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| Wilson’s R&E; tax credit measure means more jobs for New Mexico |
March 21, 2001 |
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WASHINGTON, DC - Congresswoman Heather Wilson today introduced a tax credit bill described by scientists and technology leaders as “critical to New Mexico’s future.”
Wilson’s bill will make the research and experimentation (R&E;) tax credit permanent and strengthen incentives for private enterprises to conduct research that produces new processes, services, and products.
“By most measures, technology is more important to New Mexico than to any other state in the Union,” said Art Guenther, a University of New Mexico professor and President of the International Commission for Optics. “A state without technology is a state without a future.”
Guenther said that New Mexico is home to many high-tech start-up companies. “Heather’s bill will help nurture those companies and make sure more of them survive,” he said.
Walter A. von Riesemann, past president of the American Society of Engineers, agreed, adding that New Mexico “will never be engaged in heavy manufacturing. Our future is in technology companies.”
Riesemann said that technology companies range in size “from a handful to several thousand employees. Heather’s bill not only ensures the continued research by these businesses in New Mexico, but also will provide an incentive for future expansion.”
“Making the tax credit permanent will allow New Mexico companies to plan for the future,” Wilson said, “and will help create more and better jobs for New Mexico families.”
Wilson’s bill, the Private Sector Research and Development Investment Act of 2001, is co-sponsored by Democrats Joseph Crowley of New York, Rush Holt of New Jersey, and Darlene Hooley of Oregon, and Republicans Joe Skeen of New Mexico and Ron Paul of Texas. It is companion legislation to S515 introduced last week by New Mexico Senators Pete Domenici and Jeff Bingaman.
BILL SUMMARY
Private Sector Research and Development Investment Act of 2001
The legislation addresses two broad goals:
* establishes a permanent credit, and
* strengthens the formulation of the credit.
The bill enhances the credit received by all users of the regular Research Tax Credit. Thus, all companies benefitting from its current formulation are positively impacted. The changes in the credit are focused in the Alternative Credit and Basic Research Credit portions of the current credit legislation and represent significant enhancements to these options.
The bill addresses several concerns with the existing credit
* base period used for the regular credit, 1984-88, is out-dated.
* 50 percent rule precludes most startups from gaining full credit.
* basic research credit is very difficult to use.
alternative credit provides no strong incentive
* for increased research intensity.
In addition to permanence, the bill increases the maintenance level of the alternative credit to 4 percent. (Thus the bill meets the goals of some groups who favor simply permanence and 1% addition to the alternative credit.) In addition, the bill:
* establishes a 20 percent marginal rate for increased research intensity for users of the alternative credit,
* changes the base period for alternative credit users to an eight year average,
* eliminates the 50 percent rule for users of the alternative credit,
* encourages industrial partnerships with universities and national labs,
* expands definition of basic research to include all published work,
* enables basic research at FFRDCs to count toward the basic research credit,
* qualifies 100 percent of contract research accomplished at universities, national labs, and small businesses,
* encourages establishment of research-driven consortia by providing 20 percent credit for their research expenses,
* provides a phase-in of credit for start-up businesses, and,
* enables small businesses to count patent filing fees toward research expenses.
With these enhancements, the bill provides a permanent Research Tax Credit that addresses shortcomings in the current formulation of the credit. Furthermore, the bill meets the goals of constituents who favor only permanence or only permanence plus an increase in the alternative credit.
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