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Report: R & D Credit Bolsters Jobs And Economy

Over 70 percent of research expenditures under the R&D tax credit went to paying U.S. employee wages in 2005, according to an Ernst & Young report.

WASHINGTON -- The Research & Experimentation (R&D) Credit that expired on December 31, 2007 spurred over $6 billion in innovation-producing investments that funded wages for high-skilled employees across more than 17,700 small and large companies in the U.S., according to a report by Ernst & Young LLP.

In 2005, over 70 percent of the qualifying research expenditures under the credit went to paying U.S. employee wages and salaries, the report said.

β€œIn this time of economic uncertainty, Congress should act now to seamlessly strengthen and restore the R&D Credit,” said Monica McGuire, executive secretary of the R&D Credit Coalition. β€œSimply put, without this important incentive, our nation risks exporting high-skilled jobs to a wide range of countries all too willing to make up for our lack of R&D investment incentives.”

Additional findings include:

  • 30 percent of R&D Credit claims went to companies with fewer than 1,000 employees.
  • R&D Credit claims increased by 34 percent from 2003 to 2005.
  • 16 percent increase in the number of companies claiming the R&D Credit from 2003 to 2005.
  • On a per capita basis, Connecticut, Delaware, Massachusetts, Michigan, Washington and New Jersey reported the most R&D activity.
  • States with the most companies reporting R&D activity include California, Texas, Massachusetts, Florida, Pennsylvania, New York and Michigan.

To view the report, click here.

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