UPDATE: Murray Amendment Passes!
(WASHINGTON, D.C.) – Today, U.S. Senator Patty Murray (D-Wash.) introduced an amendment to extend the Research and Development Tax Credit for 18 months to help American workers. The credit will expire at the end of June unless Congress acts. Murray offered the Murray-Hatch amendment with Sen. Orin Hatch (R-Utah) to the JOBS Act.
“Every day we learn of more American jobs being shipped overseas. American companies are losing out in the global marketplace and that has a huge impact on our workers and our economy,” Senator Murray said in a speech on the Senate floor. “Today I’m offering a way for us to fight back and help our workers and companies continue to lead the world in innovation.”
The Murray-Hatch Amendment will:
- Extend the traditional R&D tax credit for 18 months through 12/31/05. (The credit will expire at the end of June 2004 unless Congress acts).
- Increase the Alternative Incremental Credit Rates (starting 1/1/05 through 12/31/05)
- Provide an Alternative Simplified Credit Calculation (starting 1/1/05 through 12/31/05)
“Extending and improving the Research and Development tax credit is one of the most important things we can do today to foster investment at home and job creation throughout the country,” Murray said.
About the R&D Tax Credit:
- The credit is only available for R&D performed in the United States.
- The credit is targeted almost exclusively at wages and salaries paid to employees engaged in direct U.S.-based R&D. This promotes the creation of new, high-skilled jobs in the United States.
- The credit gives companies an incentive to conduct their R&D in the United States at a time when foreign trading partners offer strong incentives to encourage companies to move their R&D work outside of the U.S.
- The credit will make American companies more innovative and competitive in the global marketplace.
Senator Murray’s Remarks Follow:
Mr. President, I rise today to offer the Hatch-Murray Amendment to strengthen and extend the Research and Development Tax Credit. We are all concerned about our slow economy. Every day we learn of more American jobs being shipped overseas. We worry about American companies losing out in the global marketplace and the impact that has on our workers and our economy.
Today I’m offering a way for us to fight back and to help our workers and companies continue to lead the world in innovation. Today, I’m proud to offer an amendment that will support high wage jobs for American workers here at home and make our products more competitive around the world. Anyone who wants to support good-paying American jobs, and anyone who wants help American companies compete and win in the global marketplace should vote for the Hatch-Murray amendment.
We all know that research and development is a critical part of any business’s success, but investing in R&D is not cheap. Our foreign trade competitors are offering substantial tax and financial incentives to encourage American companies to make their research investments elsewhere. But we need those jobs here in the U.S. and this amendment gives us a chance to support American workers in the face of foreign competition.
That’s why the R&D tax credit is so important. It provides a real incentive for companies to increase their investment in U.S.-based research and development. The credit helps stimulate innovation, wages, and exports – which all contribute to a stronger economy and a higher standard of living for American workers.
And this is about investing in America because this tax credit is only available for R&D performed in the United States. It provides a discount on qualifying expenditures, and it’s a proven incentive for U.S. companies to increase their R&D investment here in the U.S.
Unfortunately, the existing research and development tax credit will expire in June. Unless we take action, in just a few months we will be throwing away one of the best incentives for spurring investments here at home.
As my colleagues know, I have always supported making the R&D tax credit permanent. Because of budget constraints, we’re not in a position to do that today, but we can do the next best thing and extend and strengthen this incentive.
The Hatch-Murray amendment does three things.
- First, it extends the traditional credit for 18 months — through December 31, 2005.
- Second, it increases the Alternative Incremental Credit rates starting in January 2005.
- Finally, again starting in January 2005, it provides an Alternative Simplified Credit to encourage even more research-intensive businesses to spend more on research here in the U.S.
The R&D tax credit is a great example of how we make the tax code work for American workers and American families right here at home.
Mr. President, I have a letter here from the R&D Tax Credit Coalition and I ask unanimous consent that it be included in the Record after my remarks. This letter is signed by over 500 companies and associations, and it urges Congress to permanently extend the R&D tax credit and make the modifications contained in S.664.
Let me just share a portion of this letter. It says, quote –
“the technological innovations made possible by the R&D Credit enable companies to bring more products and services to market, increase employment, and raise the standard of living for all Americans. R&D helps manufacturers and services companies with U.S. operations maintain a competitive edge over lower-cost foreign competitors. It allows a small, medium or large company to reduce its financial risk in expensive, labor-intensive R&D investments. Since the credit was created in 1981, investments in technology and innovation have spurred economic growth and contributed greatly to our country’s high standard of living. Continued R&D spending is a necessary element in our country’s ability to invest for our future.”
Mr. President, this isn’t some abstract, economic principle. It’s a real incentive that creates jobs and helps workers here in America, and I’ve seen it first hand at companies throughout Washington State.
For example, this year Microsoft plans to invest $6.8 billion on R&D. Because this tax credit is targeted almost exclusively at wages, the credit will translate into additional jobs in Washington and in the United States. That will mean jobs not just at Microsoft, but at many other local companies. For example, according to a Feb 25, 2003 article in the Seattle Times, one study found that every job at Microsoft supports 3.4 other jobs in the economy. It also found that from 1990 to 2001, Microsoft was responsible for more than a fourth – 28.3 percent – of King County’s employment growth.
This is just one example of how one company’s investment in R&D is supporting good, family-wage jobs throughout the region. That’s just one company. There are many other companies engaged in R&D in Washington State and in the United States. Their investment in R&D will help our workers and our economy.
I want to share some other figures that show the importance of R&D investments – especially to Washington state. In the year 2000, companies performed almost $200 billion in R&D. $9.8 billion of that research was performed in Washington state. And let me shed some light on types of employers that are doing that work. 33% of the research done in Washington state was performed by manufacturers. We’ve seen a terrible loss of manufacturing jobs over the years, and this credit is one way to help stem the tide. 11.4 percent of the research done in Washington state was done in the professional, scientific, and technical service industries.
Mr. President, this is about moving our economy forward. Technological innovations have accounted for more than one-third of our nation’s economic growth during the last decade. We know that innovation is critical to sustained growth in the future. Extending and improving the R&D tax credit is one of the most important things we can do right now to foster investment at home and job creation throughout the country.
I urge my colleagues to give Americans workers a fair shot in the global marketplace by voting for the Hatch-Murray Amendment.
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