Tax

Research & Development Tax Credit

Tax Credits for Private-Sector Research Fuels Innovation and Creates High-Wage Jobs

The R&D tax credit is an effective tool for boosting innovation, competitiveness and creating high-wage employment, by;

• Creating a real incentive for public-private partnerships to fuel innovation and economic activity,
• Spurring innovation and start-up companies,
• Seeding surrounding areas with additional investment in not only scientific research but also indirect business benefits,
• Anchoring high-tech business investments near research facilities and,
• Enabling rapid time-to-market production when manufacturing plants are located close to research. 

But the U.S. R&D Tax Credit Has Been Among the Developed World’s Weakest.

While other countries around the world have significantly increased tax incentives for private-sector research investments, the United States has the weakest incentives of any developed country. The credit is currently set to expire in January 2012, discouraging American business from making the research investments in the U.S. that would boost innovation capacity and create high-wage jobs.

• The stop-and-start approach to R&D tax credit policy makes the credit far less effective than it could be as an incentive for greater private-sector research investment.
• In the 1990 America provided the most robust R&D tax credit among developed nations, but by 2009, the United States had fallen to 24th place.
• Congress has temporarily extended the credit 11 times since 1981 and has allowed it to expire four times.
• R&D stimulated by the tax credit is an important anchor for high-wage jobs, as high-tech manufacturing is often located near R&D facilities to speed innovation.
• The Administration’s FY 2012 budget includes a permanent R&D tax credit.

SIA Calls Upon Congress to Bolster U.S. Innovation Through the R&D Tax Credit

Congress must pass a seamless, strengthened and permanent U.S. R&D tax credit this year. 

Download the SIA Issue Paper here and visit the Document Library for additional studies and papers

Tax Credit

R&D Tax Credit Coalition, http://www.investinamericasfuture.org/