NAM: Renewing Expired R&D Credit a Priority for Co
Washngton, DC, October 11, 2006--The President of the National Association of Manufacturers (NAM) today pressed Congress to renew the tax credit that encourages U.S. research and development, calling it a critical tool for maintaining the United States’ economic competitiveness.
Speaking to the annual conference of the Industrial Research Institute, NAM President John Engler said manufacturers had made investment decisions this year based on the reasonable expectation that Congress would renew the R&D tax credit.
“Companies have invested in R&D this year assuming the credit would recover some of their expenses,” Engler said. “They knew it had expired, but this has happened before, and Congress usually gets around to renewing it.
“We’re running out of time. Congress will return to Washington after the elections, when we hope it will renew the R&D credit. But if Congress goes homes without acting, leaving a lump of coal in the stockings of business instead of the promised incentive, it will be a conspicuous betrayal of trust that will undermine the credit’s incentive value.”
Engler said that the R&D tax credit represented the centerpiece of an innovation-focused agenda that Congress should make a priority when it reconvenes in a lame-duck session. Other priorities include increased federal spending on research and development and expansion of visa programs that permit U.S. businesses to attract highly skilled foreign employees.
Originally enacted in 1981, the R&D tax credit has been extended 11 times but not since its last expiration in December 2005. The credit is available for certain research and development expenditures made only in the U.S., primarily spending on employees who perform qualified research activities.
Engler urged Congress to pass legislation that includes a seamless extension and strengthening of the R&D credit. The ultimate goal must be a permanent tax credit that competes with the tax-based incentives promoted by U.S. global competitors, he said.
“Not only must we remind lawmakers that manufacturers account for more than two-thirds of all industrial R&D in the country,” Engler told the group of top business and research leaders. “We also must remind them how critical that R&D spending is for manufacturers who are attempting to compete in this global economy.”
If allowed to stand, the expired credit would account for a 9 percent increase in the overall manufacturing tax burden, he noted.
Engler also highlighted the NAM’s strong support for pending appropriations measures that boost spending on basic research, especially in the physical sciences. The increased investment was part of the NAM’s recommendations developed in conjunction with last December’s National Summit on Competitiveness.
The summit also called for reforms in the H1-B visa and Employment-Based entry programs that allow U.S. employers to hire the highly trained scientists, educators, engineers and medical professionals who bolster the country’s manufacturing economy.
“The current system of arbitrary and insufficient visa caps is a real impediment to U.S. competitiveness,” Engler said. “In fact, the World Economic Forum’s new Global Competitiveness Index – in which the United States slipped from first to sixth place this year – cautioned that America’s dwindling talent pool could pose a serious economic problem in the future.”
As a legislative response, the NAM supports the “SKIL Bill” (Securing Knowledge Innovation and Leadership). The measure is S. 2691, sponsored by Sen. John Cornyn (R-TX) and H.R. 5744, sponsored by Rep. John Shadegg (R-AZ).
