U.S. President Barack Obama has urged Congress to make permanent a research and development (R&D) tax credit for U.S. companies as part of an effort to reinvigorate the national economy. The plan would enlarge the tax credit from about $7 billion per year to about $10 billion per year over the next 10 years. In addition, the formula businesses use to calculate their credit would be reconfigured so that firms using a streamlined formula will receive a tax credit of 17 percent for R&D spending, rather than 14 percent.
The R&D credit has garnered the support of technology groups. "The R&D credit is one of the strongest tools our nation has to spur the cutting-edge innovation that will drive the creation of more American jobs," says TechNet CEO Rey Ramsey. Evelyn Hirt, president of the Institute of Electrical and Electronics Engineers-USA, says the credit would provide companies with economic predictability. "The technologies U.S. companies develop or improve will ultimately have a positive effect on U.S. competitiveness, the growth of small businesses, and job creation," Hirt says.
The permanent R&D credit would replace the temporary credit, which expired last December.
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