[Congressional Record Volume 157, Number 55 (Thursday, April 14, 2011)]
[Senate]
[Pages S2514-S2516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COONS:
  S. 825. A bill to amend the Internal Revenue Code of 1986 to 
permanently extend and modify the research tax credit, and for other 
purposes; to the Committee on Finance.
  Mr. COONS. Mr. President, I rise today to introduce my first bill in 
the Senate, one I believe will promote competitiveness and spur the 
growth of sustainable middle class jobs. As I noted in my maiden speech 
in January, the people of Delaware sent me here with a mission to work 
with my colleagues to help create jobs and get our economy moving 
again.
  My bill, the Job Creation Through Innovation Act, will do just that. 
By making strategic investments in research and development and 
incentives for economic growth, this legislation will help companies in 
Delaware and across the United States innovate, create jobs, and 
compete globally.
  First, it will simplify, expand, and make permanent the Research and 
Development Tax Credit. When this credit was enacted into law in 1981, 
the United States was the best place in the world to perform research 
and development. Thirty years and fourteen temporary extensions later, 
we still do not have a permanent R&D credit on the books. Passing 
temporary extensions, one after another, undermines the very purpose of 
this credit. Whenever there is uncertainty about the credit's future 
availability, businesses discount its value, and we reap only the 
counterproductive effect of reducing the credit's benefit to our 
economy. Research and development projects are never stop-and-go, and 
the R&D tax credit shouldn't be either.
  Second, many new small businesses today are ineligible for the R&D 
credit, because they are not yet profitable. My bill will create a new 
Small Business Innovation Credit, which will provide much-needed 
support to these start-ups. Currently, the R&D credit is non-
refundable, so only those companies with income tax liability benefit 
from it. This poses a special problem for research-intensive start-up 
businesses--just the sort of businesses that have the potential to 
develop revolutionary technologies and products. Such firms often spend 
their first several years operating at a loss while spending a great 
deal of money on research and development. The Small Business 
Innovation Credit will address this by allowing companies with 500 
employees or fewer to claim a refundable R&D credit.
  Another provision of my bill is a new Domestic Manufacturing Tax 
Credit, which will provide additional tax incentives to companies that 
both conduct research and manufacture their products right here in 
America. This will reward companies that invest in America and give 
multinational firms another reason to keep manufacturing jobs from 
being shipped overseas.
  The Job Creation Through Innovation Act would additionally extend the 
Section 1603 Treasury Grants Program--or ``TGP''--and the Advanced 
Energy Manufacturing Credit. Both of these were authorized in the 
Recovery Act and are designed to promote clean energy technology and 
investment. Both have also had a significant and beneficial impact on 
energy project developers and manufacturers in my home state of 
Delaware and other states in the past 2 years.
  The TGP provides payments for specified energy property in lieu of 
investment tax credits and production tax credits. Economic certainty 
is critical to wind, solar, biofuel, geothermal, and other clean energy 
projects, and, according to a survey of leading participants in the tax 
equity market, without an extension of the TGP the anticipated total 
financing available for renewable resource projects would decrease 
significantly, should it be left to expire at the end of 2011. My bill 
extends the TGP for another year.
  The Advanced Energy Manufacturing Credit, also called the 48C 
Incentive, provides a thirty percent investment tax credit to domestic 
manufacturers who build or expand facilities that produce a range of 
clean energy products and technologies. These credits can also be used 
to leverage private investment, and it is estimated that this tax 
credit has to date helped businesses raise more than $5.4 billion from 
just a $2.3 billion Federal investment. It is also estimated to have 
created 58,000 jobs. My bill will provide an additional $5 billion in 
incentives, of which up to $1.5 billion would be made available to 
companies whose applications are already pending under the original 
solicitation.
  In my maiden speech in January, I spoke at length about the new 
agenda for manufacturing I intend to promote during my service in the 
Senate, and this bill is just the first step. I am proud that Delaware 
is already on the cutting-edge of the high-tech and clean energy 
manufacturing revolution I believe will be the key to winning the 
future.
  While we are all rightly focused now on the deficit and cutting our 
budget, we must also think ahead and make those long-term investments 
that will boost our economy, incentivize clean energy resources and 
manufacturing, and grow the jobs we need to sustain a strong middle 
class in this country for years to come. I hope my colleagues will join 
me in this effort, and I commend those who already have.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 825

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Job 
     Creation Through Innovation Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. USE OF ONLY SIMPLIFIED RESEARCH CREDIT AFTER 2011; 
                   EXPANSION AND PERMANENT EXTENSION.

