A bi-partisan group of U.S. House lawmakers has launched a major effort to spur job creation and innovation by modernizing and making permanent the Research and Development tax credit.
"Innovation drives America's future," said U.S. Congressman Kevin Brady (R-Texas), a senior member of the House Ways and Means Committee and the author of The American Research and Competitiveness Act of 2011. "To keep from falling behind our global competitors and to make sure America is the first choice for R & D jobs we need to modernize the tax credit, strengthen it to encourage companies to make greater investment in research and jobs and make the credit permanent so businesses have the confidence to make long-term investment decisions here in the United States."
Other leaders of the effort are Democratic representatives John Larson of Connecticut, Anna Eshoo of California and Doris Matsui of California. Joining Brady are Republican sponsors Erik Paulsen of Minnesota and Michael McCaul of Texas.
"Research and development is imperative to our country's competitiveness in the global marketplace," added Rep. Paulsen. "We need a tax code that spurs innovation and promotes sustainable job growth in industries like medical technology, which provide thousands of high-paying jobs in Minnesota. These companies often face high start up costs and this credit will help them create the next life-saving technology. We must make the R & D credit permanent and encourage businesses to continue the pursuit of new ideas."
"America is the world's leading innovator -- developing life-saving technologies, state-of-the art computer systems, and breakthrough manufacturing products -- but we're losing ground to competitors around the world," said Rep. Larson. "It's time we get back on the playing field by modernizing the R&D tax credit and keeping American jobs and innovation here at home."
"The R&D tax credit is a proven policy which encourages businesses to invest in new technologies that create jobs and shape tomorrow's economy. For decades it has been essential for out-innovating and out-competing the rest of the world, but now other countries have caught up," Rep. Eshoo said. "This bill will modernize the tax credit--expanding it, making it permanent and keeping the U.S. as a global leader."
The American Research and Competitiveness Act of 2011 would simplify and strengthen the R & D tax credit by increasing the "alternative simplified credit" from 14% to 20% and making it permanent, while providing a one-year bridge for those companies that still use the "traditional credit" to December 31, 2012.
American business leaders offered strong support for the legislation.
"UTC commends Representatives Brady, Larson, Paulsen, and Eshoo on the introduction of The American Research and Competitiveness Act of 2011," said Dr. J. Michael McQuade, Senior Vice-President, Science and Technology, United Technologies Corporation. "The United Technologies family of companies demonstrates every day how investments in research and innovation enable us to do more with less. From elevators to jet engines to building systems, UTC's research investments have led to innovations that reduce emissions, conserve energy, eliminate hazardous waste and help make modern life possible. By modernizing, enhancing and making permanent the R&D simplified credit, The American Research & Competitiveness Act of 2011 promotes job growth and thriving communities in the U.S."
"America's economy is fueled by investments in research and development, and our national competitiveness will be strengthened by enhancing and making the tax credit permanent," said Larry Irving, Vice President, Global Government Affairs of Hewlett-Packard. "We commend Representative Kevin Brady (R-TX) and Representative John Larson (D-CT) for introducing The American Research and Competitiveness Act of 2011 and we will work closely with members of Congress to support the passage of this important measure."
"Investment in R&D is critical for our nation's economic competitiveness and IBM applauds Representatives Brady and Larson in their effort to enhance and make permanent the alternative simplified Research and Development tax credit," said Christopher Padilla, Vice President, IBM Governmental Programs. "Throughout its 100 year history, IBM has demonstrated a strong commitment to funding scientific research, which has paved the way for societal breakthroughs such as missions to the moon, helping to map the humane genome and most recently, a computing system named Watson that represents a new frontier of information science through its ability to understand natural language. The American Research and Competitiveness Act of 2011 will help advance the next wave of innovations that will have positive implications for our society and help to further economic vitality for the United States."
"R&D is the critical lifeblood of our industry," said Doug Cronin, Vice President of Corporate Tax at Boston Scientific. "The R&D tax credit enables American companies like Boston Scientific to develop breakthrough treatments for patients while also creating quality jobs that fuel economic growth. Innovation in America is the key to rebuilding our economy and strong investment in R &D is a vital component of that success. I commend Rep. Brady and the sponsors for their leadership by introducing this bill."
When it comes to jobs, the U.S. simply can't afford to be ranked 24th out of 38 countries in R&D incentives or to continue on the path of temporary extensions. A permanent plan would provide certainty for companies to make those long-term investments. Other countries are moving ahead of the U.S. by offering stronger incentives to attract research and development and the good-paying jobs that go with it to their markets. "It is time we get back in the game," added Brady. "If we modernize the U.S. R&D tax credit, we keep American jobs and innovation here at home. It's really as simple as that."