Congress could give the economy a Christmas present and extend the R&D tax credit, or it could put a lump of coal in the stockings of the thousands of workers across the nation that depend on the credit for good, high-paying jobs.
The credit isn’t just some bit of tinsel: it
spurs the creation of U.S.-based innovation
and economic activity. It fosters private-sector R&D investment by
companies of all sizes and brings new, improved products and services to
market.
The list of these is nearly endless: energy-efficient appliances, new
vaccines, faster Internet and communications capabilities, safer
transportation, and improved national security, to name just a few. Innovative
ideas become reality when American companies make a strong commitment to invest
in our future national prosperity.
But most importantly, the provision is really a “jobs credit” since 70 percent or more of its benefits are attributable to salaries of workers performing U.S.-based research. Only R&D performed in the United States may qualify for the R&D credit. The credit stimulates innovation-producing R&D investments in all 50 states across nearly 18,000 small, medium and large companies, according to a 2008 report by Ernst & Young for the R&D Credit Coalition.
The credit’s renewal is important because
these businesses cannot make important R&D decisions without it. R&D
projects take a long time and require big investments up front. Without the
credit, many critical projects across the nation simply won’t get started, will
end, or will get shipped overseas where even more generous incentives await.
While time is running short, it’s not over.
The White
House supports a permanent R&D credit, and more than 400 companies recently sent a letter to Congress
asking them to extend and strengthen the credit as a way to spur investment.
Also, 34 technology company CEOs sent a letter to Obama asking for his intervention on saving the credit. “To remove the uncertainty that is deterring businesses from making investment and hiring decisions, action is needed both in the immediate and long term,” the CEOs wrote. “Before the end of this year, we encourage enactment of a permanent extension of a strengthened research and development tax credit and other key business tax incentives set to expire at the end of this year.”
Still, Congress seems to have its sled stuck at the North Pole.
Lawmakers don’t seem willing to make the holiday season a little brighter for
all those workers who depend on the R&D credit. They might get in the
spirit a little faster if people picked up the phone and let them know that the
R&D tax credit is more than just some hypothetical item on the wish list.
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