Democratic Senator Tom Carper has introduced a bill that would make the research and development tax credit permanent. If the proposed legislation goes through, the R&D credit would not longer be temporary as it’s been since 1981, reports Tax-News.
But there are hurdles. It will have to pass the gauntlet of Senate Democrats and President Obama. Both have in the past looked askance at tax credit bills because of their expense.
Dubbed the COMPETE Act, Carper’s bill would “increase the credit rate to 25 percent of qualifying research investments.” It would also “open access to research tax incentives to new sectors of the economy, such as clinical research.” And, lastly, it would channel private funding toward small startups by allowing “investors in small research companies to claim the credit.”
Carper said his measure is in response to the current R&D credit that is “too small, too complicated, poorly targeted, and not accessible to some research companies, particularly smaller businesses.” The bill, he contends, would remedy that while encouraging innovation via private investments.
So far, a few prominent voices from trade associations have expressed their enthusiastic support of the COMPETE Act.
As cited by Tax-News, Jim Greenwood, president and CEO of The Biotechnology Industry Organization, the largest biotech trade organization in the country, said about the bill: “The R&D tax credit is an important incentive that encourages private investment in medical, agricultural and industrial biotechnology research. Such research not only produces groundbreaking new discoveries, but also creates millions of well-paying American jobs.”
This past May the House of Representatives pass a bill similar to COMPETE that ended up being put on ice due to opposition from President Obama and Senate Democrats. Their criticism of the bill centered on the estimated $155 billion in costs the government would incur over a 10-year period.