"EIA and the technology community are deeply disappointed that Congress has allowed the R&D tax credit to expire this year and postponed the opportunity to expand the credit in a way that will enhance U.S. innovation. Over the years since it was first enacted in 1981, the credit has worked to incentivize high-value research and experimentation in the U.S., creating highly paid jobs for American workers and strengthening our innovation economy. The expiration of the tax credit on Dec. 31 is a tragedy for the high-tech industry, increasing the cost of doing qualifying R&D in the U.S. for many companies by as much as 7.5%. This could lead to potential layoffs for highly skilled workers and a shift in R&D to other countries with more generous tax incentives. Allowing the credit to lapse, even for a short time, will lead to uncertainty regarding the availability of the credit, cause companies to discount its long-term value and reduce the credit's benefit to the economy.

"We strongly urge Congress to make retroactive reenactment and enhancement of the credit - as included in the recently passed House and Senate tax reconciliation bills - an early priority when it reconvenes next year. A lapse in the credit, however temporary, has an immediate impact on high-tech companies' long-term R&D strategies, their financial reporting and their budget and employment plans. However, if Congress reinstates and strengthens the credit by passing into law important enhancements that EIA has long supported, this tax incentive will provide companies with a strong reason to undertake and increase domestic research work.

"Data show that the growth in foreign-based R&D spending now outpaces that in U.S.-based spending, so an R&D credit that provides incentive to as many innovative companies as possible is more crucial than ever. We urge Congress to address this unfinished business quickly and restore innovation certainty in the form of an improved R&D tax credit as soon as possible."