The Incredible Shrinking Tax Credit
Congress has once again retained tax credits to companies both for their in-house R&D and for contributions to basic research at universities and other nonprofit research institutions. But the credit is steadily shrinking. The original law for new R&D spending was a 25% credit for four years. In 1986 the credit was extended for two years and lowered to 20%, and in 1988 one more year was added. The basic research credit, created in 1986, has followed a similar path. This year Congress approved what amounts to a nine-month extension, after revising a bill passed by the House of Representatives and the Senate Finance Committee that contained a permanent credit. "We came within a hair's breadth of getting it all," says Kenneth Kay, executive director of CORETECH, an industry-university consortium that has lobbied hard for the credit. "It's disheartening, but it's better than a December...
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