5,300 Workers Stand Up for R&D

It’s pretty rare that 5,000 people agree on anything, but that’s what happened today as thousands of R&D professionals from 135 companies and 44 states sent a letter to Congress urging lawmakers to immediately extend and make permanent the research and development tax credit before it expires on December 31.

The credit goes to support American innovation efforts that help keep the country competitive.  And, failure to extend the credit would pull the rug out from under an economy that is struggling to regain its footing.

With 70 percent of the credit going to pay R&D employee salaries and wages, letting the credit expire would put 120,000 U.S. jobs at risk and cost $45 million in lost economic activity, according to a report released last month by TechAmerica.

“Research and development keeps our companies on the cutting edge of global competitiveness. R&D brought us smart phones, airplanes, vaccines, hybrid cars, the artificial hip and much more,” the employees wrote. “U.S. companies employ high-skilled, high-wage workers across America that depend on the R&D tax credit for maintaining the nation’s leadership in biotechnology, manufacturing, technology, and other business sectors in the U.S.  If the credit expires on December 31, it will place America’s innovation economy at risk.”

The U.S. House is scheduled to vote on a tax extenders package today that would extend the R&D tax credit for one year, but the credit’s future remains terribly uncertain.    

As President Obama noted earlier this year, “This is a tax credit that returns $2 to the economy for every dollar we spend. Yet over the years we’ve allowed this credit to lapse or we’ve extended it year to year—even just a few months at a time. Under my budget, this tax credit will no longer fall prey to the whims of politics and partisanship. It will be far more effective when businesses like yours can count on it, when you’ve got some stability and reliability.”

While R&D is part of American DNA, it is not something that comes cheap. R&D is expensive, and it takes planning to bring those ideas to the marketplace. Our ability to pay for R&D, to map out the future of the products it creates, and to keep those Americans involved in one of our most important enterprises are threatened by congressional inaction over the R&D tax credit.

It’s important to remember that United States isn’t the only nation that gives R&D incentives. While Congress is slow to renew the credit, other nations are not. When the R&D Credit was first created, the U.S. had the distinction of providing the most generous tax treatment for research among all OECD nations. Today, that is not the case because the credit has been whittled away over the years due to our global competitors such as Canada, China, Japan and others that offer more aggressive R&D incentives. In fact, the U.S. has fallen out of the top 10 globally when measuring government incentives for private sector R&D and now measures 17th.

Congress needs to heed the call of the 5,300 R&D men and women across this great nation.  The employees who signed onto the letter represent thousands more who toil everyday in labs, research facilities, machine shops and other facilities across the country, who help America invent its way to a brighter future.  

 

Comments

[daxheref]

medium stratosphere times 2009

[John]

I couldn't agree more. Congress should take note of the fact that over 5000 people want this to happen. In this economy, need to give every tax incentive to companies that we can.

[Jeffrey Feingold]

Also keep in mind the importance of proper documentation of R&D activities. Tax Point Advisors (www.taxpointadvisors.com) is the leading provider of R&D tax credit study services. CPA firms and their clients across the nation rely on Tax Point more than any other firm.