Issue Date: January 2, 2006
Industry seeks renewal of R&D tax break
The chemical industry is urging Congress to revive an important tax break by passing legislation early this year to retroactively extend and expand the R&D tax credit, which expired on Dec. 31, 2005. Both the Senate and the House have adopted measures that would renew the credit for one year, but lawmakers adjourned late last month without reconciling differences in their tax relief bills. About 16,000 companies in the U.S. are eligible for the credit, which costs the U.S. Treasury more than $6 billion a year. "Many foreign governments offer their manufacturers better R&D incentives than the U.S.," states American Chemistry Council President Jack N. Gerard. "Congress must act to ensure American competitiveness in an increasingly global environment." ACC says U.S. businesses will face negative financial consequences and some research projects currently under way may be jeopardized unless the tax credit is quickly reinstated. The credit, which partially offsets R&D costs incurred by companies conducting qualified research, was originally enacted as a temporary measure in 1981. It has since been extended 11 times but has never been made permanent. Congress has on occasion renewed the tax break after it expired and made the renewal retroactive, but strict accounting rules prohibit companies from assuming that will happen again.
- Chemical & Engineering News
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