Hundreds of U.S. Companies & Organizations Urge Congress to Strengthen and Make Permanent the R&D Tax Credit

October 21, 2009

Studies Show 70% of R&D Credit Goes Directly to Fund High-Skilled Job Growth; Validates Clear Need for Congress to Approve Permanent R&D Credit

WASHINGTON, Oct. 21 /PRNewswire-USNewswire/ -- More than 400 companies and business organizations from across the United States this week urged Congress to approve legislation to strengthen and make permanent the R&D tax credit before it expires on December 31, 2009.

Today, more than 70 percent of the benefits of the credit are attributable to the salaries of workers performing U.S. based research. President Barack Obama in recent months has called for the Credit to be made permanent.

In a letter sent to Congressional leadership and every member of the U.S. Congress, the companies wrote:

"The R&D tax credit encourages businesses of all sizes to undertake cutting-edge research projects in the United States. R&D is the very lifeblood of our knowledge economy. At a time when the American economy is weak, research and development across industry sectors makes it possible to create and maintain good, high-paying jobs at home and sharpens the ability of companies to compete in the global marketplace.

"Failure to enact a permanent and strengthened credit will have significant negative consequences for the U.S. economy and threatens investments we need to make in important areas of the economy such as renewable energy and energy efficiency technologies, health care, biotechnology, manufacturing processes, and information and communications technologies. Now is not the time to back away from the spirit of invention. Now is the time to embrace it wholeheartedly. Businesses need certainty to make long-term, high risk investments in the U.S. Furthermore, a strengthened credit will be more competitive with incentives provided by other countries that are vying for research investment dollars.

We respectfully urge you to approve legislation to strengthen and make permanent the R&D tax credit as soon as possible."

Earlier this year, President Obama said that the R&D Credit "returns $2 to the economy for every dollar we spend. Yet over the years we've allowed this credit to lapse or we've extended it year to year -- even just a few months at a time. Under my budget, this tax credit will no longer fall prey to the whims of politics and partisanship."

Companies and organizations signing the letter to Congress represent virtually every industry sector from manufacturing, health care, energy, technology, pharmaceuticals, telecommunications, aerospace, agriculture, biotechnology and more. A copy of the letter is available upon request and is available on the R&D Credit Coalition website at www.investinamericasfuture.org.

Facts About the R&D Credit:

    --  The R&D Credit, created by Congress in 1981, spurs the creation of
        U.S.-based innovation and economic activity.  It has fostered private
        sector R&D investment by companies of all sizes, helping to bring new,
        improved products and services to market.  The list of these is nearly
        endless: energy-efficient appliances, new vaccines, faster Internet and
        communications capabilities, safer transportation, and improved national
        security to name just a few.
    --  The R&D Credit is available only for certain qualified research
        performed in the U.S. and represents a "jobs" provision since
        approximately 70% or more of the benefits of the credit are attributable
        to salaries of workers performing U.S. based research.
    --  Only R&D performed in the U.S. may qualify for the R&D Credit.  The
        Credit stimulates innovation-producing R&D investments in all 50 states
        across nearly 18,000 small, medium and large companies, according to a
        report by Ernst & Young LLP.
    --  Innovation is an expensive, intricate and time-intensive enterprise that
        sparks a chain of investments in capital equipment, workers and
        spillover activities in every economic sector.  In effect, the R&D
        Credit stimulates short-term business investment with long-term benefits
        to our economy.
    --  When the R&D Credit was first created, the U.S. had the distinction of
        providing the most generous tax treatment for research among all OECD
        nations.  Today, that is not the case because the credit has been
        whittled away over the years due to our global competitors such as
        Canada, China, Japan and others that offer more aggressive R&D
        incentives. In fact, the U.S. has fallen out of the top 10 globally when
        measuring government incentives for private sector R&D and now measures
        17th.

    --  A permanent extension of the Credit would enhance its incentive value
        because companies could count on the Credit throughout the term of their
        multiyear R&D projects.  Uncertainty regarding the availability of the
        Credit automatically results in companies discounting its value.

About the R&D Credit Coalition

The R&D Credit Coalition is a group of more than 100 trade and professional associations along with small, medium and large companies that collectively represent millions of American workers engaged in U.S.-based research throughout major sectors of the U.S. economy, including aerospace, agriculture, biotechnology, chemicals, electronics, energy, information technology, manufacturing, medical technology, pharmaceuticals, software and telecommunications. To view the letter and learn more about the R&D Tax Credit, please visit: http://www.investinamericasfuture.org/

SOURCE R&D Credit Coalition