Issue Date: December 20, 2010
Tax Deal Benefits R&D
The Senate last week easily passed President Barack Obama’s compromise tax deal with congressional Republicans, reviving an expired credit for R&D activities conducted in the U.S. and extending for another year key incentives for the renewable energy and ethanol industries.
The $858 billion package (H.R. 4853), which was overwhelmingly approved by the Senate on Dec. 15 by a vote of 81 to 19, was being debated in the House of Representatives at C&EN’s press time. Democratic leaders said they expected the bill to ultimately pass and become law.
“Making sure that middle-class taxes don’t go up is absolutely essential if we want to continue to expand and grow the economy and create jobs,” House Majority Leader Steny Hoyer (D-Md.) told reporters during a midweek Capitol Hill briefing.
The wide-ranging package includes a number of items that business lobbyists have pushed for, such as a retroactive two-year extension of the 20% tax credit for R&D expenditures, which lapsed at the end of 2009. Renewing the credit “permits our members, small and medium-size batch chemical companies, to plan for R&D investments more efficiently,” says Lawrence D. Sloan, president of the Society of Chemical Manufacturers & Affiliates, an industry trade association.
“By being able to take advantage of the tax credit, companies are more willing to invest in this area, which furthers their global competitiveness and helps retain and create new jobs, a particularly important issue in today’s economy,” Sloan says.
The measure also extends for one year a grant program created by the 2009 stimulus bill for wind, solar, geothermal, and other renewable power developers. They would receive grants worth 30% of the cost of an energy project. Hydropower and some biomass projects would receive half that amount.
In addition, ethanol tax credits would be extended through 2011 at the current 45-cents-per-gal level, as would the 54-cents-per-gal tariff on imported ethanol and the 22.67-cents-per-gal tariff on ethyl tert-butyl ether. Biodiesel and renewable diesel would continue to receive a $1.00-per-gal production tax credit.
The legislation also includes several energy efficiency tax credits ranging from home energy efficiency projects to a tax credit for manufacturers of energy-efficient appliances.
Business groups also support the measure because it would extend for two years all of the Bush-era income tax rate cuts that are scheduled to expire on Jan. 1, 2011. More than 70% of U.S. manufacturers pay taxes at the individual rate.
“This bill will go a long way toward restoring the certainty that employers have been seeking in order to expand and put more Americans back to work,” says R. Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce.
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