Task Force Pushes Tax Changes
The Senate Republican High-Tech Task Force Friday urged the White House to help push for a permanent extension and update of the research and development tax credit and to back off policies to reform the U.S. international tax system.
In a letter to President Obama, Sen. Orrin Hatch of Utah, chairman of the task force, and other GOP senators praised Obama for calling for a permanent extension of the R&D tax credit in his fiscal year 2011 budget plan. "However, we believe that in order to gain the full effect of the incentive and to keep the U.S. as the premiere location for research in the world, we must improve the credit as well as extend it," they wrote.
The R&D credit expired at the end of last year after the Senate failed to take up legislation that would extend it and other tax breaks for a year. Senate Finance Committee leaders included a one-year extension of the R&D credit in their jobs bill released Thursday, but Senate Majority Leader Harry Reid, D-Nev., said he plans to push a smaller jobs bill that does not include such unrelated tax provisions. In response, Information Technology Industry Council lobbyist Ralph Hellman said, "we don't understand why they would have made the decision to strip extenders out of this package. Excluding [the R&D credit] will create more uncertainty when the economy needs this the most."
Hatch and the other GOP task force members also voiced concern with a proposal in Obama's budget plan calling for changes to a provision that allows U.S. companies to defer paying taxes on overseas profits. The senators argued that the "thrust of your proposals to reform the U.S. international tax system are driven by a misguided sense that U.S.-based firms are abusing the tax rules by effectively moving U.S. jobs and investment to foreign locations. In reality, U.S. firms compete on a global scale, and our current worldwide system of taxation often leaves our companies at a serious disadvantage to those based in other nations." Hellman echoed this concern, saying "these tax issues are front and center right now for the high tech community, and the task force letter really outlined the right policies for moving forward."
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