Summary of Bills to Extend or Make Permanent
the R&D Tax Credit
in the 106th Congress
This page summarizes the following bills:
| This page was last updated on February 5, 2000. |
Introduction
The R&D Tax Credit has become a perennial issue in Congress. The credit was first enacted in 1981 as a temporary measure, and has been extended on eight occasions since then. Under the current scheme, corporations receive a 20% tax credit for qualified research and development expenditures (QREs) in excess of a calculated base amount.
The Congress passed, and the President signed, a bill which extends the R&D tax credit for another five years at the end of 1999. The bill was a huge collection of appropriations bills. However, efforts to make the credit permanent continue.
Several bills introduced in the 106th Congress (including S 195, S 680, HR 760, HR 835, S 951, HR 1682, and S 1803) would make the credit a permanent feature of the Internal Revenue Code. Attempts to make it permanent in the past failed.
The R&D tax credit was first enacted in 1981. It was given a four and one half year duration. Since then, it was extended in 1986, 1988, 1991, 1993, 1996, 1997, 1998, and 1999 for periods of three, one, one, one, one half, three, 11/12s, and 5 years, respectively. It lapsed briefly in 1995.
In 1981, the tax credit was 25%. However, it was reduced to 20% in 1986, and has remained there since. In 1996 the Alternative Incremental Research Credit (AIRC) was added, providing electing corporations the opportunity to claim credit at reduced rates for QREs exceeding lower base amounts.
The companion bills, S 195 (Boxer) and HR 760 (Sensenbrenner), would merely permanently extend the tax credit (by deleting subsection (h) of Section 41 of the IRC of 1986). Also, HR 2086 (Sensenbrenner) is a broad high-tech bill which also includes the language of HR 760.
S 680 (Hatch-Baucus) and HR 835 (Johnson) would both permanently extend the tax credit, and raise the alternative incremental credit rates. Two more recent entries are S 951 (Domenici) and HR 1682 (Wilson). These companion bills would make permanent the credit, change the alternative incremental credit, expand the credit to support collaborative research and development, and make it easier for small and start-up businesses to access the credit. Finally, S 1803 would permanently extend the tax credit, and increase the AIRC rates. (It is very similar to S 680 and HR 835; however, it also extends coverage to Puerto Rico.)
HR 2488, the Financial Freedom Act, is a massive tax bill, that also includes a temporary extension of the R&D tax credit.Tax Relief Extension Act of 1999, (S. 1792)
About one third of the House is cosponsoring HR 835, while about one third of the Senate is cosponsoring S 680.
USC Citation. __ USC § 41
Statutory Citations. Section 221 of the Economic Recovery
Tax Act of 1981 (PL 97-34); Section 271(c)(1) of the Deficit Reduction Act of
1984 (PL 98-368), Section 231(d) of the Tax Reform Act of 1986 (PL 99-514),
(PL100-647), (PL 101-239), (PL 101-508), (PL 102-227), (PL 102-66), (PL
104-188), (105-34), (105-277).
| Summary of
R&D Tax Credit Bills (as of 11/15/99) |
|||||
| Bill | Sponsor | Total Sponsors |
Permanent Extension |
Increase AIRC |
Comments |
| S 195 | Boxer | 3 | yes | no | These are companion bills. |
| HR 760 | Sensenbrenner | 25 | yes | no | |
| HR 835 | Johnson | 163 | yes | yes | These are companion bills. |
| S 680 | Hatch | 47 | yes | yes | |
| S 951 | Domenici | 9 | yes | yes | These are companion bills. |
| HR 1682 | Wilson | 11 | yes | yes | |
| HR 2086 | Sensenbrenner | 46 | yes | no | A broad high tech bill |
| HR 2488 | Archer | 9 | no (5 yrs.) | yes | An omnibus tax reform bill. |
| S 1429 | Roth | 9 | no | An omnibus tax reform bill. | |
| S 1792 | Roth | 1 | |||
| S 1803 | Robb | 12 | yes | yes | |
|
|
S 195
S 195, an untitled bill to make permanent the research and development tax credit.
