[Congressional Record Volume 155, Number 84 (Monday, June 8, 2009)]
[Senate]
[Pages S6265-S6266]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself, Mr. Hatch, Mr. Kerry, Mrs. Lincoln, 
        Mr. Wyden, Mr. Schumer, Ms. Cantwell, Mr. Menendez, Mr. Ensign, 
        and Mr. Cornyn):
  S. 1203. A bill to amend the Internal Revenue Code of 1986 to extend 
the research credit through 2010 and to increase and make permanent the 
alternative simplified research credit, and for other purposes; to the 
Committee on Finance.
  Mr. BAUCUS, Mr. President, I am introducing this bill with Senator 
Hatch and others to move America forward in the 21st Century.
  In 2005, the last year for which we have IRS data, over eleven 
thousand C-corporations claimed the research tax credit. Approximately 
70 percent of qualifying expenses are wages. This credit encourages 
American businesses to keep jobs here.

[[Page S6266]]

  These jobs are good paying jobs. And when the research is performed 
in the U.S., then the intangible property stays in this country. And we 
get to enjoy the fruits of the labor. We need to keep the research jobs 
here. We cannot lose these jobs. We must make the research and 
development credit permanent and do everything we can to keep these 
research jobs here.
  The Grow Research Opportunities with Taxcredit's Help Act of 2009 
improves and simplifies the credit for applied research in section 41 
of the tax code. This credit has grown to be overly complex, both for 
taxpayers and the IRS. Beginning in 2009, the bill would ramp up the 
simpler credit for qualifying research expenses that exceed 50 percent 
of the average expenses for the prior 3 years. This alternative 
simplified credit increases from 14 percent to 20 percent in 2009.
  Second, the bill allows taxpayers to claim the traditional credit in 
2009 and 2010. This gives the traditional credit companies time to 
adjust their accounting and effectively shift to the alternative 
simplified credit. For tax years beginning after 2010, the alternative 
simplified credit will be the only tax credit for qualifying research 
expenses.
  The main complaint about the traditional credit is that it is very 
complex, particularly the reference to the 20-year-old base period. 
This base period creates problems for the taxpayer in trying to 
calculate the credit. It creates problems for the IRS in trying to 
administer and audit those claims.
  The alternative simplified credit focuses only on expenses, not gross 
receipts. It is still an incremental credit, so that companies must 
continue to increase research spending over time.
  A tax credit is a cost-effective way to promote research and 
development. A report by the Congressional Research Service finds that 
without government support, investment in research and development 
would fall short of the socially optimal amount. Thus CRS endorses 
Government policies to boost private sector research and development.
  We are competing in a global economy, and we need to promote research 
in this country. This bill will pave the way to a robust research and 
development incentive so that we can continue to lead the way in new 
technologies and domestic job growth.
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