The Department of Treasury on Friday released a new report, “Investing in U.S. Competitiveness: The Benefits of Enhancing the Research and Experimentation (R&E) Tax Credit,” with the full .pdf available here.

The report, developed to support the Obama Administration’s promotion of a permanent and stronger R&D tax credit, reaffirms the credit’s value to the U.S. economy, especially the manufacturing sector. In 2008, manufacturers claimed $5.78 billion worth of tax credits, or 69.3 percent of the total. The top three manufacturing sectors claiming the credit were:

  • Computer and electronic product manufacturing: 31.5 percent of the total claimed.
  • Chemical manufacturing: 25.9%
  • Transportation equipment manufacturing: 20.5%

The Administration proposes:

  • Making the R&E Credit Permanent. The President proposed in his FY 2012 Budget to permanently extend the R&E credit so that businesses can make investments in research projects, confident that they can benefit from the credit in the future. The President has placed a high priority on making the credit permanent, proposing this in his previous two budgets as well.
  • Increasing the Alternative Simplified Credit Rate by More than 20 Percent. While the President has previously proposed making the R&E credit permanent, the Administration now also proposes to increase the rate of the alternative simplified credit from 14 percent to 17 percent. This will provide a larger incentive to increase research and simplify the credit by encouraging firms to switch to the alternative simplified tax credit base. The Administration’s proposal maintains the current regular research credit to prevent disruption to firms that choose to continue claiming the regular research credit.

Secretary Geithner gave brief remarks Friday that mentioned the tax credit when he visited NanoMech, a nanotech-products manufacturer in Northwestern Arkansas.

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