WASHINGTON-In a move that could aide future wireless technological development, Congress is pushing a bipartisan bill that would permanently extend the research and development tax credit.
The bill, introduced by Rep. Nancy Johnson (R-Conn.) and buoyed by strong GOP and Democratic backing, makes permanent a research and development tax credit originally enacted in 1981. Congress has extended the tax credit off-and-on nine times, including last year.
“This important legislation,” said J.C. Watts Jr. (R-Okla.), chairman of the House Republican Conference, “will stimulate investment and innovation, create jobs, and contribute to a stronger economy and higher standard of living for all Americans.”
As the bill progresses through Congress, the Congressional Budget Office has flagged potential problems with the Clinton administration’s $366 million plan to fund high technology R&D in fiscal 2000.
The CBO report “provides valuable insight into whether federal agencies are indeed making basic research a priority or if they are spending scarce R&D funds on short-term product developments more likely undertaken by the private sector,”said Rep. James Sensenbrenner (R-Wis.), chairman of the House Science Committee.
Sensenbrenner said he welcomed indications that Vice President Gore supports making the R&D credit a permanent fixture in the tax code.
Rep. Bob Etheridge (D-N.C.), in a House floor statement, said, “The R&D tax credit provides an essential incentive for companies to increase their investment in U.S. research and development. The R&D tax credit is important to the Research Triangle Park, located in North Carolina, as well, which happens to be the home for 3,100 information technology establishments and over 195,000 technology employees, and with a payroll of $5.1 billion.”
“Unless companies can consistently depend upon the combined federal and state tax credit year in and out,” added Etheridge, “we risk the ground-breaking research that is provided for job placement.”
A recent study prepared by PriceWaterhouseCoopers Tax Policy Economics Group found extending the tax credit would benefit all aspects of the American economy, providing the government with higher revenues and U.S. families with more after-tax income. As a result of the credit, the PWC study estimates the government will receive a $1.75 in tax revenue for each $1 invested, as well as Americans’ personal incomes rising $61 billion during 10 years-equivalent to a $25 billion tax cut.
“I think it is time we made the R&D tax credit permanent, just as the home mortgage interest deduction, and give American companies the tools they need. We need to continue to expand the economy and keep it stunning,” stated Rep. Anna Eshoo (D-Calif.), a champion of Silicon Valley’s high-tech business sector.
RCR Washington Bureau Chief Jeffrey Silva contributed to this report.
