By Karen Axelton
A movement to make the R&D tax credit permanent seems to be gaining momentum, according to the Kauffmann Foundation. Originally created in 1981, the Research & Experimentation Tax Credit has been renewed 14 times so far, most recently when
President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 in December.
True to form, the most recent renewal still allows the tax credit to expire at the end of 2011. But now, both political parties and a host of business interests are working to make the credit permanent so that businesses could enjoy the benefits without the uncertainty of wondering if or when the credit will be renewed.
Kauffmann cites a White House fact sheet which says the R&D tax credit directly supports jobs in the United States as well as U.S.-based investment and a 2010 study by the Information Technology & Innovation Foundation (ITIF) which found the credit spurs job creation. Organizations ranging from large companies like Ernst & Young to smaller entrepreneurial companies support the extension of the credit.
President Obama is seeking to expand the credit by about 20 percent (which would be the biggest increase in its history) and simplify the credit so more firms will be likely to take it. Even if expanded, the R&D credit would still be behind many countries nationwide in terms of tax credits offered to businesses that invest in research and development.
The American Research and Competitiveness Act of 2011 (H.R. 942), currently under consideration by Congress, would expand the credit and make it permanent. The bill was introduced by Rep. Kevin Brady (R-TX) and has earned strong support from both Democrats and Republicans so far.
We still have eight months until the credit expires, but if your business will benefit from extension of the credit—and an end to the uncertainty—let your elected representatives know how you feel.
Image by Flickr user Richard Chen (Creative Commons)
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