       (a) Simplified Credit for Qualified Research Expenses.--
     Subsection (a) of section 41 is amended to read as follows:

[[Page S2515]]

       ``(a) General Rule.--
       ``(1) Credit determined.--For purposes of section 38, the 
     research credit determined under this section for the taxable 
     year shall be an amount equal to 20 percent of so much of the 
     qualified research expenses for the taxable year as exceeds 
     50 percent of the average qualified research expenses for the 
     3 taxable years preceding the taxable year for which the 
     credit is being determined.
       ``(2) Special rule in case of no qualified research 
     expenses in any of 3 preceding taxable years.--
       ``(A) Taxpayers to which paragraph applies.--The credit 
     under this section shall be determined under this paragraph 
     if the taxpayer has no qualified research expenses in any one 
     of the 3 taxable years preceding the taxable year for which 
     the credit is being determined.
       ``(B) Credit rate.--The credit determined under this 
     paragraph shall be equal to 10 percent of the qualified 
     research expenses for the taxable year.''.
       (b) Conforming Amendments.--
       (1) Termination of base amount calculation.--Section 41 is 
     amended by striking subsection (c) and redesignating 
     subsection (d) as subsection (c).
       (2) Termination of basic research payment calculation.--
     Section 41 is amended by striking subsection (e) and 
     redesignating subsections (f) and (g) as subsections (d) and 
     (e), respectively.
       (3) Special rules.--
       (A) Paragraph (1)(A)(ii) of subsection (d) of section 41, 
     as so redesignated, is amended by striking ``shares of the 
     qualified research expenses, basic research payments, and 
     amounts paid or incurred to energy research consortiums,'' 
     and inserting ``share of the qualified research expenses''.
       (B) Paragraph (1)(B)(ii) of section 41(d), as so 
     redesignated, is amended by striking ``shares of the 
     qualified research expenses, basic research payments, and 
     amounts paid or incurred to energy research consortiums,'' 
     and inserting ``share of the qualified research expenses''.
       (C) Paragraph (3) of section 41(d), as so redesignated, is 
     amended--
       (i) by striking ``, and the gross receipts of the 
     taxpayer'' and all that follows in subparagraph (A) and 
     inserting a period,
       (ii) by striking ``, and the gross receipts of the 
     taxpayer'' and all that follows in subparagraph (B) and 
     inserting a period, and
       (iii) by striking subparagraph (C).
       (D) Paragraph (4) of section 41(d), as so redesignated, is 
     amended by striking ``and gross receipts''.
       (E) Subsection (d) of section 41, as so redesignated, is 
     amended by striking paragraph (6).
       (4) Permanent extension.--
       (A) Section 41 is amended by striking subsection (h).
       (B) Section 45C(b)(1) is amended by striking subparagraph 
     (D).
       (5) Cross-references.--
       (A) Paragraphs (2)(A) and (4) of section 41(b) are each 
     amended by striking ``subsection (f)(1)'' and inserting 
     ``subsection (d)(1)''.
       (B) Paragraph (2) of section 45C(c) is amended by striking 
     ``base period research expenses'' and inserting ``average 
     qualified research expenses''.
       (C) Paragraph (3) of section 45C(d) is amended by striking 
     ``section 41(f)'' and inserting ``section 41(d)''.
       (D) Paragraph (2) of section 45G(e) is amended by striking 
     ``section 41(f)'' and inserting ``section 41(d)''.
       (E) Subsection (g) of section 45O is amended by striking 
     ``section 41(f)'' and inserting ``section 41(d)''.
       (F) Subparagraph (A) of section 54(l)(3) is amended by 
     striking ``section 41(g)'' and inserting ``section 41(e)''.
       (G) Clause (i) of section 170(e)(4)(B) is amended to read 
     as follows:
       ``(i) the contribution is to a qualified organization,''.
       (H) Paragraph (4) of section 170(e) is amended by adding at 
     the end the following new subparagraph:
       ``(E) Qualified organization.--For purposes of this 
     paragraph, the term `qualified organization' means--
       ``(i) any educational organization which--

       ``(I) is an institution of higher education (within the 
     meaning of section 3304(f)), and
       ``(II) is described in subsection (b)(1)(A)(ii), or

       ``(ii) any organization not described in clause (i) which--

       ``(I) is described in section 501(c)(3) and is exempt from 
     tax under section 501(a),
       ``(II) is organized and operated primarily to conduct 
     scientific research, and
       ``(III) is not a private foundation.''.

