ITI congratulates and welcomes new Ways and Means Chairman Kevin Brady (R-Tex.), and we ask that he waste no time in rolling up his sleeves to make tax extenders the first order of business for the committee in 2015.
As the end of the year approaches, Congress faces a familiar task: passing the so-called tax extenders. This set of tax policies is critical to an assortment of businesses, community development organizations, and individual taxpayers who rely on the provisions for various purposes. For the tech industry, these policies include the research and development (R&D) credit, which is a key tool that spurs innovation and brings new products to market.
Chairman Brady had a long and solid history of support for working to improve US tax policy, including authoring and passing legislation in the House of Representatives in May, HR. 880, the American Research and Competitiveness Act, that would enhance the R&D credit and make it permanent. ITI strongly supported passage of HR 880 in a key vote letter sent to the House of Representatives earlier this year. We also are grateful to the Senate Finance Committee for its passage of a two-year package and to the House of Representatives for processing an assortment of bills to make various extenders permanent, including the R&D credit.
We hope that Ways and Means can find a path forward for passage of a robust package of multi-year extensions for all of these critical provisions. A multi-year bill would provide the economy a shot in the arm, and can provide a strong, much-needed bridge to comprehensive tax reform that will make the economy more prosperous in the decades to come.
At ITI, we have long argued in favor of a robust and predictable R&D credit because it returns an assortment of economic benefits. First, it spurs new investment, which multiplies across the economy. Second, it encourages the kind of risk taking that is necessary to experiment and innovate. Finally, it encourages companies to choose the U.S. as their incubator for developing the innovations that are transforming our world and making our lives better.
According to the White House and the Department of the Treasury, for every $1 invested by the U.S. government through the R&D credit, businesses invest $2 in additional research. The majority of these research dollars are used to create good paying jobs here in the United States. No wonder that strong record of job creation and innovation has resulted in strong bipartisan support for the credit.
Unfortunately, delayed action in recent years has diluted some of these benefits. Last year, Congress passed a tax extenders bill, and only then extended the provisions for two weeks while making them retroactive for the rest of 2014. As we move into November, it unfortunately seems as though we are staring down a similar fate for this year. While retroactive credits are better than no credits at all, the cycle of innovation is forward looking, and lawmakers need to catch up if they want to fully leverage tax extenders like the R&D credit to encourage new economic growth.