BIO Urges Congress to Extend the Research & Development Tax Credit Prior to Adjournment
Absence of federal credit discourages new research projects in the U.S.
WASHINGTON, D.C. (November 14, 2006) – In a joint letter to Congressional leaders, Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood, AdvaMed President and CEO Stephen J. Ubl, and 32 BIO state affiliate organizations today urged Congress to act immediately to extend and strengthen the research and development tax credit (R&D credit) before adjourning:
“The R&D credit, which has been in place for more than 25 years, expired at the end of 2005. It is a critical and effective federal incentive, vital to maintaining U.S. competitiveness, and one of the primary reasons that the United States currently leads the world in bioscience research and development. For many bioscience and medical technology companies now operating on a global basis, the decision is not whether to invest in research and development, but in which of their facilities the project will be located. The absence of a long term and dependable federal credit creates a significant disincentive for locating new research projects in the U.S.
“Failure to extend and strengthen the R&D credit before the close of the 109th Congress will have serious negative consequences for American companies. If the R&D credit is not retroactively extended and strengthened by Dec. 31, 2006, companies will be required to state their annual year-end earnings reflecting the full impact of a higher tax rate due to the fact that the credit has lapsed. As such, failure to immediately and retroactively extend the R&D credit prior to adjournment will adversely impact annual earnings-per-share for all companies who would have otherwise claimed the credit. For highly research-intensive bioscience and medical technology companies, particularly those that must raise funds in the capital markets, this could seriously destabilize their position in the marketplace.
“Additionally, since the inception of the R&D credit, numerous states have enacted their own incentives pegged to the amount claimed under the federal credit. State governments increasingly realize that they are no longer competing just within the U.S. to attract research activity. Governments around the world have created the necessary infrastructure and are now offering U.S. companies highly competitive and valuable long-term, contractual incentives to attract new investments in research and related manufacturing facilities.”
The full text of the letter can be viewed at http://www.bio.org/tax/r&d/ .
BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products.
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