November 14,2006

Grassley, Baucus Urge Renewal of the Research and Development Tax Credit

Senator Grassley’s statement:

“I appreciate the frustration of employers who can’t rely on the certainty of an extendedresearch and development tax credit. These are employers who – thanks to politics and through nofault of their own – are limited in their ability to plan for the future, to make hiring decisions, andto make investments that will create jobs.

“The research and development tax credit is overwhelmingly popular in the House andSenate. For political reasons, businesses have been in limbo on these provisions. We’re talking aboutalmost one year of limbo now, and maybe a few more weeks. A lot of businesses, in good faith,relied on my assurances. They relied on the assurances of the congressional leadership, made in Mayof this year. These business people were assured that these extenders would be done. In my state,Rockwell Collins, of Cedar Rapids, is taking a financial hit because of our dilly-dallying. And it’snot just management that cares. Iowa is a manufacturing state and we’re proud of our “R and D.”Thousands of Iowa employees have the right to ask why this popular provision is being delayed.Some of them could ask why something this popular is a hostage to be cavalierly shot. They couldask me if political threats are more important than a tax incentive to create investment, jobs, andinnovation.

“When they ask me these questions, I could blame the Senate Democratic leadership forthwarting Republican efforts to pass death tax relief and using the R and D tax credit as a hostageor bartering chip. Certainly, there’s truth to that defense. Blaming the other side is fair politicaldiscourse and everyone does it. But employers and workers just want to know the bottom line. Weowe these companies and workers a ticket out of limbo. The election is over. The political outcomeis certain. We need to give taxpayers the same certainty about tax provisions that affect their bottomline. I hope the House and Senate use the lame duck session to redeem themselves from lamenessand pass a solid extenders package including the R and D tax credit. I’m going to work very hardto persuade the Republican and Democratic leadership in both bodies to recognize these basic facts and pass a seamless extension of the R and D credit.”

Senator Baucus’ statement:

“Sixteen thousand American businesses use the research and development tax credit – or theywould, if Congress would do the right thing and renew it. Already this year, many companies havehad to restate their earnings, because the tax cut they depended on to help finance their research anddevelopment efforts simply wasn’t there. This has been a failure of the Congress to supportAmerican jobs, to support American business, and to support the innovation that keeps America’seconomy first in the world. If Congress is serious about creating more good-paying jobs forAmericans right here at home, if Congress is serious about keeping American businesses at theforefront of world markets, Congress needs to act. And we must do better by American workers andbusinesses in the future. It’s time to stop the annual exercise that threatens the research anddevelopment tax credit. It should be updated. It should be streamlined. It should be made permanent.”