MR. PRESIDENT, to fuel American economic growth and job creation, we have to make sure our tax policy is as smart as the innovators who power our economy.
American ingenuity has always been at the core of our economic success. Behind nearly every game-changing innovation, from the light bulb to the search engine, has been critical research and development that transforms an idea into a market-ready product. The challenges of the global economy may be new, but the solution is the same -- supporting and sustaining American innovators.
That's why I joined with my friend and colleague, the Senator from Wyoming, Senator Enzi, to draft legislation that gives innovative startup companies the opportunity to take advantage of the successful Research and Development Tax Credit, which would support their efforts to invest in innovation and create jobs.
Senator Enzi and I are proud to be joined by Senator Schumer of New York and Senator Rubio of Florida in introducing the Startup Innovation Credit Act of 2012, which allows qualifying companies to claim the R&D Tax Credit against their employment taxes instead of their income taxes, thereby opening the credit to new companies who don't yet have an income tax liability. We are also grateful to our colleagues in the House, who are working to introduce a bipartisan companion bill this week.
Over the past three decades, the research and development tax credit has helped tens of thousands of successful American companies create jobs by incentivizing investment in innovation. But with America's global manufacturing competitiveness at stake, it's time Congress shows the same type of support for entrepreneurs and young companies.
Small and startup businesses are driving our nation's economic recovery and creating jobs by taking risks to turn their ideas into marketable products. Over the past few decades, firms that were younger than five years old were responsible for the overwhelming majority of new jobs in this country.
The tax code is a powerful tool in the government's toolbox, but tax credits can't help emerging companies that don't yet have tax liabilities. That takes the R&D tax credit off the table for countless promising startups and small businesses.
Over the last two years, I've talked with dozens of business leaders and experts in tax policy to refine an idea to create a new small business innovation credit that would help those young companies. My commitment to this concept has only strengthened since I introduced a version of it in my very first bill as a Senator, the Job Creation Through Innovation Act. This work continued, along with Senator Rubio, in the subsequent AGREE Act and Startup Act 2.0.
The reason I am so doggedly pursuing this idea is because it is critical for young, innovative companies in my home state of Delaware. Take, for example, DeNovix, a small company based in Wilmington. With just six employees, they design, manufacture and sell laboratory equipment that helps scientists innovate and achieve results. As a brand-new company, all of DeNovix' products are in the research and development phase. So at this point, they can't take advantage of the R&D Tax Credit. A new, innovative company, shut out of support they need at the time they need it most. That seems counterproductive for our economy. So let's fix it. Under the Startup Innovation Credit Act of 2012, DeNovix and companies like them across Delaware and across the country could grow and create jobs with the help of the R&D tax credit.
We can't let tough economic times slow down the power of American ingenuity, especially when history has taught us that now is exactly the time we need to be investing in our innovators. More than half of our Fortune 500 companies were launched during a recession or bear market, so a small business founded this year could become the next General Electric or DuPont if it gets the support it needs.
America's researchers, business leaders, innovators and entrepreneurs are already working to help create jobs and ensure American competitiveness in the global economy. We just have to support and sustain their hard work, and we cannot take the rest of the year off just because there's an election coming up. Even in this difficult, partisan atmosphere, we have to find ways to work together and get things done.
Innovation will drive American economic competitiveness for generations to come, and our job is to help our innovators and entrepreneurs do their jobs. I urge my colleagues to join Senators Enzi, Schumer, Rubio and I in strong support of the Startup Innovation Credit Act of 2012.