Posted by Jeffrey M. Feingold on 01.22.12
A recent study conducted by the R&D Credit Coalition concluded that the U.S. Federal R&D tax credit increases research spending and creates jobs in the U.S.. The report also suggested that the effectiveness of the credit would be more significant if the government strengthens the credit and makes it a permanent part of U.S. Tax Code. Among the findings of the study are:
The current credit is estimated to increase annual private research spending by $10-Billion in the short-term and by $22-Billion in the long-term; the benefit being substantially greater in comparison to the credit's approximately $8-Billion cost against annual federal revenue.
It is estimated that, by increasing the alternative simplified credit (ASC) from a net benefit of 7% to 10%, the annual private research spending in the U.S. would increase by an additional $5 Billion to $15 Billion in the short-term, and that long-term spending would increase to about $33 Billion.
The report also states that research-related jobs would increase in the U.S. by about 130,000 in the near-term and by another 300,000 in the long-term as a result of extending the credit and strengthening the alternative simplified credit.
The coalition's report submits that the research and development tax credit encourages businesses to make long-term investments in technology that ultimately creates new jobs, boosting the economy and encouraging further innovation development.