Feeds

US Senate rubberstamps R&D tax credit

'Investment in the future'

The Essential Guide to IT Transformation

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
Just TWO climate committee MPs contradict IPCC: The two with SCIENCE degrees
'Greenhouse effect is real, but as for the rest of it ...'
'Blow it up': Plods pop round for chat with Commonwealth Games tweeter
You'd better not be talking about the council's housing plans
Arrr: Freetard-bothering Digital Economy Act tied up, thrown in the hold
Ministry of Fun confirms: Yes, we're busy doing nothing
Help yourself to anyone's photos FOR FREE, suggests UK.gov
Copyright law reforms will keep m'learned friends busy
Apple smacked with privacy sueball over Location Services
Class action launched on behalf of 100 million iPhone owners
Adam Afriyie MP: Smart meters are NOT so smart
Mega-costly gas 'n' 'leccy totting-up tech not worth it - Tory MP
Yes, Australia's government SHOULD store comms metadata
Not because it's a good idea but because it already operates the infrastructure and processes to do it well
prev story

Whitepapers

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.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.