Saturday, September 20th, 2014

The Obameter

Make permanent the Research & Development tax credit


The Research & Development tax credit and the renewable energy production tax credit are intended to spur innovation in the private sector, but the tax credits have expiration dates under current law. Obama would make them permanent.


Updates

Tax credits extended under fiscal cliff deal

The compromise that President Barack Obama and Congress struck on Jan. 1, 2013, to avert drastic federal spending cuts and tax increases known as the fiscal cliff also included some smaller tax perks.

The Research & Development tax credit, which expired in 2011, was made retroactive for 2012 and extended through 2013. The fiscal cliff bill, formally known as H.R. 8, also extends the wind power production tax credit, which gives a tax break of 2.2 cents for every kilowatt-hour of energy produced by wind. It was set to expire at the end of 2012 and will now include projects that complete construction in 2013.

Obama wants both of these credits to become permanent, and the fiscal cliff deal falls short of that. But it keeps them alive a little longer. We rate this a Compromise.

Sources:

Text of H.R. 8 (fiscal cliff bill), Jan. 1, 2013
   
House Republican Conference, summary of H.R. 8, Jan. 1, 2013
   
Washington Post, "Wonkbook: Everything you need to know about the fiscal cliff deal," Jan. 1, 2013

The Hill, "Tech groups laud R&D tax credit extension in 'fiscal cliff' deal,” Jan. 2, 2013

Business Journal, "Expired R&D tax credit refreshed, extended,” Jan. 3, 2013

Forbes, "Wind Power Tax Credit Survives Fiscal Cliff Deal,” Jan. 2, 2013

Tax compromise extends tax credits

President Barack Obama promised to make the research and development tax credit permanent, as well as the renewable energy production tax credit. He hasn't quite achieved that, but he did sign laws that extended the credits.

As we reported previously, the American Recovery and Reinvestment Act -- better known as the economic stimulus -- extended the energy credit through 2012.

In December 2010, Obama and Senate Republicans negotiated broad tax compromise legislation that extended most of the Bush-era tax cuts another two years. As part of that, the research and development tax credit was extended through the end of 2011.

This falls short of Obama's promise, but it does give him more time to negotiate permanent enactment. We leave the rating at In the Works.

Sources:

Thomas, HR 4583

U.S. Senate Finance Committee, S.A.4753: The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010

The American Wind Energy Association, fact sheet on the renewable energy production tax credit, accessed Jan. 11, 2011

The White House, Fact Sheet on the Framework Agreement on Middle Class Tax Cuts and Unemployment Insurance, Dec. 7, 2010

The White House, Press Conference by the President, Dec. 7, 2010

Obama takes steps in making tax credits permanent

 
Inventors — and the corporations that employ them — may not have to lobby year after year for tax perks much longer.
 
On the campaign trail, President Barack Obama promised to extend tax credits for research and development.
 
Already, several steps have been taken to accomplish his goal.
 
First, Obama included $75 billion in his fiscal year 2010 budget to make the credit permanent.
 
And at least two bills have been introduced this year that would accomplish his goal.
 
One bill, authored by Reps. John Boccieri and Chris Lee, would make the research and development tax credit permanent, and offer a bonus credits to companies who manufacture most of their products in the United States. The bill was introduced on March 17, 2009, but so far, the bill hasn't seen any action in the House of Representatives.
 
Sens. Max Baucus and Orrin Hatch introduced similar legislation on June 8, 2009, but the Senate has not taken up that bill either.
 
Meanwhile, Obama has made progress on his promise about the renewable energy production tax credit. The stimulus bill signed in February 2009 extended the credit until 2012. But he's not yet achieved his goal of making credit permanent.
 
So, there's progress on both aspects of this promise. We rate it In the Works.

Sources:

The White House, Fact Sheet: Investing in Our Clean Energy Future , accessed Sept. 4, 2009

The House of Representative's Democratic Caucus, press release on research and development tax credit bill, accessed Sept. 4, 2009

Sen. Orrin Hatch, press release on research and development tax credit bill , accessed Sept. 4, 2009

The American Wind Energy Association, fact sheet on the renewable energy production tax credit, accessed Sept. 4, 2009