Filed by KOSU News in US News.
December 10, 2009

Congress is considering extending a popular research and development tax credit that businesses say creates jobs. Legislation that just passed the House would extend the credit for another year. But many high-tech and pharmaceutical companies want the credit to be made permanent.

Consider this paradigm: Research and development drives innovation, which creates new products that are then sold, boosting the economy — or at least that’s the pitch made by people like Karen Myers, vice president of CA, a computer software company that relies on the federal tax breaks.

“We feel a real sense of urgency, because we understand that the clock is moving,” Myers says.

CA and hundreds of other firms sent a letter to Congress urging lawmakers to extend the credit, which is slated to expire at the end of the month. President Obama has called for its extension at least through next year. But Monica McGuire, senior policy director with the National Association of Manufacturers, wants the credit to be permanent.

“Companies need continuity to know that the credit’s going to exist at the time the R&D project is completed,” says McGuire. “In manufacturing, the typical R&D project could span five to 10 years.”

McGuire calls the R&D credit a jobs credit, noting that most of the money saved goes to pay employees. Manufacturing has shed more than 2 million jobs since the recession started. Still, even in a tough economy, the credit’s extension is a thorn for deficit hawks.

The measure now heads to the Senate, where debate on a health care overhaul could stall any action before the credit expires. Copyright 2009 KUNC-FM