Cantwell Cosponsors Bill to Simplify and Make R&D Tax Credit Permanent
Bill introduced today would boost innovative American industries, economic growth
WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) cosponsored bipartisan legislation introduced by Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) to simplify and make permanent the Research and Development (R&D) Tax Credit, boosting innovative American industries and sparking economic and job growth here at home.
The Greater Research Opportunities with Tax Help (GROWTH) Act of 2011 would provide certainty to businesses, allowing them to count on the credit for long-term research projects and providing an incentive for them to make job-creating investments.
“In Washington state, we know that American innovation creates jobs,” Cantwell said. “That’s why I’ve continually worked to make the R&D tax credit permanent. This bipartisan bill would help give innovative American businesses the long-term certainty they need to invest, grow and hire in our communities. The R&D tax credit has helped create jobs in Washington state and across the nation. Making it permanent is a smart investment in our nation’s global competitiveness and economic growth.”
Under current law, the R&D provision can be calculated under two methods: a traditional credit and the alternative simplified credit, both of which provide U.S. firms a tax credit for incremental qualifying research expenses, such as labor and equipment costs. However, the traditional credit is considered outdated and has drawn criticism for the compliance burden it places on both taxpayers and the IRS.
The GROWTH Act would simplify and update the research credit by significantly raising the value of the alternative simplified credit from 14 percent to 20 percent of average qualifying research expenses and allowing the traditional credit to expire at the end of 2011. The Baucus-Hatch proposal supported by Cantwell would also make the simplified R&D credit permanent, giving businesses certainty and eliminating the threat of expiration. Since the credit was created in 1981, Congress has had to extend the credit 14 times, sometimes after the credit had already expired.
Cantwell has long supported tax credits for research and development. As a member of the Senate Finance Committee and Senate Small Business Committee, Cantwell has advocated important tax incentives to help small businesses invest in growth and create new jobs. In 2004, Cantwell championed a successful extension of the research and development tax credit and has since pushed for making the credit permanent.
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