goes directly to pay American workers developing the products and markets of tomorrow. The expiration of this key tool for American job growth is universally felt.”
She added, "In this time of economic uncertainty, Congress should act now to seamlessly strengthen and restore the R&D Credit. Simply put, without this important incentive, our nation risks exporting high-skilled jobs to a wide range of countries all too willing to make up for our lack of R&D investment incentives.”
The R&D Tax Credit Coalition represents a number of industry trade groups, including the National Association of Manufacturers and associations representing the aerospace, agriculture, biotechnology, chemicals, electronics, energy, and information technology industries.
The Ernst & Young study, titled Supporting Innovation and Economic Growth is available at: www.investinamericasfuture.org/2008_study/





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