       (I) Subsection (f) of section 197 is amended by striking 
     ``section 41(f)(1)'' each place it appears in paragraphs 
     (1)(C) and (9)(C)(i) and inserting ``section 41(d)(1)''.
       (J) Section 280C is amended--
       (i) by striking ``41(f)'' each place it appears in 
     subsection (b)(3) and inserting ``41(d)'',
       (ii) by striking ``or basic research expenses (as defined 
     in section 41(e)(2))'' in subsection (c)(1),
       (iii) by striking ``section 41(a)(1)'' in subsection 
     (c)(2)(A) and inserting ``section 41(a)'', and
       (iv) by striking ``or basic research expenses'' in 
     subsection (c)(2)(B).
       (K) Subclause (IV)(c) of section 936(h)(5)(C)(i) is amended 
     by striking ``section 41(f)'' and inserting ``section 
     41(d)''.
       (L) Subparagraph (D) of section 936(j)(5) is amended by 
     striking ``section 41(f)(3)'' and inserting ``section 
     41(d)(3)''.
       (M) Clause (i) of section 965(c)(2)(C) is amended by 
     striking ``section 41(f)(3)'' and inserting ``section 
     41(d)(3)''.
       (N) Clause (i) of section 1400N(l)(7)(B) is amended by 
     striking ``section 41(g)'' and inserting ``section 41(e)''.
       (c) Technical Corrections.--Section 409 is amended--
       (1) by inserting ``, as in effect before the enactment of 
     the Tax Reform Act of 1984)'' after ``section 41(c)(1)(B)'' 
     in subsection (b)(1)(A),
       (2) by inserting ``, as in effect before the enactment of 
     the Tax Reform Act of 1984'' after ``relating to the employee 
     stock ownership credit'' in subsection (b)(4),
       (3) by inserting ``(as in effect before the enactment of 
     the Tax Reform Act of 1984)'' after ``section 41(c)(1)(B)'' 
     in subsection (i)(1)(A),
       (4) by inserting ``(as in effect before the enactment of 
     the Tax Reform Act of 1984)'' after ``section 41(c)(1)(B)'' 
     in subsection (m),
       (5) by inserting ``(as so in effect)'' after ``section 
     48(n)(1)'' in subsection (m),
       (6) by inserting ``(as in effect before the enactment of 
     the Tax Reform Act of 1984)'' after ``section 48(n)'' in 
     subsection (q)(1), and
       (7) by inserting ``(as in effect before the enactment of 
     the Tax Reform Act of 1984)'' after ``section 41'' in 
     subsection (q)(3).
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2011.
       (2) Technical corrections.--The amendments made by 
     subsection (c) shall take effect on the date of the enactment 
     of this Act.

     SEC. 3. ENHANCED RESEARCH CREDIT FOR DOMESTIC MANUFACTURERS.

       (a) In General.--Section 41, as amended by section 3, is 
     amended by redesignating subsection (f) as subsection (g) and 
     by inserting after subsection (e) the following new 
     subsection:
       ``(f) Enhanced Credit for Domestic Manufacturers.--
       ``(1) In general.--In the case of a qualified domestic 
     manufacturer, this section shall be applied by increasing the 
     20 percent amount in subsection (a)(1) by the bonus amount.
       ``(2) Qualified domestic manufacturer.--For purposes of 
     this subsection--
       ``(A) In general.--The term `qualified domestic 
     manufacturer' means a taxpayer who has domestic production 
     gross receipts which are more than 50 percent of total 
     production gross receipts.
       ``(B) Domestic production gross receipts.--The term 
     `domestic production gross receipts' has the meaning given to 
     such term under section 199(c)(4).
       ``(C) Total production gross receipts.--The term `total 
     production gross receipts' means the gross receipts of the 
     taxpayer which are described in section 199(c)(4), 
     determined--
       ``(i) without regard to whether property described in 
     subparagraph (A)(i)(I) or (A)(i)(III) thereof was 
     manufactured, produced, grown, or extracted in the United 
     States,
       ``(ii) by substituting `any property described in section 
     168(f)(3)' for `any qualified film' in subparagraph 
     (A)(i)(II) thereof, and
       ``(iii) without regard to whether any construction 
     described in subparagraph (A)(ii) thereof or services 
     described in subparagraph (A)(iii) thereof were performed in 
     the United States.
       ``(3) Bonus amount.--For purposes of paragraph (1), the 
     bonus amount shall be determined as follows:

 
  ``If the percentage of total production
     gross receipts which are domestic          The bonus amount is:
       production gross receipts is:
 
More than 50 percent and not more than 60   2 percentage points
 percent.
More than 60 percent and not more than 70   4 percentage points
 percent.
More than 70 percent and not more than 80   6 percentage points
 percent.
More than 80 percent and not more than 90   8 percentage points
 percent.
More than 90 percent......................  10 percentage points.''.
 

       (b) Effective Date.--The amendment made by this section 
     shall apply to expenditures paid or incurred in taxable years 
     beginning after December 31, 2011.

     SEC. 4. RESEARCH CREDIT MADE REFUNDABLE FOR SMALL BUSINESSES.

