No R&D tax credit
Congress at the end of the year did not renew a longstanding R&D tax credit, a popular program for the biotech industry and other sectors, given that it covers 20% of qualified R&D spending, but this doesn't necessarily mean the program is dead. The provision and other so-called 'extenders' were left out of a tax relief bill that was signed into law just before the New Year, which was a stripped-down version that dealt primarily with matters relating to the alternative minimum tax. But Democratic leaders of relevant committees in both chambers—the Senate Finance Committee and the House Ways and Means Committee—said they intend to address the R&D tax credit soon and apply it retroactively. That's happened before, as the credit has officially expired 13 times since first becoming law in 1981. But the re-upping of the tax credit isn't necessarily a done deal, either, says Ways and Means spokesman Matthew Beck. He advises that R&D tax credit advocates should maintain their efforts to prod Congress into approving another extension. If the credit is not renewed, most if not all companies in the biotech industry, which has benefited from the program since its inception, would see their earnings subject to a higher tax rate. Additionally, legislative proposals that would permanently extend the credit might generate discussion this year, given that members of both the Finance and Ways and Means committees are among its backers. It's worth noting, though, that similar ideas have failed to take hold in the past because no acceptable offsets for the credit's cost have been found. AL
This is a preview of subscription content, access via your institution