Washington, D.C. – The Electronic Industries Alliance (EIA) today urged Congress to support legislation that would extend and strengthen the research and development (R&D) tax credit so critical to long-term technological advancement in the U.S. The R&D credit, which is due to expire on June 30, lowers the cost of high-risk research investment in the U.S. and is an effective incentive for companies to increase spending.

“Over the past 30 years, innovation has given the U.S. and the rest of the world wave after wave of technological advancement and generated millions of high-skilled jobs,” said Dave McCurdy, president of EIA. “If we want to ensure that successive waves of innovation begin in the U.S., and that U.S. workers are the first to benefit from ‘the next big things,’ we must have the necessary innovation infrastructure in place. The R&D credit is a fundamental part of that infrastructure.”

A new analysis of data on the R&D credit released today notes that the credit is used by companies in all sectors of the economy but primarily (68.6%) by those in the manufacturing sector. In the case of small companies, the relative value of the credit can represent as much as 9.4% of a firm’s value. It is important to note that only R&D work performed in the U.S. qualifies for the credit.

Congress has endorsed the R&D credit 10 times since its inception in 1981, with strong bipartisan support, but the lack of uncertainty inherent in its impending expiration could result in the decision by some companies to locate future projects offshore, where R&D policies are more generous and stable.
EIA strongly believes that Congress should extend the credit beyond its June 30 expiration date and help fuel technology-driven economic growth. Technological innovations accounted for more than one-third of U.S. economic growth during the last decade. The Alliance also urges Congress to strengthen the credit by increasing the Alternative Incremental Research Credit (AIRC) rates and by providing an alternative simplified credit calculation to induce even more research-intensive businesses to undertake additional R&D spending.

About EIA: The Electronic Industries Alliance is the leading trade organization in the U.S. for the high-tech industry. Its 2,500 member companies provide products and services ranging from microscopic electronic components to state-of-the-art defense, space and industry high-tech systems, as well as the full range of telecommunications and consumer electronic products. EIA’s mission is to promote the market development and competitiveness of the U.S. high-tech industry through domestic and international policy efforts.