The National Association of Manufacturers (NAM) president, John Engler, on Tuesday urged Congress to renew the tax credit that encourages U.S. research and development (R&D), saying it is a necessary tool for maintaining the United States’ economic competitiveness.
Manufacturers have already made investment decisions in 2006 based on expectations that Congress would be renewing the R&D tax credit, said Engler in a speech at the Industrial Research Institute's annual conference.
Engler noted that although the R&D tax credit had expired, companies still invested in R&D because Congress usually renews the credit eventually, as in the past. Manufacturers who invested in R&D this year are planning on the credit to help them recover some of their losses.
Engler is hoping that Congress, when they return after the mid-term elections, will pass legislation that will strengthen the R&D credit, with the ultimate goal being a permanent tax credit that competes with tax-based incentives offered by U.S. global competitors.
"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,” said Engler.
If allowed to remain, the expired credit would mean a 9 percent increase in the overall manufacturing tax burden, he noted.
The R&D tax credit, originally enacted in 1981, has been extended 11 times but not since its last expiration in December 2005. The credit is offered for certain R&D expenses made only in the U.S., primarily for employees who perform qualified research activities.