Year-end R&D Extension Unlikely
With the Senate days away from leaving for the year and bogged down with healthcare legislation, it looks increasingly unlikely that lawmakers will meet an end-of-the-year deadline for extending the research and development tax credit and other business tax breaks. The House passed the legislation last week but the Senate has yet to act.
TechAmerica made another appeal Thursday to the Senate to act on legislation that includes a one-year extension of the R&D tax credit and other tax breaks before they expire on Dec. 31. "It is a critical incentive for companies that conduct R&D in the United States, and it has a proven history of encouraging additional investments in research and job growth in companies of all sizes," TechAmerica President Phil Bond said in a statement.
The credit has been allowed to lapse a dozen times since its inception in 1981, but Congress has generally passed a retroactive extension of the credit, except for once in the mid-1990s, according to the National Association of Manufacturers' Monica McGuire, executive secretary for the R&D Credit Coalition. Lawmakers may move next year to extend the credit retroactively, but it would require the House to take up the legislation again.
The coalition has been lobbying Congress to not only make the R&D tax credit permanent but to strengthen and update it. "There's a global race for R&D dollars," McGuire said. She noted that on a list of 21 Organization for Economic Cooperation and Development countries that provide incentives for companies to do R&D, the United States now ranks 17th after ranking No. 1 in the mid 1980s. Both McGuire and Bond said more than 70 percent of the claims for the R&D credit in the United States go to pay for wages and salaries of workers. "If Congress is serious about jobs it ought not to treat the credit as a yoyo," she said.
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