Irresponsible R&D Bill Would Add Billions to National Deficit

Press Release

Today, the House of Representatives voted on a bill that would make research and development (R&D) tax credits permanent but in the process would add billions to the nation's deficit. The Republican-backed H.R. 4438, the American Research and Competitiveness Act of 2014, provides no way to pay for these important tax credits, which would result in $156 billion being added to the deficit over the next ten years, in violation of current law which requires tax cuts and new spending to be offset.

Congresswoman Niki Tsongas has always been a strong supporter of making the federal R&D tax credit permanent, consistently cosponsoring legislation and calling on House and Senate leaders to do so in a responsible way. For example, most recently, Tsongas voted for the House Democratic budget in April which would make this tax cut permanent and would have paid for it by closing corporate tax loopholes. Currently, the tax credits have to be renewed on a year-to-year basis.

However, Tsongas voted against H.R. 4438 because a permanent, unpaid-for corporate tax cut will have harmful, long-term consequences on lower and middle class families and the nation's overall economic wellbeing. That is why numerous news outlets and economists from across the national spectrum have spoken out against this extension, including USA Today, which editorialized, "Making a useful tax cut permanent makes sense, but doing it without offsetting the cost -- and pretending the cost doesn't even matter -- does not."

Congresswoman Tsongas released the following statement.

"There is a glaring, harmful and hypocritical flaw in the Republican methodology for making the R&D tax credit permanent: there is no way to pay for it. This bill does America's economy a disservice by adding $156 billion to our nation's deficit in the first ten years alone, and billions more in perpetuity.

"If this were a short-term extension, or a responsibly paid-for permanent extension, I would have supported without hesitation. However, voting in favor of a permanent unpaid-for corporate tax cut creates a large hole in the budget and leads to a host of problems down the road for middle class Americans. Every dollar that can no longer be counted on in government revenue thanks to this tax credit will have to be recouped from somewhere else in the federal budget. Medicare, food safety programs, police and fire grant programs, education funding, nutrition programs, and funding to support our crumbling infrastructure will face future cuts in order to cover the costs.

"I have always been proud to support an R&D tax credit that is offset by closing the egregious corporate loopholes that have allowed some companies to make billions of dollars in annual profits even as they have paid no federal income taxes in the United States at all. Given that these kinds of commonsense offsets are available, I am extremely dismayed that Republicans would bring forward a permanent corporate tax cut with no offset while refusing to allow even one up-or-down vote on a 5-month extension of unemployment insurance benefits because of cost. Today's actions fly in the face of American families and American businesses who want to responsibly draw down our deficit, grow our economy and lead the world in innovation.

"Innovation, research and development and advanced manufacturing are the future of American business and America's economy. Massachusetts plays a large role as a top R&D hub, bringing together academic, industrial and business resources to provide cutting-edge progress in numerous industries. Making the R&D tax credit permanent would provide greater certainty to businesses in our area, and across America. But this is the wrong approach.

"I am very disappointed that this was brought to the House Floor in an irresponsible way."

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