Today, a House subcommittee is examining the value of tax extenders. The tech sector is strongly supporting three key provisions that have major benefits for job creation and economic strength in the U.S.: the research-and-development tax credit, the CFC look-through exception, and the active finance exception. ITI submitted testimony for the hearing. Here are some of the key points:
On the urgency of extending these tax credits:
“Many of the provisions are integral to America’s global economic leadership and our companies’ ability to innovate and create new, good-paying, long-lasting jobs.”
“Absent an effort by Congress this year to pass a tax extenders package, critical job-creating tax provisions could be left off the books for two years or more. Even a delay of one year, which is all but certain, is unacceptable, especially at a time when other countries are not standing still to attract capital investment, and encourage companies to create jobs within their borders. Bluntly, our economy cannot afford extended congressional inaction on tax incentives that boost American jobs and the American economy.”
“This is clearly a pro-jobs tax credit, with approximately 70 percent of the benefits of the credit attributable to salaries of workers performing U.S.-based research. This credit leads to more tax revenue, patents, and jobs. Here at home and around the world, R&D tax incentives have been proven to effectively increase private-sector innovation and boost economic growth... Our global competitors would welcome Congressional inaction on the R&D credit; our economy simply cannot afford it.”
On the look-through exception and the active finance provision:
“…such investment is associated with increased U.S. investment, wages, employment, R&D spending, and exports. The high-tech industry depends on serving markets around the world, and these provisions are crucial to our ability to compete abroad so that we can remain strong and create jobs here at home.”
ITI will continue to work with the Congress and the White House to back these job-creating tax provisions and to reform America’s outmoded, contradictory, and overly complex tax code. We believe that upgrading the code will go a long way towards reclaiming America’s global economic leadership position.