Sponsors. Barbara Boxer (D-CA). Cosponsor. John Ashcroft (R-MO) and Ted Kennedy (D-MA).
Summary. This bill is short and simple. It would make permanent the research and development tax credit. Specifically, Section 41 of the Internal Revenue Code of 1986, pertaining to credit for increasing research activities, would be amended by striking subsection (h).
Sen. Boxer described her bill in a January 19 statement in the Congressional Record: "Also included is legislation to make the Research and Experimentation Tax Credit permanent. Virtually all economists agree that the R&E Tax Credit is a valuable incentive that encourages high-tech companies to develop innovative products. In the past, however, the credit has been enacted intermittently and only for very limited periods of time. The on-again, off-again nature of the R&E Tax Credit makes it very difficult for companies to plan long-term research projects. It should be made permanent."
Status. This bill was introduced on January 19, 1999. No action has been taken.
Legislative History with Links to Related Materials.
HR 760
HR 760, an untitled bill to make permanent the research and development tax credit.
Sponsor. James Sensenbrenner (R-WI). Cosponsors: George Brown (D-CA), Dana Rohrabacker (R-CA), Mark Green (R-WI), and Vernon Ehlers (R-MI), Sherwood Boehlert (R-NY), Randy Cunningham (R-CA), Ronnie Shows (D-MS), Jerry Costello (D-IL), Jack Metcalf (R-WA), Eddie Johnson (D-TX), Bill McCollum (R-FL), Martin Frost (D-TX), Richard Burr (R-NC), Henry Waxman (D-CA), Maurice Hinchey (D-NY), Pete Sessions (R-TX), George Nethercutt (R-WA), Charles Gonzalez (D-TX), Connie Morella (R-MD), John Hostettler (R-IN), Gary Miller (R-CA), David Minge (D-MN), Carolyn Kilpatrick (D-MI), and Michael Capuano (D-MA).
Summary. This is the House version of S 195. See above.
Status. This bill was introduced on January 19, 1999. No action has been taken.
Legislative History with Links to Related Materials.
HR 835
HR 835, an untitled bill to permanently extend the research credit and to adjust the alternative incremental credit rates.
Sponsor. Nancy Johnson (R-CT). Cosponsors. Thomas Allen (D-ME), Brian Baird (D-WA), John Baldacci (D-ME), Xaviera Becarra (D-CA), Rod Blagojevich (D-IL), Sherwood Boehlert (R-NY), David Bonoir (D-MI), Dave Camp (R-MI), Tom Campbell (R-CA), Benjamin Cardin (D-MD), Saxby Chambliss (R-GA), Merrill Cook (R-UT), Chris Cox (R-CA), William Coyne (D-PA), Phil Crane (R-IL), Randy Cunningham (R-CA), Jim Davis (D-FL), Diana DeGette (D-CO), Rosa DeLauro (D-CT), Peter Deutsch (D-FL), Julian Dixon (D-CA), Calvin Dooley (D-CA), David Dreier (R-CA), Jennifer Dunn (R-WA), Vernon Ehlers (R-MI), Robert Ehrlich (R-MD), Phil English (R-PA), Anna Eshoo (D-CA), Bob Etheridge (D-NC), Eni Faleomavaega (Del. AS), Sam Farr (D-CA), Bob Filner (D-CA), Mark Foley (R-FL), Rodney Frelinghuysen (R-NJ), Martin Frost (D-TX), Sam Gejdenson (D-CT), Hall, Wally Herger (R-CA), Rush Holt (D-NJ), Darlene Hooley (D-OR), Amo Houghton (R-NY), Kenny Hulshof (R-MO), Jay Inslee (D-WA), William Jefferson (D-LA), Eddie Johnson (D-TX), Sam Johnson (R-TX), Ron Kind (D-WI), Jim Kolbe (R-AZ), Steven Kuykendall (R-CA), John Larson (D-CT), John Lewis (D-GA), Ron Lewis (R-KY), Zoe Lofgren (D-CA), Sander Levin (D-MI), Frank Lucas (R-OK), William Luther (D-MN), Carolyn Maloney (D-NY), James Maloney (D-CT), Edward Markey (D-MA), Bob Matsui (D-CA), Karen McCarthy (D-MO), Jim McDermott (D-WA), Scott McInnis (R-CO), Howard McKeon (R-CA), Jack Metcalf (R-WA), James Moran (D-VA), Connie Morella (R-MD), Richard Neal (D-MA), Robert Ney (R-OH), Frank Pallone (D-NJ), Nancy Pelosi (D-CA), John Peterson (R-PA), Chip Pickering (R-MA), Rob Portman (R-OH), David Price (D-NC), Jim Ramstad (R-MN), Tim Roemer (D-IN), James Rogan (R-CA), Max Sandlin (D-TX), Tom Sawyer (D-OH), Christopher Shays (R-CT), Bradley Sherman (D-CA), Ronnie Shows (D-MS), Adam Smith (D-WA), Victor Snyder (D-AR), Debbie Stabenow (D-MI), Ellen Tauscher (D-CA), Karen Thurman (D-FL), Edolphus Towns (D-NY), Mark Udall (D-CO), Bruce Vento (D-MN), Greg Walden (R-OR), Wes Watkins (R-OK), Henry Waxman (D-CA), Curt Weldon (R-PA), Gerry Weller (R-IL), David Wu (D-OR), Al Wynn (D-MD) ,Grace Napolitano (D-CA), Michael Capuano (D-MA), Lee Terry (R-NE), Earl Blumenauer (D-OR), Rick Boucher (D-VA), Jim Turner (D-TX), William Goodling (R-PA), William Thomas (R-CA), Richard Gephardt (D-MO), Doug Ose (R-CA), Ruben Hinojosa (D-TX), Richard Pombo (R-CA), Dennis Moore (D-KS), Loretta Sanchez (D-CA), Joseph Hoeffel (D-PA), Paul Gillmor (R-OH), Deborah Pryce (R-OH), Lucille Allard (D-CA), Dennis Kucinich (D-OH), David Minge (D-MN), Howard Berman (D-CA), Zach Wamp (R-TN), Bart Gordon (D-TN), Bud Cramer (D-AL), James Hansen (R-UT), Mary Bono (R-CA), Maurice Hinchey (D-NY), Jim McCrery (R-LA), J.C. Watts (R-OK), Tom Davis (R-VA), Mike Thompson (D-CA), John Kasich (R-OH), Tony Hall (D-OH), Robert Menendez (D-NJ), Ron Packard (R-CA), Ron Paul (R-TX), Steve Rothman (R-NJ), J.D. Hayworth, Patrick Kennedy (D-RI), James Walsh, Pete Sessions, John Hostettler, Donald Payne, Thomas Reynolds, Bob Goodlatte, Dick Armey, Joel Hefley, Tom DeLay (R-TX), Brian Bilbray (R-CA), Ken Bentsen, Robert Weygand, Bob Clement, Roy Blunt (R-MO), Charles Gonzalez, James Barcia, Lois Capps (D-CA), Bill Pascrell, David Phelps, Nick Lampson, John Spratt, Michael Forbes (D-NY), Bob Franks (R-NJ), Cynthia McKinney (D-GA), Louise Slaughter (D-NY), and Tom Lantos (D-CA).
Summary. This very short bill would both permanently extend the research and development tax credit, and raise the alternative incremental credit rates.
Status. HR 835 was introduced on February 24, 1999. No action has been taken.
Legislative History with Links to Related Materials.
S 680
S 680, an untitled bill to permanently extend the research credit and to adjust the alternative incremental credit rates.
