US Lawmakers Seek Permanent R And D Tax Credit

by Leroy Baker, Tax-News.com, New York

27 March 2009

Bipartisan legislation has been introduced into the US House of Representatives to make the research and development (R&D) tax credit permanent.

The bill, introduced by Representatives Chris Lee, a New York Republican, and John Boccieri, an Ohio Democrat, seeks to eliminate the uncertainty companies face in their investment planning, which accompanies the routine temporary extensions of the tax credit.

Since enactment in 1981, Congress has extended the R&D tax credit law at least 12 times with extensions ranging from five years to just six months.

The Lee/Boccieri bill would also offer a bonus tax credit on a sliding scale to companies who manufacture most of their products in the United States - a provision likely to appeal to President Obama's brand of economic nationalism.

“This is important bipartisan legislation that will help keep good-paying jobs and crucial R&D investment dollars here in the United States,” said Lee. “A strengthened R&D credit will also boost our economy over the long-term by giving our innovators the tools they need to compete globally.”

“During this great recession, our priority should be saving and creating jobs and helping our manufacturers modernize to compete in the global economy,” said Boccieri. “This legislation rewards and creates American jobs, keeps research and development in the US, and takes critical steps to make the research and development tax credit comparable to those credits offered in other countries.”

In a presentation on March 25, President Obama reiterated his pledge to make the R&D tax credit permanent as part of his fiscal year 2010 budget plan. He estimates that this would cost USD75bn, but would be crucial in fostering the development of clean energy technologies, which is a cause close the President's heart.

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