Tech's much-coveted R&D tax credit finally wins approval of both House and Senate but how to pay for the credit derails the effort before it can be sent to the White House. The R&D tax credit, which has expired, has blocked U.S. businesses from assuming the credit in their 2008 financial reporting results or in forecasting project costs.
Both the U.S. House and Senate have approved a two-year
renewal of the expired R&D tax credit that the IT industry
holds dear, but differences still remain before the bill can be sent to the
White House for President Bush's approval.
Following a 93-2 vote by the Senate Sept. 24 to renew the
tax credit as part of a $60 billion larger package of tax extension bills, the
House followed suit on Sept. 26 but made changes in the Senate version. The two chambers remain divided over how to
budget for the credit, which has expired 13 times since the tax credit was created
The House insists that tax relief should be paid for by
increasing revenues so as to not increase the budget deficit. The White House
says it opposes increasing taxes on others to extend the breaks.Unlike the Senate version, the House bill pays for the tax
breaks by imposing limits on oil industry tax breaks and tightening loopholes
allowing for overseas tax write-offs. The White House has signaled it will sign
the Senate version of the legislation but will veto any tax bill with the oil
industry offsets.Following the Sept. 26 House vote, House lawmakers
considered two alternatives, but the House withdrew the proposals when it became
clear Republicans would not support the legislation.
"They shouldn't have the arrogance of saying they
aren't even going to look at it," House Ways and Means Chairman Charles
Rangel, D-N.Y., said.The R&D tax credit, which most recently expired in
January, meanwhile remains hostage to the larger tax bill."We applaud House leaders in both parties for backing
a two-year extension, and call on them to work with their colleagues in the
Senate to swiftly resolve the details," Information Technology
Association of America President and CEO Phil Bond said in a statement.
"While the House and Senate debate budget process, the message received by
American companies is 'take your R&D elsewhere.'"In the nine months since the R&D tax credit expired,
U.S. businesses have been unable to assume the credit in their 2008 financial
reporting results or in forecasting project costs. ITAA has estimated that the
lapse of the R&D credit has placed at risk more than $13 billion and over
10,000 jobs.The tax credit can cover up to 20 percent of qualified