Sponsor. Orrin Hatch (R-UT). Cosponsors: Max Baucus (D-MT), Charles Robb (D-VA), Slade Gorton (R-WA), Spencer Abraham (R-MI), John Ashcroft (R-MO), Barbara Boxer (D-CA), John Breaux (D-LA), Thad Cochran (R-MI), Kent Conrad (D-ND), Mike DeWine (R-OH), Chris Dodd (D-CT), Byron Dorgan (D-ND), Richard Durbin (D-IL), Dianne Feinstein (D-CA), Charles Grassley (R-IA), Kay Hutchison (R-TX), James Inhofe (R-OK), Tim Johnson (D-SD), Edward Kennedy (D-MA), Robert Kerrey (D-NE), Frank Lautenberg (D-NJ), Carl Levin (D-MI), Joseph Lieberman (D-CT), Richard Lugar (R-IN), Connie Mack (R-FL), Barbara Mikulski (D-MD), Frank Murkowski (R-AK), Paul Sarbanes (D-MD), Gordon Smith (R-OR), Robert Torricelli (D-NJ), John Warner (R-VA), Ron Wyden (D-OR), Phil Graham (R-TX), Patrick Leahy (D-VT), Harry Reid (D-NV), Richard Bryan (D-NV), James Jeffords (R-VT), John Kerry (D-MA), Jeff Sessions (R-AL), Conrad Burns (R-MT), Fred Thompson (R-TN), Robert Bennett (R-UT), Max Cleland (D-GA), Peter Fitzgerald (R-IL)
Republicans: 21. Democrats: 24
Summary. This bill would both permanently extend the research and development tax credit, and raise the alternative incremental credit rates.
Status. S 680 IS was introduced on March 22, 1999. No action has been taken.
Legislative History with Links to Related Materials.
S 951
Private Sector Research and Development Investment Act
Sponsor. Sen. Pete Domenici (R-NM). Cosponsors. Jeff Bingaman (D-NM), Bill Frist (R-TN), Joe Lieberman (D-CT), Olympia Snow (R-ME), Ted Kennedy (D-MA), Jay Rockefeller (D-WV), Blanche Lincoln (D-AR), Richard Lugar (R-IN).
Summary. S 951 IS is the longest and most complex of the bills to make permanent the R&D tax credit. Its companion bill in the House is HR 1682 IH. These two bills are supported by the entire New Mexico delegation in Congress, and the Progressive Policy Institute.
S 951 begins, like the other bills, by making permanent the credit, with a short provision that deletes subsection (h) of Section 41 of the Internal Revenue Act of 1986. (See, Section 2,) It is the provisions that change the structure of the credit that take up the bulk of the bill. Sen. Domenici stated that "this bill incorporates all the improvement suggested in other bills that primarily make the credit permanent and provide some increase in the alternative credit. But this bill goes further and corrects weaknesses in the current formulation of the Credit. I want to seize this opportunity to make the Research Tax Credit a tool that will truly meet the goals for which it was established." (See, statement in Congressional Record.)
S 951 revises the alternative incremental credit. (See, Section 3.) S 951 modifies the credit for basic research. (See, Section 4.) S 951 extends the credit to expenses attributable to certain collaborative research consortia. (See, Section 5.)
See also, summary (and endorsement) of S 951 prepared by the Progressive Policy Institute.
Status. S 951 was introduced on May 4, 1999, and referred to the Finance Committee. No action has been taken.
Legislative History with Links to Related Materials.
HR 1682
Private Sector Research and Development Investment Act
Sponsor. Heather Wilson (R-NM). Cosponsors. Joe Skeen (R-NM), Harold Ford (D-TN), Tom Udall (D-NM), David Minge (D-MN), Joseph Crowley (D-NY), Rush Holt (D-NJ), Darlene Hooley (D-OR), Martin Frost (D-TX), James Moran (D-VA), Ron Paul (R-TX).
Summary. HR 1682 IH is the companion bill to S 951 IS. See, summary of S 951, above.
Status. HR 1682 was introduced on May 4, 1999. No action has been taken.
Legislative History with Links to Related Materials.
