Letter from Rep. James Sensenbrenner (R-WI) to Rep. Bill Archer (R-TX). Re: Making permanent the R&D tax credit. Date: June 22, 1999. Source: House Science Committee.

June 22, 1999

The Honorable Bill Archer
Chairman
Committee on Ways and Means
U.S. House of Representatives
Washington, D.C. 20515

Dear Chairman,

I am writing to express my strong support for a permanent extension of the Research and Development Tax Credit (R&D Tax Credit) as proposed in H.R. 760 and H.R. 2086, the Networking and Information Technology Research and Development Act of 1999.

As you know, the R&D Tax Credit expires on June 30. Thus, I believe that it is critical that we act quickly to permanently extend this credit. The National Science Policy Study concluded that Congress should, "[e]xtend the R&D Tax credit on a permanent basis to provide a stable planning foundation for private firms, and in general, seek to implement tax policies that encourage capital formation." As federal discretionary spending for R&D is squeezed, incentives must be used to invigorate America’s investment in private sector innovation so that we can expand our global leadership in high-technology.

Annual extensions of this credit have created uncertainty in the research community and some argue that due to this uncertainty, private industry has failed to conduct long-term research projects. Nevertheless, the President and Vice-President continue to support another one year extension of the R&D tax credit as indicated in their FY 2000 budget. We must not continue to adopt the Administration’s short-sighted policy, but must take a more visionary approach.

Thank you for your consideration of this important policy change.

Sincerely,

 

JAMES SENSENBRENNER, JR.
Chairman

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Press Release of Rep. Sensenbrenner.
Re: Letter to Rep. Archer.
Date: June 22, 1999.
Source: House Science Committee.

SENSENBRENNER CONTINUES PERMANENT R&D
TAX CREDIT PUSH

WASHINGTON, D.C. – House Science Committee Chairman F. James Sensenbrenner, Jr., (R-WI) has written to House Ways and Means Chairman Bill Archer (R-TX) expressing strong support for a permanent research and development (R&D) tax credit and urging quick action in light of the credit’s expiration on June 30. Chairman Sensenbrenner’s letter mentioned two bills he has introduced that permanently extend the R&D credit, H.R. 760 and H.R. 2086, the Networking and Information Technology Research and Development Act (NITRD).

Referring to the R&D credit, Chairman Sensenbrenner wrote, "As federal discretionary spending for R&D is squeezed, incentives must be used to invigorate America’s investment in private sector innovation so that we can expand our global leadership in high-technology."

Chairman Sensenbrenner’s letter also quotes the Science Committee’s National Science Policy Study conclusion last year that Congress should, "[e]xtend the R&D Tax credit on a permanent basis to provide a stable planning foundation for private firms, and in general, seek to implement tax policies that encourage capital formation."

While the credit enjoys enormous support and has been extended repeatedly since first being enacted in 1981, the uncertainty and instability of a short-term credit have hindered efforts to fully realize the credit’s benefits. In fact, a Coopers & Lybrand study last year estimated a permanent R&D credit would result in an additional $41 billion in R&D investment between 1998 and 2010.

Chairman Sensenbrenner also announced the Science Committee would be holding a hearing next Thursday, July 1 on his legislation (NITRD) that permanently extends the R&D credit and nearly doubles federal information technology research over the next five years.

The full text of Chairman Sensenbrenner’s letter is attached.