Obama Calls for R&D Tax Credit Extension

President touts technology agenda as a centerpiece to economic recovery, drawing plaudits from often-critical IT groups for the proposal to extend the tax credit for research and development.
Posted September 9, 2010

Kenneth Corbin

President Obama won praise from some prominent tech-sector groups this week when he called for Congress to expand and make permanent the corporate tax credit for research and development, a longstanding policy priority for many IT firms.

In a campaign-style address on Wednesday in Parma, Ohio, Obama sharply criticized the economic proposals of congressional Republicans, singling out House Minority Leader John Boehner. Obama is calling on Congress to renew the bulk of the tax cuts enacted during the Bush administration, but to allow the reductions for the wealthiest Americans to expire.

Included in the president's tax package would be the R&D write-off, a proposal Obama argued would strengthen the domestic economy and nourish high-growth sectors of the economy such as IT.

"Instead of tax loopholes that incentivize investment in overseas jobs, I'm proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in Ohio, right here in the United States of America," Obama said on Wednesday.

Industry groups whose members have chafed at some administration policies they have viewed as hostile to business -- ranging from corporate tax rates to what they've perceived as an overzealous Federal Communications Commission -- lauded the president's proposal.

"The federal R&D tax credit isn't a Democratic or Republican issue, but rather an essential ingredient in our nation’s prospects for sustained economic growth," Dean Garfield, president and CEO of the Information Technology Industry Council (ITI), said in a statement.

"The R&D tax credit is a simple, common sense and pro-growth idea that highlights what's possible when policymakers work together to put America’s economic interests first."

Congress enacted the temporary R&D credit in 1981, extending it more than a dozen times as proposals to make it a permanent fixture of the tax code have stalled. Meanwhile, the credit has expired.

Tech businesses and advocacy groups have long lobbied for expanding the tax credit as an job-creating incentive to invest in domestic research efforts. The credit does not apply to foreign expenditures.

"A more generous R&D credit would make the U.S. more attractive as a global destination for investment, thus helping us retain the most desirable jobs today and enhancing our R&D capacity for tomorrow," Robert Atkinson, president and CEO of the Information Technology and Innovation Foundation, said in response to Obama's proposal.

The estimates that expanding the R&D tax credit from the previous rate of 14 percent to 20 percent would create 162,000 jobs, and generate $17 billion in additional tax revenue.

Kenneth Corbin is an associate editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

Tags: IT management, IT Jobs/Salary, IT spending, IT managers, IT budget

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