Tech Industry Threatens 120,000 Job Loss if R&D Tax Credit Not Extended

By Donald Sears  |  Posted 2009-10-22

With the threat of 120,000 job losses, the industry trade group TechAmerica is pushing hard for an extension of the U.S. R&D tax credit. The credit brings $2 for every $1 spent back to the United States, claims the group.

Tax reform organizations have called the tax credit corporate welfare, and want Congress to let the credit lapse and expire, said an IDG news article. Since 1981 when the credit first began, it has consistently been extended at a cost to the United States of about $7 billion a year.

In a sensitive political environment with unemployment hovering near 10 percent, changes to health care, and regulatory reform of the financial and banking systems, the idea of more job loss is something most politicians want to avoid. The tax credit allows anywhere from 14 to 20 percent of R&D spending. When you extend the credits 10 years out, as IDG points out, you're talking about $68 billion.

Yet, it's not simply that the industry wants the same tax credit. It wants it increased to the highest levels at 20 percent of spending on R&D costs. Hard to know where Congress is going to go with this one, but combine the threat of more job loss and the argument that companies will move R&D overseas to countries that extend competitive credit, and it is not difficult to imagine the Obama administration and Congress extending the credit.

"We're talking about 120,000 jobs -- if anything, this is citizen welfare ... or employee welfare," Bartlett Cleland, senior director of policy for TechAmerica, said to IDG News. "These are not 120,000 sweep-the-floor jobs. These are highly compensated, well-educated U.S. employees."

TechAmerica has the backing of over 400 companies, including technology giants AT&T, Hewlett-Packard, Cisco Systems, Intel and Microsoft, and also advocates for increases in the H-1B visa program. Recent H-1B visa news finds more fraud and abuse in the program.

Rocket Fuel