Obama: Expand the Research and Development Tax Credit
During a speech given in Cleveland, Ohio on Wednesday, President Obama proposed an expansion of the research and development tax credit as a key part of an economic package aiming to provide further relief to the nation's troubled economy.
"I'm proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America," Obama said.
Established in 1981, the R&D tax credit, which has been extended 13 times, is a boon for the technology sector. Obama now proposes making it a permanent feature of the American tax code, increasing it by roughly 20 percent, and simplifying the way businesses can qualify for it.
To offset the cost, the administration suggests closing tax loopholes that incentivize investment in overseas jobs. In contrast, the R&D credit requires research and experimentation to be performed in the United States.
In the span of a decade, the expanded credit would dedicate roughly $100 billion over the next 10 years to leverage additional R&D investment. According to a fact sheet distributed by the White House, the proposal will "keep the U.S. economy at the cutting edge of the 21st century technologies," and expand "high-tech jobs."
Unsurprisingly, the announcement came as welcome news to the technology sector.
"This will better enable the U.S. compete globally and make it clear that the United States has finally gotten off the sidelines in the fight for global economic competitiveness," Rob Atkinson, president of the Information, Technology and Innovation Foundation, said in a statement.
Dean Garfield, head of the Information Technology Industry Council, also applauded the move. "We commend President Obama for focusing on a proven and bi-partisan economic solution, and look forward to working with the administration and members of Congress to ensure that any final bill advances, rather than hinders, innovation, job creation, and our global competiveness."
ITI estimates that the new tax credit will create 160,000 jobs and generate $17 billion in additional tax revenue.
TechAmerica, a leading technology industry coalition, also sent out a statement lauding the president's announcement.
Despite the industry enthusiasm, challenges remain to enacting the proposal. The current session of Congress wanes and much of lawmakers' attention is being absorbed by the mid-term elections.
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