The Harm of an Expired Tax Credit

From the R&D Credit Coalition:

WASHINGTON, DC – June 3, 2008 – The Research & Experimentation (R&D) Credit, allowed to expire by the U.S. Congress on December 31, 2007, has spurred more than $6 billion in innovation-producing investments that have funded wages for high-skilled employees across more than 17,700 small and large companies in all 50 states, according to a new report by Ernst & Young LLP and released today by the R&D Credit Coalition.

In 2005, more than 70 percent of the qualifying research expenditures under the R&D Credit went to paying U.S. employee wages and salaries according to the report titled, “Supporting Innovation and Economic Growth.”

“The positive economic impact of the R&D Credit is wide and vast. The fact is that 70 percent of the benefit of this credit goes directly to pay American workers developing the products and markets of tomorrow,” said Monica McGuire, executive secretary of the R&D Credit Coalition. “For 25 years, the R&D Credit has helped to foster the domestic growth of highly-skilled jobs. The expiration of this key tool for American job growth is universally felt.”
The full study is available here. Also, coverage from WebCPA. The San Antonio Business Journal found the Texas angle, “Texas second in corporate R&D activity, report shows.”

The report, by Ernst & Young LLP, shows that 2,641 Texas companies reported R&D activity in 2005, the most recent year for which data was available, representing 5.7 percent of total U.S. R&D. California topped the list with 5,741 companies, while Massachusetts was third with 2,478 companies

We’ve put the state rankings in a separate .pdf page: rankings-of-states-business-rd. C’mon reporters, localize!

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