Statement by Sen. Orrin Hatch (R-UT).
Re: Introduction of S __, a bill to make permanent the R&D tax credit, and to adjust the alternative incremental credit rates.
Date: March 22, 1999.
Source: Office of Sen. Orrin Hatch.

Permanent R&D Tax Credit Legislation

Introduction

I would like to thank you all for coming. I am delighted to join in this bipartisan effort today to introduce legislation to make the current R&E tax credit permanent.

Could our grandparents have even imagined that by the end of this century America's electricity would be delivered by nuclear power? That telephones would be used to send images as well as sound? That a microwave oven could have dinner on the table in minutes? Or that we would have aircraft capable of breaking the sound barrier?

Here we are in 1999, facing a new century, with possibilities beyond imagination.

Research and Development is essential to America's economic growth and prosperity.

Investing in R&D is an investment in the future of our country.

R&D increases labor productivity, leading to better paying jobs for American workers. A study conducted by Coopers & Lybrand projected that payroll increases as a result of gains in productivity stimulated by the R&D tax credit will exceed $60 billion over the next 12 years.

The R&E tax credit is very effective in stimulating more Research and Development.

The marginal of effect of one dollar of the R&E tax credit, stimulates approximately one dollar of additional R&D in the short-run and as much as two dollars in the long-run.

The R&E tax credit is good for my home state of Utah.

Research and Development has played a large part in the considerable economic expansion that has taken pace in Utah over the past decade.

Utah is home to many high-tech businesses. For example between Salt Lake and Provo lies the world's biggest stretch of software and computer engineering firms. This area was labeled "Software Valley" by Business Week and is second only to Silicon Valley as a thriving high tech area.

Approximately 80,000 workers in Utah are employees in the 1,400 plus technology based companies including many biotechnology and biomedical firms. R&D is the lifeblood of these firms and thousands of firms like them throughout the nation.

For the R&E Tax Credit to reach its full effectiveness, it must be made permanent.

The R&E tax credit has been extended nine times since 1981, and it is due to expire again at the end of June.

This on again-off again pattern makes the credit unreliable and severely handicaps its effectiveness in increasing R&D spending.

Research and development projects typically take a number of years and some may even last longer than a decade. Businesses need to know whether they can count on the credit being there as they make their long term plans and commit resources.

The past uncertainty surrounding the credit has induced business leaders to allocate significantly less to R&D. This is restricting the growth of our economy.

By making the R&E tax credit permanent, we will be guaranteeing American competitiveness, creating high paying jobs, stimulating economic growth, and supporting the advancements that have fueled our economy over the past century.

As the new millennium approaches this bill sends a strong message that we are committed to ensuring prosperity and a high standard of living for future generations of Americans.

I applaud my colleagues here today and the others who have cosponsored this legislation. I would hope that President Clinton and the congressional leadership will continue to see the importance of this research incentive and join us in working to make it permanent.