       (a) In General.--Subsection (a) of section 41 of the 
     Internal Revenue Code of 1986, as amended by section 3, is 
     amended by adding at the end the following new paragraph:
       ``(3) Portion of credit refundable.--
       ``(A) In general.--For purposes of subsections (b) and (c) 
     of section 6401, the amount of the credit determined under 
     this section which is attributable to a qualified small 
     business shall be treated as a credit allowed under subpart C 
     of part IV of subchapter A for the taxable year (and not 
     under any other subpart). For purposes of section 6425, any 
     amount treated as so allowed shall be treated as a payment of 
     estimated income tax for the taxable year.
       ``(B) Qualified small business.--For purposes of this 
     paragraph, the term `qualified small business' means, with 
     respect to any taxable year, any person if the annual average 
     number of employees employed by such person during such 
     taxable year is 500 or fewer.''.
       (b) Conforming Amendment.--Section 1324(b)(2) of title 31, 
     United States Code, is amended by inserting ``41(a)(3),'' 
     after ``36A,''.

[[Page S2516]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2011.

     SEC. 5. EXTENSION OF GRANTS FOR SPECIFIED ENERGY PROPERTY IN 
                   LIEU OF TAX CREDITS.

       (a) In General.--Subsection (a) of section 1603 of division 
     B of the American Recovery and Reinvestment Act of 2009 is 
     amended--
       (1) in paragraph (1), by striking ``or 2011'' and inserting 
     ``2011, or 2012'', and
       (2) in paragraph (2)--
       (A) by striking ``after 2011'' and inserting ``after 
     2012'', and
       (B) by striking ``or 2011'' and inserting ``2011, or 
     2012''.
       (b) Conforming Amendment.--Subsection (j) of section 1603 
     of division B of such Act is amended by striking ``2012'' and 
     inserting ``2013''.

     SEC. 6. EXTENSION OF THE ADVANCED ENERGY PROJECT CREDIT.

       (a) In General.--Subsection (d) of section 48C is amended 
     by adding at the end the following new paragraph:
       ``(6) Additional 2011 allocations.--
       ``(A) In general.--Not later than 180 days after the date 
     of the enactment of this paragraph, the Secretary, in 
     consultation with the Secretary of Energy, shall establish a 
     program to consider and award certifications for qualified 
     investments eligible for credits under this section to 
     qualifying advanced energy project sponsors with respect to 
     applications received on or after the date of the enactment 
     of this paragraph.
       ``(B) Limitation.--The total amount of credits that may be 
     allocated under the program described in subparagraph (A) 
     shall not exceed the 2011 allocation amount reduced by so 
     much of the 2011 allocation amount as is taken into account 
     as an increase in the limitation described in paragraph 
     (1)(B).
       ``(C) Application of certain rules.--Rules similar to the 
     rules of paragraphs (2), (3), (4), and (5) shall apply for 
     purposes of the program described in subparagraph (A), except 
     that--
       ``(i) Certification.--Applicants shall have 2 years from 
     the date that the Secretary establishes such program to 
     submit applications.
       ``(ii) Selection criteria.--For purposes of paragraph 
     (3)(B)(i), the term `domestic job creation (both direct and 
     indirect)' means the creation of direct jobs in the United 
     States producing the property manufactured at the 
     manufacturing facility described under subsection 
     (c)(1)(A)(i), and the creation of indirect jobs in the 
     manufacturing supply chain for such property in the United 
     States.
       ``(iii) Review and redistribution.--The Secretary shall 
     conduct a separate review and redistribution under paragraph 
     (5) with respect to such program not later than 4 years after 
     the date of the enactment of this paragraph.
       ``(D) 2011 allocation amount.--For purposes of this 
     subsection, the term `2011 allocation amount' means 
     $5,000,000,000.
       ``(E) Direct payments.--In lieu of any qualifying advanced 
     energy project credit which would otherwise be determined 
     under this section with respect to an allocation to a 
     taxpayer under this paragraph, the Secretary shall, upon the 
     election of the taxpayer, make a grant to the taxpayer in the 
     amount of such credit as so determined. Rules similar to the 
     rules of section 50 shall apply with respect to any grant 
     made under this subparagraph.''.
       (b) Portion of 2011 Allocation Allocated Toward Pending 
     Applications Under Original Program.--Subparagraph (B) of 
     section 48C(d)(1) is amended by inserting ``(increased by so 
     much of the 2011 allocation amount (not in excess of 
     $1,500,000,000) as the Secretary determines necessary to make 
     allocations to qualified investments with respect to which 
     qualifying applications were submitted before the date of the 
     enactment of paragraph (6))'' after ``$2,300,000,000''.
       (c) Conforming Amendment.--Paragraph (2) of section 1324(b) 
     of title 31, United States Code, is amended by inserting 
     ``48C(d)(6)(E),'' after ``36C,''.
                                 ______