[Congressional Record Volume 147, Number 82 (Wednesday, June 13, 2001)]
[Extensions of Remarks]
[Page E1094]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               AMERICAN BREAKTHROUGH RESEARCH ACT OF 2001

                                 ______
                                 

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                        Wednesday, June 13, 2001

  Mr. CRANE. Mr. Speaker, I am pleased to announce that I, along with 
my friend and Colleague Congressman Bob Matsui, are introducing the 
American Breakthrough Research Act of 2001. This important legislation 
remedies a shortcoming in the federal income tax incentives available 
for research and development activities. To a considerable extent, our 
country's competitive position in the world economy and our citizens' 
standard of living are dependent on maintaining and enhancing our 
leadership in pure science and in the equally important 
commercialization of the fruits of scientific discovery. Over many 
years, the Congress and administrations across political parties 
consistently have supported tax incentives for those crucial 
activities.
  Much of the risky and capital intensive work of developing the 
commercial potential of scientific findings is undertaken by relatively 
small and even start-up businesses. It often takes many years and many 
millions of dollars of investment to turn discoveries into products, 
and along the way these entrepreneurs tend to have few if any products 
to sell and little or no revenues. The U.S. bioscience industry, for 
example, which many call the industry of the 21st century is comprised 
of about 1200 companies, most of which are relatively small. While the 
medicines and treatments that these companies are developing hold great 
promise to reduce or eliminate major diseases such as cancer and cystic 
fibrosis, few companies can go to the market with products to sell.
  A key goal of Congress in enacting and re-enacting the research tax 
credit and expensing provisions of the Code has been to foster this 
long-term intensive R&D work. Yet the fact is that many such companies 
derive no benefit from these provisions. As estimated by a major U.S. 
accounting firm, 95 percent of the Nation's biotechnology firms did not 
earn any profits in 2000. The existing research tax incentives thus 
fail to reach these companies because the incentives can be utilized 
only by companies that have significant profits and taxable income.
  This is a fundamental problem that we need to address now. This 
defect in existing law puts these companies, which are critically 
dependent on investment to sustain their research, at a disadvantage in 
raising capital compared with other, often larger companies that do 
have current income. Without current access to these tax incentives, 
these smaller companies whose research activities are so vital to our 
Nation, are hard pressed to find needed capital.
  The Crane-Matsui legislation fixes this shortcoming. It provides 
eligible long-term research companies with the opportunity to obtain a 
current benefit from these tax attributes through an election to claim 
a refundable tax credit in exchange for relinquishing the research-
related losses and credits. There is growing precedent for this type of 
proposal among the States, several of which have enacted or are 
considering similar provisions to provide research companies with a 
current benefit from otherwise unusable tax incentives. We hope our 
colleagues will join us in supporting this important legislation.

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