R&D Tax Credit Legislation Will Boost Innovation and Jobs

May 7, 2014

WASHINGTON – (May 7, 2014) The Information Technology and Innovation Foundation (ITIF) praised the U.S. House of Representatives’ announcement that it will vote this week on passage of the American Research and Competitiveness Act of 2014. The bill would increase the rate for one of the two federal research and development tax credits, the Alternative Simplified Credit, from 14 to 20 percent and would also make the credit permanent, eliminating the need to extend the program each year, ideas that ITIF has long championed.

“The R&D tax credit is an effective tool for spurring additional business R&D, which in turn drives U.S. productivity, competitiveness and economic growth,” says Robert Atkinson, President of ITIF. “Raising the credit will spur additional investment by firms in the U.S., while also putting the United States on a more competitive footing with the 26 other nations who have put in place more generous R&D tax incentives to further develop their innovation ecosystems and high tech economies.”

ITIF has argued that raising the credit to 20 percent would increase annual GDP growth by $66 billion and create at least 162,000 jobs. Furthermore, in the long term, revenues generated from this enhanced growth would exceed the cost of foregone taxes in net present value terms. This suggests that concerns about the impact of this bill on the budget deficit are misguided, including President Obama’s announcement that he would veto the measure if it came to his desk stating that it would raise the deficit.

“Given that the Obama Administration has publicly supported increasing the R&D credit and making it permanent, it is troubling that they are now threatening to veto this pro-growth measure,” Atkinson adds. “ITIF urges the Administration to reconsider and work with the House and Senate leadership to pass this important legislation this year.”


The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.