SCHUMER ANNOUNCES SENATE PASSAGE OF ESSENTIAL RESEARCH AND DEVELOPMENT TAX BREAK THAT WILL PROVIDE VITAL FUNDING TO UPSTATE NEW YORK BUSINESSES
Federal Research and Development Tax Credits, Vital for Upstate NY Jobs and Businesses, Lapsed in 2007With Senate Passage, Tax Credit is One Step Closer to Reinstatement - New York Ranked Sixth in R&D Credits Claimed in 2005Schumer: R&D Tax Credit Helps Fuel American Innovation, Keeps High-Tech Jobs and Industries in the U.S.
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U.S. Senator Charles E. Schumer today announced that a bill to renew the research and development tax credit for one year passed the full Senate last night. The tax credit, a federal tax break for companies that rely on research and development to stay in business, had been in place since 1981 before expiring at the end of 2007. Senator Schumer said the tax break was especially vital to Upstate New York businesses. The bill will now go to the U.S. House of Representatives.
"These much needed research and development tax credits will help Upstate New York businesses to thrive and create new jobs," Schumer said. "Businesses rely on research and development to stay on the cutting edge, and these tax credits will give them a boost in the right direction."
The research tax credit has never been a permanent provision of the federal tax code and expired at the end of 2007. Since its enactment in mid1981, the credit has been extended twelve times and significantly modified five times. The tax bill just passed by the Senate makes several modifications to the credit rates and extends it for two years, through the end of 2009. Schumer said that the renewal of the research and development tax credit will help keep Upstate New York businesses and the jobs that come with them in the state. Without Congressional action, New York businesses once again would have to bear the entire burden of research and development that for many of them is central to competitiveness and remaining in the black.
New York ranked sixth in R&D tax credits claimed in 2005 with over 2,000 companies reporting R&D activity, many of which are major employers in New York and critical contributors to the New York economy. For instance, Lockheed Martin had $106 million in qualified research expenditures in New York alone in 2007. With 10,000 employees in New York, the R&D tax credit is vital to continuing operations and has made New York the company's third largest R&D state. Without the R&D tax credit, it is unlikely Bausch & Lomb would have been able to open the $19 million, 75,000 square foot Rochester R&D facility, which added twenty laboratories, multiple offices, and gave a home to more than 400 scientists, engineers, and support staff in the Rochester area.
In 2007, IBM spent about $1.6 billion on research in various locations in New York, including Yorktown, where the company's lead Watson Research lab that was established in 1961, is based. There are about 1,500 employees performing and supporting research at this lab and at other locations in New York. The company has recently invested in its semiconductor facility in East Fishkill, NY bringing its total investment there since 2000 to over $4 billion.
While the credit is often thought of as a single unified credit, it actually consists of five discrete credits: (1) a regular credit, (2) an alternative incremental credit (AIRC), (3) an alternative simplified credit (ASIC), (4) a basic research credit, and (5) an energy research credit. All but the energy research credit are incremental, which is to say that they apply only to qualified research spending above some base amount. In sum, the research and development credits are designed to help businesses across the country keep research and development within the United States' borders, creating jobs and fostering scientific innovation in many industries such as medicine, computers, telecommunications, transportation, and electronics.
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