Tech Group Wants Permanent R&D Tax Credit

AeA, the nation’s largest high-tech trade association, joined the R&D Credit Coalition last week to urge key Congressional leaders to permanently extend the research and development (R&D) tax credit. The temporary R&D tax credit, which has been extended ten times since its inception in 1981, expires next year on June 30.

The Coalition sent a letter to the chairman and ranking member of the House Committee on Ways and Means and the chairman and ranking member of Senate Finance Committee signed by 52 associations and 286 individual companies representing nearly every research-intensive business segment and state in the U.S.

In addition to a permanent extension of the tax credit, the group also supports an increase to the Alternative Incremental Research Credit rates and a new elective alternative credit formula to allow “all companies to equally benefit from the research credit.”

William T. Archey, president and CEO of the Washington-based AeA underscored the importance of the R&D tax credit to the nations high-tech sector.

“Continued growth of our economy is inextricably tied to the ability of companies to make a sustained commitment to long-term research,” said Archey. “It is critical that the White House and Congress, while considering tax legislation to stimulate growth in the economy, take the opportunity to revive and extend a proven incentive for U.S. companies to increase their investment in U.S.-based research and development. Doing so will encourage the creation of jobs and lay a foundation for long-term economic expansion in the U.S.”

Archey added, “Failing to enact a permanent extension of the R&D credit before Congress adjourns this year could significantly disrupt R&D planning for 2004. The resulting uncertainty in the business community can only reduce the economic benefits that all U.S. businesses and workers receive as a result of the credit.”

AeA represents more than 3,000 companies with 1.8 million employees.