Feeds

US Senate rubberstamps R&D tax credit

'Investment in the future'

5 things you didn’t know about cloud backup

The US Senate has approved extending an expired tax credit for business research and development, a spending incentive that many American tech companies have come to rely on.

The R&D credit was renewed late Tuesday after being attached to the Renewable Energy and Job Creation Act, which earlier was passed by the US House of Representatives in May. The House must now approve the Senate-modified version of the bill before it goes to the President to be signed or vetoed.

Lawmakers have authorized annual extension of the research credit since it began in the early 1980s. It has been allowed to expire a total of 13 times over the years, however, prompting many in the tech industry to call for making the research spending relief permanent.

The credit, presently left to lapse since December, can cover up to 20 per cent of certain R&D spending by tech, manufacturing, and pharmaceutical firms. Those companies claim the funding dry periods lure research jobs overseas to countries where R&D tax incentives are better committed.

An outspoken supporter of the tax credit is Intel chairman Craig Barrett. At his opening keynote at Intel's Developer Forum in August, Barrett had choice words for Washington for allowing the program to lapse.

"Our government refuses to recognize investment in the future is essential," he said.

Meanwhile, opponents argue the tax credit amounts to no less than a government subsidy for large businesses. This claim strikes a particular cord against current negative reactions to government bailouts of US financial institutions — worrying many in the tech industry that the credit will be placed under much closer scrutiny this time around.

The Information Technology Industry Council lobby group applauded the Senate approving the measure.

"Given the historic economic uncertainty facing our nation, we should be doing all we can to encourage innovation and spark job growth in the US," said Ralph Hellman, ITI veep of government relations in a statement. "It's time for the House to act and pass this legislation right away."

The Renewable Energy and Job Creation Act also provides about $18bn of tax incentives for investment in renewable energy, energy efficiency, and conservation. Riding along is extensions of approximately $27bn of expiring temporary tax provision.

If passed, the extension of R&D credit will be extended until December 31, 2009. The proposal is estimated to cost $8.76bn over 10 years. ®

The essential guide to IT transformation

More from The Register

next story
Britain's housing crisis: What are we going to do about it?
Rent control: Better than bombs at destroying housing
Top beak: UK privacy law may be reconsidered because of social media
Rise of Twitter etc creates 'enormous challenges'
GCHQ protesters stick it to British spooks ... by drinking urine
Activists told NOT to snap pics of staff at the concrete doughnut
What do you mean, I have to POST a PHYSICAL CHEQUE to get my gun licence?
Stop bitching about firearms fees - we need computerisation
Ex US cybersecurity czar guilty in child sex abuse website case
Health and Human Services IT security chief headed online to share vile images
We need less U.S. in our WWW – Euro digital chief Steelie Neelie
EC moves to shift status quo at Internet Governance Forum
Oz biz regulator discovers shared servers in EPIC FACEPALM
'Not aware' that one IP can hold more than one Website
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.