R&D tax credits knocked out in Congressional punch-up
'This is the absolute worst that could happen'
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Tech vendors had another reason to cry into their beer today, as it emerged that the congressional logjam that has scuppered the White House’s $700bn bank bailout has also iced the restoration of their beloved R&D tax credit.
Similar breaks on the development of renewable energies have also run into the ground, as Congress spends the Jewish New Year recess thinking of who it will blame for its decision to vote against the Paulson plan to underpin a sinking Wall Street.
The R&D tax credit can cover up to 20 per cent of certain R&D spending by high tech firms, but expired in December - tech bigwigs have been screaming at Washington to get their fingers out and renew the scheme ever since. Craig Barrett slammed polls last month saying Washington refused to recognize that “investment in the future is essential".
Clearly someone heard Barrett in Washington and the credit was duly restored in a Senate vote last week. Tax breaks for the development of solar and wind energy schemes were also given the go ahead, only needing agreement from the House of Representatives before being signed off by the Lame Duck in Chief.
But the House of Representatives – who, unlike the Senate, all face re-election next month – are refusing to play ball, with some demanding that the benefits for tech vendors are offset by a little pain somewhere else, in the form of increased tax revenues elsewhere.
Throw in the excitement amongst members that they had an opportunity to bring the US financial system - and by extension the world’s - to its knees by torpedoing the Paulson plan, and unsurprisingly the tax breaks bill fell right to the bottom of the agenda.
The impasse doesn’t mean only high tech firms take it in the wallet - a range of tax breaks affecting individuals and businesses are still up in the air. Apart from causing tax-planning problems for everyone from school teachers to Craig Barrett, the massive US tax industry – from the IRS to software vendors to tax accountants - is just a few months from the end of the tax year with no idea what breaks will, or won’t, be doled out.
According to the Wall Street Journal, Ralph Hellmann at tech lobby group the Information Technology Industry Council said: "This is the absolute worst thing you could do in this current economic climate."
Well, there might be worse things. Like perhaps ignoring market oversight for years then throwing a hissy fit and flouncing off on holiday when it finally emerges what looked like a booming economy was built on something less stable than sand. ®
COMMENTS
@Grolomon Sundy
I thought that it was with the trust of the Chinese government these days, since they now finance America.
Also, the GDP for the Euro finally exceeded the Dollar last march according to Reuters, so the Euro seems now to be the worlds largest economy anyway - http://www.reuters.com/article/idUSL1491971920080314
It also has a lot less debt.
As to whether any of the posts on this board make anyone sound gay, I'm not sure it matters, however tho doth protest too much, methinks.
Mines the pink one with a pocket full of euros.
Finally!
An article which mentions the glaring need for oversight. The US government has been dropping controls in many areas for years, probably due to the large donations to the campaigns of our elected representatives from the big business lobbyists. A bit of a pity that stock market participants abroad decided to invest in certain immoral US loan companies. I'm sure that more research will be done by those wanting to buy US stocks in the future though.
A stealth vote up next?
If those Reps don't think the vote tally for a criminal bailout that passes will get paraded out to the voters for this election, they're dreamin'. I predict though that they'll decide to do it via sealed vote in order to hide who did what from the voters. That may backfire though, as we do have the list of who voted the first time, and that may just have to do if they try to hide the nasty business. Their only hope is to find some way to stall their financial "crisis" until after the election, then pass it after it's too late to affect their reelections. They can bluster about people losing their jobs, but they'd better look out for their own job which is clearly on the line here. Both Republican and Democrat voters are pissed off about this, and frankly, have been waiting patiently for these particular chickens to come home to roost. If every Rep who votes for a bailout loses their job in November it'd be just desserts, though that's probably a little too much to hope for.
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