Griffin Votes to Simplify Tax Credit To Grow Jobs

Press Release

Congressman Tim Griffin (AR-02), a member of the Ways and Means Committee, released the following statement after the House passed H.R. 4438, the American Research and Competitiveness Act of 2014, to establish a permanent simplified formula for calculating the research tax credit:

"Our complicated tax code creates uncertainty for American businesses, which hurts their ability to hire and invest here at home. In our effort to reform our broken tax code and make our system simpler, fairer and flatter, we must change the temporary status of important policies, like the Research and Development tax credit. This tax credit has been repeatedly extended since the "80s, and permanently extending it will spur economic growth, give businesses needed stability and make the U.S. more competitive on a global scale. I urge the Senate to act on this essential piece of legislation that will help grow American jobs."

Rep. Griffin is a cosponsor of H.R. 4438, which establishes a permanent simplified formula for calculating the research tax credit. The tax credit is equal to the sum of:

1) 20 percent of qualified research expenses for the taxable year that exceeds 50 percent of the average qualified research expenses for the three preceding tax years;

2) 20 percent of basic research payments for the taxable year that exceed 50 percent of average research payments for the three preceding tax years; and

3) 20 percent of all expenses (without regard to a base amount) paid to an energy-research consortium for research conducted for the taxpayer.

Moreover, this legislation continues the rule that allows taxpayers to claim a reduced research credit if the taxpayer has no qualified research expenses over the three preceding tax years, and increases this credit from six percent to ten percent. H.R. 4438 would repeal the traditional research tax credit effective for tax years beginning after 2013. This legislation would be effective for amounts paid and incurred after the 2013 tax year.

According to the National Association of Manufacturers, "the R&D tax credit is a proven incentive for spurring private-sector investment in R&D and creating domestic, high-wage jobs -- 70 percent of credit dollars are used to pay salaries of R&D workers…a strong and permanent R&D incentive will allow the United States to remain competitive in the global race for R&D investment dollars and a leader in global innovation…"

The Joint Committee on Taxation, Congress's independent, non-partisan referee for tax legislation, estimates that making the R&D credit permanent will increase the amount of research and development American companies undertake by 10 percent.

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