Drugmakers, chemical manufacturers, and other businesses are welcoming a May 20 vote by the House of Representatives to revive the tax credit for corporate research and development. The move would make the credit a permanent feature of the federal tax code.
The bill now goes to the Senate.
The R&D credit is one of the most popular of the dozens of temporary tax breaks that Congress routinely renews every year or two, often retroactively at the end of the session. The legislation (H.R. 880) approved by the House would reauthorize the R&D tax credit on a permanent basis, retroactive to Dec. 31, 2014. The measure would also increase the value of the credit from 14% to 20%.
“We strongly support making the R&D tax credit a permanent part of the tax code, not subject to yearly extensions, as it has played a vital role in supporting the search for cures and breakthrough medicines,” says James C. Greenwood, CEO of the Biotechnology Industry Organization (BIO), a trade association.
Many specialty chemical companies also rely on the R&D tax credit to help them remain competitive in the global marketplace, says William E. Allmond IV, a vice president at the Society of Chemical Manufacturers & Affiliates, an industry trade group. “One of our members told House staffers that 20% of their workforce is involved with R&D, and 8 to 10% of company sales are used for R&D,” Allmond says.
President Barack Obama has threatened to veto H.R. 880, arguing it would increase the federal deficit by more than $180 billion over a decade.