WASHINGTON—The Information Technology and Innovation Foundation (ITIF) today applauded Congress for making permanent the research and development tax credit (also known as the research and experimentation credit) and welcomed lawmakers’ decision to extend bonus depreciation until 2019 as part of tax legislation being considered this week. ITIF released the following statement from Senior Fellow Joe Kennedy:
As ITIF explained in a report earlier this year, the R&D tax credit and bonus depreciation are essential for spurring innovation and creating high-paying jobs. They are among the most impactful ways Congress can use the tax code to encourage companies to increase research and capital investment.
Without pioneering new ideas and equipment, innovation and productivity will be stuck in neutral. By making the R&D tax credit permanent, policymakers are giving companies a predictable incentive to increase spending on research and development, which accrues to the benefit of the public at large. The legislation also provides an additional incentive for startups to conduct R&D, which will accelerate growth.
By extending bonus depreciation, this legislation provides an additional incentive for the kind of capital investment that grows the economy, creates more jobs, and drives up wages. But while extending this provision is an important first step, we continue to urge Congress to eventually make bonus depreciation permanent.
We are pleased to see Congress ending the year by investing in America’s future. Passing this legislation should clear the way for Congress to consider broader corporate tax reform next year. As ITIF has pointed out, corporate tax reform is a vital response to the increased international competition for corporate profits and jobs. Recognizing that these provisions should be included in the budget baseline makes it much easier for Congress to pass a bill that lowers effective rates closer to those of America’s major competitors.