[Congressional Record Volume 158, Number 115 (Tuesday, July 31, 2012)]
[Senate]
[Page S5735]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COONS (for himself, Mr. Enzi, Mr. Schumer, and Mr. Rubio):
  S. 3460. A bill to amend the Internal Revenue Code of 1986 to provide 
for startup businesses to use a portion of the research and development 
credit to offset payroll taxes; to the Committee on Finance.
  Mr. COONS. Mr. President, to fuel American economic growth and job 
creation, we have to make sure our tax policy is as smart as the 
innovators who power our economy.
  American ingenuity has always been at the core of our economic 
success. Behind nearly every game-changing innovation, from the light 
bulb to the search engine, has been critical research and development 
that transforms an idea into a market-ready product. The challenges of 
the global economy may be new, but the solution is the same--supporting 
and sustaining American innovators.
  That is why I joined with my friend and colleague, the Senator from 
Wyoming, Senator Enzi, to draft legislation that gives innovative 
startup companies the opportunity to take advantage of the successful 
research and development tax credit, which would support their efforts 
to invest in innovation and create jobs.
  Senator Enzi and I are proud to be joined by Senator Schumer of New 
York and Senator Rubio of Florida in introducing the Startup Innovation 
Credit Act of 2012, which allows qualifying companies to claim the R&D 
tax credit against their employment taxes instead of their income 
taxes, thereby opening the credit to new companies who don't yet have 
an income tax liability. We are also grateful to our colleagues in the 
House, who are working to introduce a bipartisan companion bill this 
week.
  Over the past three decades, the research and development tax credit 
has helped tens of thousands of successful American companies create 
jobs by incentivizing investment in innovation. But with America's 
global manufacturing competitiveness at stake, it is time Congress 
shows the same type of support for entrepreneurs and young companies.
  Small and startup businesses are driving our Nation's economic 
recovery and creating jobs by taking risks to turn their ideas into 
marketable products. Over the past few decades, firms that were younger 
than 5 years old were responsible for the overwhelming majority of new 
jobs in this country.
  The tax code is a powerful tool in the government's toolbox, but tax 
credits can't help emerging companies that don't yet have tax 
liabilities. That takes the R&D tax credit off the table for countless 
promising startups and small businesses.
  Over the last two years, I have talked with dozens of business 
leaders and experts in tax policy to refine an idea to create a new 
small business innovation credit that would help those young companies. 
My commitment to this concept has only strengthened since I introduced 
a version of it in my very first bill as a Senator, the Job Creation 
Through Innovation Act. This work continued, along with Senator Rubio, 
in the subsequent AGREE Act and Startup Act 2.0.
  The reason I am so doggedly pursuing this idea is because it is 
critical for young, innovative companies in my home state of Delaware. 
Take, for example, DeNovix, a small company based in Wilmington. With 
just six employees, they design, manufacture and sell laboratory 
equipment that helps scientists innovate and achieve results. As a 
brand-new company, all of DeNovix' products are in the research and 
development phase. So at this point, they can't take advantage of the 
R&D tax credit. A new, innovative company, shut out of support they 
need at the time they need it most. That seems counterproductive for 
our economy. So let us fix it. Under the Startup Innovation Credit Act 
of 2012, DeNovix and companies like them across Delaware and across the 
country could grow and create jobs with the help of the R&D tax credit.
  We can't let tough economic times slow down the power of American 
ingenuity, especially when history has taught us that now is exactly 
the time we need to be investing in our innovators. More than half of 
our Fortune 500 companies were launched during a recession or bear 
market, so a small business founded this year could become the next 
General Electric or DuPont if it gets the support it needs.
  America's researchers, business leaders, innovators and entrepreneurs 
are already working to help create jobs and ensure American 
competitiveness in the global economy. We just have to support and 
sustain their hard work, and we cannot take the rest of the year off 
just because there is an election coming up. Even in this difficult, 
partisan atmosphere, we have to find ways to work together and get 
things done.
  Innovation will drive American economic competitiveness for 
generations to come, and our job is to help our innovators and 
entrepreneurs do their jobs. I urge my colleagues to join Senators 
Enzi, Schumer, Rubio and I in strong support of the Startup Innovation 
Credit Act of 2012.
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