Legislation to bolster R&D tax credit.(On the Hill)

Bipartisan legislation has been introduced to streamline and make permanent the soon-to-expire research and development (R&D) tax credit. The bill would increase the Alternative Simplified Credit (ASC) from 14% to 20%, permanently extend the ASC and extend the traditional credit through 2010. The alternative credit was added to the tax code in 2006, allowing firms to claim a credit for 12% of qualified research expenses above 50% of its average over the previous three tax years. The Senate proposal would allow companies to use the traditional credit for 2009 and 2010. Afterward, it would expire. The bill has more than 50 cosponsors. The current R&D tax credit has been extended 13 times and is set to expire in 2009. The Obama Administration has proposed making the credit permanent, but in its current form rather than with the modifications, at an estimated $74.5 billion cost. The administration would pay for the change through taxes targeting multinational firms' overseas profits, which the business community has launched a massive lobbying effort to kill.

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