6/8/2009 3:10 PM
ET
(RTTNews) -
Senate Finance Committee members unveiled new legislation Monday that is intended to improve and simplify the research and development (R&D) tax credit.
Under current law, the R&D provision is composed of two credits - a traditional credit and the alternative simplified credit - both of which provide US firms a tax credit for incremental qualifying research expenses, such as labor and equipment costs.
The new legislation would allow the traditional credit to expire in 2010 and increase the alternative simplified credit, which is currently set at 14 percent of qualifying expenses, to 20 percent of qualifying expenses.
Companies would be given the option to claim the credit under current law in 2009 and 2010 in order to have time to adjust their accounting and effectively shift to the new, improved simplified credit.
"In this global economy, research and development by American companies is critical to our economic recovery and the long-term global competitiveness of our country," said committee Chairman Max Baucus, who sponsored the bill (D-MT).
"Our bill would make it easier to access the benefit, making the credit work even more effectively and continue to lead the way to new technologies, domestic job growth and, ultimately, a stronger US economy."
If enacted, the new legislation would extend the credit and provide an alternative simplified credit that addresses changes in business models and economic circumstances that currently prevent some businesses from getting full benefit of the credit.
"Research and development is clearly the lifeblood of not only Utah's, but the nation's economy," said Senator Orrin Hatch (R-UT), who sponsored the bill along with Baucus.
"And as we increase productivity through research and innovation, we will be in a better position to deal with our looming budgetary challenges. We need a strong and permanent research credit to encourage the kind of growth that will create these good jobs in Utah and elsewhere across the nation."
by RTT Staff Writer
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