Arlington, Va., June 16, 2005 - With the federal research and development (R&D) tax credit slated to expire later this year for the 12th time, the Electronic Industries Alliance (EIA) today called on Congress to extend the credit and expand its usefulness by making it permanent. EIA and others in the business community actively supporting the R&D tax credit joined Senator Orrin Hatch (R-UT) and Representatives Nancy Johnson (R-CT) and Benjamin Cardin (D-MD) this morning at a Capitol Hill press conference designed to raise awareness of the credit's importance. EIA urged the passage of S. 627, sponsored by Hatch and Senator Max Baucus (D-MT), and H.R. 1736, sponsored by Johnson and Cardin. These bills would permanently extend the credit and make enhancements to provide the credit's benefits to a wider array of companies.

"There are few tax mechanisms as important to EIA's 1,300 member companies as the R&D credit, EIA President and CEO Dave McCurdy said. "The expiration of the credit would mean as much as a 7.5% increase in the cost of doing qualifying R&D in the U.S. for many companies, potentially leading to layoffs for highly skilled workers and a shift in R&D to other countries with more generous tax incentives. The R&D tax credit is also an important tool for small high-tech member companies who are part of the Alliance, since the value of the credit as a percentage of assets is highest for smaller companies, reaching as much as 9.4%."

R&D is a core business operation for U.S. high-tech companies developing, testing, refining and perfecting new innovations in science, technology, telecommunications and other areas. Because of the credit, EIA believes work related to U.S. innovation can be done more cost-effectively. If the credit is no longer available after its current expiration date of Dec. 31, the Alliance believes the environment that allows U.S. high-tech industries to compete on a global basis will be in jeopardy and that other nations will benefit from a shift of research-based activity and highly skilled jobs. As EIA noted in its 2004 policy playbook, The Technology Industry at an Innovation Crossroads (available at www.eia.org/docs/innovation_playbook.pdf), research and development plays a vital, foundational role in the U.S. high-tech industry by facilitating commercial innovation through scientific and technological discovery.

"Congress has endorsed the R&D credit by extending it on numerous occasions since its enactment, but if we want to keep pace with other nations' willingness to create research havens within their borders, we should maximize the impact of the credit by making it permanent. A tax credit whose availability can only be gauged on a year-to-year basis is one that creates uncertainty and compels companies to discount its value," McCurdy added. "By making the R&D tax credit permanent and available to more research-intensive businesses, we can stimulate additional R&D spending in the U.S."

About EIA: The Electronic Industries Alliance (EIA) is the leading advocate in Washington, D.C., for the U.S. high-tech industry. The Alliance, which traces its origins to the Radio Manufacturers Association (chartered in 1924), is a partnership of electronic and high-tech associations and companies whose mission is to promote the market development and competitiveness of the $400 billion U.S. high-tech and electronics industries through domestic and international policy efforts. EIA's corporate members - nearly 1,300 - 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 electronics products. Headquartered in Arlington, Va., the Alliance is made up of the Electronic Components, Assemblies & Materials Association (ECA); the Government Electronics & Information Technology Association (GEIA); JEDEC; the Telecommunications Industry Association (TIA); and leading consumer electronics companies who participate in EIA's Environmental Issues Council. EIA is also heavily involved in cyber security issues through the Internet Security Alliance (ISAlliance), and education issues, through the National Science & Technology Education Partnership (NSTEP).