HR 2086
Networking and Information Technology Research and Development Act
Sponsors. James Sensenbrenner (R-WI). Original Cosponsors. George Brown (D-CA), Tom Davis (R-VA), Constance Morella (R-MD), Thomas Ewing (R-IL), Merrill Cook (R-UT), Kevin Brady (D-PA), Vernon Ehlers (R-MI), Bob Etheridge (D-NC), Dave Weldon (R-FL), Steven Kuykendall (R-CA), Debbie Stabenow (D-MI), Frank Lucas (R-OK), Nick Smith (R-MI), Michael Doyle (D-PA), Dana Rohrabacher (R-CA), E.B. Johnson (D-TX), Sheila Lee (D-TX), Michael Cupuano (D-MA), Roscoe Bartlett (R-MD), Mark Udall (D-CO), Lynn Woolsey (D-CA), Ken Calvert (R-CA), Gil Gutknecht (R-MN), Zoe Lofgren (D-CA), Bart Gordon (D-TN). Additional Cosponsors. Tom Campbell (R-CA), John Larson (D-CT), Jerry Costello (D-IL), Joe Barton (R-TX), Nick Lampson (D-TX), Sherwood Boehlert (R-NY), David Dreier (R-CA), David Wu (D-OR), John LaFalce (D-NY), Roger Wicker (R-MS), Phil English (R-PA), Bob Goodlatte (R-VA), Brian Baird (D-WA), Matthew Martinez (D-CA).
Republicans: 20. Democrats: 19.
Summary. HR 2086 IH is a large authorization bill which deals with many high-tech related topics. However, the final part (Section 8), briefly provides that the research and development tax credit is made permanent. Like S 195 and HR 760, it simply amends Section 41 of the Internal Revenue Code of 1986 by striking subsection (h).
Status. This bill was introduced on June 9, 1999. The Technology Subcommittee of the House Science Committee held a hearing on July 1, primarily on the R&D tax credit issue. The Basis Research Subcommittee held a hearing on July 14. The full Science Committee approved the bill (with the Section 8 language making the credit permanent still in the bill) on September 9.
Legislative History with Links to Related Materials.
HR 2488
Financial Freedom Act
Sponsor. Rep. Bill Archer (R-TX). Cosponsors. Phil Crane (R-IL), Phil English (R-PA), Scot McInnis (R-CO), Rick Hill (R-MT), Johnny Isakson, Lamar Smith (R-TX), Bill Thomas, and Mark Foley.
Summary. HR 2488 IH is a massive (500KB) tax bill covering a wide range of topics. However, Section 1401 would extend the research and development tax credit for five years. It would also increase the alternative incremental credit.
See also, the Joint Tax Committee's summary of the research and development tax credit, and Section 1401.
Status. This bill was introduced, and approved by the Ways and Means Committee, on July 13, 1999. It passed the House on July 22. It passed the Senate on July 30, in different form. It was vetoed by Clinton on September 23. However, its five year extension of the R&D tax credit was later attached to a huge collection of appropriations bills, which passed the Congress, and was signed by Clinton.
Legislative History with Links to Related Materials.
S 1803
S 1803, an untitled bill to make permanent the research and development tax credit.
Sponsor. Sen. Charles Robb (D-VA). Original Cosponsors. Max Baucus (D-MT), Jeff Bingaman (D-NM), Barbara Boxer (D-CA), Dianne Feinstein (D-CA), Ted Kennedy (D-MA), John Kerry (D-MA), Pat Leahy (D-VT), Patty Murray (D-WA), Harry Reid (D-NV), Paul Sarbanes (D-MD), Joe Lieberman (D-CT), Robert Torricelli (D-NJ).
Democrats: 13. Republicans: 0.
Summary. S 1803 IS is a short a simple bill, which is very similar to S 680 (permanent extension of tax credit and raise AIRC), but which also extends to Puerto Rico.
Status. S 1803 was introduced on October 27, 1999.
Legislative History with Links to Related Materials.
Some Groups Which Support the R&D Tax Credit.