[Congressional Record (Bound Edition), Volume 145 (1999), Part 4]
[Extensions of Remarks]
[Page 6083]
[From the U.S. Government Publishing Office, www.gpo.gov]




A BILL TO AMEND THE RESEARCH AND EXPERIMENTATION TAX CREDIT TO PROVIDE 
 A CREDIT AS AN INCENTIVE TO FOSTER COLLABORATIVE SCIENTIFIC RESEARCH 
   PROJECTS THROUGH BROADLY SUPPORTED NON-PROFIT, TAX-EXEMPT SECTION 
                      501(c)(3) RESEARCH CONSORTIA

                                 ______
                                 

                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                        Thursday, March 25, 1999

  Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from 
Michigan, Mr. Levin, together with twenty-one of our colleagues, in 
introducing our bill, the ``Public Benefit Collaborative Research Tax 
Credit.'' This bill would amend the research and experimentation tax 
credit in order to foster collaborative scientific research projects 
through broadly supported non-profit section 501(c)(3) research 
consortia. These collaborative not-for-profit scientific research 
consortia are devoted to research projects that benefit not just one 
company, but the economy and the country as a whole. Our amendment to 
the research credit would provide incentives for multi-company and 
multi-industry research partnerships, with the result that this 
important tax credit would be structured to foster the kind of 
collaborative research on which America's economic growth in the 21st 
century will depend.
  Our proposal would require that the research tax credit be extended 
beyond its June 30, 1999 expiration date, and we strongly urge 
extension of the credit. The research intensive sectors of our economy 
find it very difficult to do planning for research due to the constant 
stop-and-start arising from the perennial expiration and re-enactment 
of the research credit. The research credit is one of our most 
important tax incentives for economic growth, because scientific and 
technological innovation are, in the final analysis, the sources of 
that growth.
  This is why our public benefit collaborative research credit proposal 
is so important. More and more scientific and technological research of 
the greatest economic value now takes place not in the confines of 
individual companies, but collaboratively--and this is true for 
traditional manufacturing and utility sectors as well as computers and 
telecommunications. Yet the research credit as it currently stands 
actually contains disincentives for collaborative research. Companies 
are required to reduce their contributions to non-profit research 
consortia by an arbitrary 25% before those amounts can be used in the 
computation of the credit. Our proposal would eliminate the 
disincentives in current law for collaborative research, and make the 
research credit ``fit'' modern research-partnership approaches.
  Under our bill, companies would be entitled to a flat (non-
incremental) 20% credit for support payments made to non-profit, tax 
exempt section 501(c)(3) scientific research organizations. Section 
501(c)(3) scientific research organizations are required under existing 
law--which would not change--to make their research results available 
to the public on a nondiscriminatory basis. In this way, our proposal 
assures that all the scientific research for which our new credit is 
allowed is public-benefit research. In addition, for support payments 
to be eligible for our credit, the tax-exempt scientific research 
organization receiving the support payments would be required to have 
at least 15 unrelated supporting members, no three of which provide 
more than half of its funding and no one of which provides more than 
25% of its funding. This assures that only truly multi-company 
collaborative research consortia are supported by our proposal.
  Examples of broadly supported section 501(c)(3) research consortia 
whose continued success is tied to our proposal are the Gas Research 
Institute, funded by member companies in the natural gas industry, the 
Electric Power Research Institute, funded by member companies in the 
electric utility industry, the National Center for Manufacturing 
Sciences, funded by a coalition of high-technology manufacturing 
companies, the American Water Works Association Research Foundation, 
funded by water utilities, and non-profit consortia funded by other 
utility sectors, Collaborative public-benefit scientific research 
conducted by these and other section 501(c)(3) research consortia (and 
our bill should encourage new consortia) represents some of the most 
efficient and economically significant research being performed in the 
United States today, e.g. in the areas of cutting-edge manufacturing 
techniques, energy efficiency, public health, and economically rational 
pollution control, among many other areas. Collaborative research 
consortia supported by our proposal are devoted to sophisticated 
scientific research that in many cases no single company could afford, 
or would be willing, to conduct on its own, because of the uncertainty 
of immediate success or because of the risk of copycat competitors.
  For all these reasons collaborative scientific research represents 
our brightest economic future. Our bill amends the research tax credit 
provisions to foster this goal. We urge our colleagues to join us in 
cosponsoring this very important legislation, the ``Public Benefit 
Collaborative Research Tax Credit Act of 1999.''

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