Renewing expired R&D credit hoped to be a priority for Congress
Speaking to the annual conference of the Industrial Research Institute, NAM president John Engler said manufacturers had made investment decisions this year based on the reasonable expectation that Congress would renew the R&D tax credit. Engler called it a critical tool for maintaining the United States’ economic competitiveness.
“Companies have invested in R&D this year assuming the credit would recover some of their expenses,” Engler said. “They knew it had expired, but this has happened before and Congress usually gets around to renewing it.”
Engler said that the R&D tax credit represented the centerpiece of an innovation-focused agenda that Congress should make a priority when it reconvenes in a lame-duck session. Originally enacted in 1981, the credit has been extended 11 times, but not since its last expiration in December 2005. The credit is available for certain research and development expenditures made only in the U.S., primarily spending on employees who perform qualified research activities.
Engler urged Congress to pass legislation that includes a seamless extension and strengthening of the R&D credit. The ultimate goal must be a permanent tax credit that competes with the tax-based incentives promoted by U.S. global competitors, he said.
“Not only must we remind lawmakers that manufacturers account for more than two-thirds of all industrial R&D in the country,” Engler said. “We also must remind them how critical that R&D spending is for manufacturers who are attempting to compete in this global economy.”
If allowed to stand, the expired credit would account for a 9% increase in the overall manufacturing tax burden, he noted.
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey