good morning let me just go ahead and and open this hearing i'm going to start with an apology we're going to have votes relatively soon and so we're going to be interrupted we're going to get as far as we can through the to the opening statements and then we will have to go vote and then i'll get us back and start us right as soon as we get through the the first cycle of votes again so apologies ahead of time but when i have to ask for a a bit of patience today but we will we'll give everybody a chance to say what they need to say i want to go ahead by just starting with an opening statement and again welcome to all our panelists today yesterday afternoon the house voted on legislation to strengthen the s b a small business innovation programs and in debating that bill the same two themes kept coming up over and over again job creation and economic growth those are areas in which our country has traditionally excelled thanks largely to an emphasis on research and development and today even as our economy moves towards recovery we need to be focused on the kind of innovation that can unlock new markets and create new jobs the research and inspire experimentation tax credit commonly known as the r and d tax credit is a tested means for doing just that targeted tax relief is an important tool for encouraging small business growth and also an effective catalyst for innovation in the past the r and d tax credit has encouraged countless entrepreneurs to test the waters of innovation and today we're going to look at that incentive and evaluate its role in strengthening small firms any investment in small business r and d goes a long way that's because entrepreneurs are already more inventive than their larger competitor small firms produce thirteen times as many patents as big businesses and have a history of pioneering new markets we can remember the tech boom in the one nine hundred ninety s wasn't a corporate success story as much as a small business revolution one that saw the rise of lucrative new industries such as online advertising but we must also remember the innovation isn't just about developing the latest technology it's about creating jobs seventy percent of r and d credit dollars go to high wage positions for researchers scientists and engineers because small firms employ nearly forty percent of these professionals it's safe to say that r and d job growth is small business job growth and with unemployment now hovering at nine and a half percent we need every job we can get incentives for innovation are an important means for keeping current workers on payroll and putting unemployed americans back to work they also make good economic sense according to one study every dollar in r and d tax credits yields another two dollars  research clearly this credit is doing a great deal of good for our economy and yet despite its obvious benefits there is concern that it is not accomplishing as much as it could for entrepreneurs that's a real issue because roughly forty percent of the businesses that claim this credit are small firms perhaps the greatest shortcoming in the r and d credit is its lack of permanence in the nearly three decades since its inception the incentive has never been cemented instead it's been one year at a time often at the last minute retroactively and after the credit has expired now that sounds convoluted it's because it is and needless to say these actions have added an element of uncertainty to an already risky r and d process making the tax credit permanent could mitigate that risk giving entrepreneurs the stability they need to plan budgets and attract investment meanwhile a move to unravel some of the credits complexity could also be a big help by simplifying the process we could cut down on paperwork and ease compliance costs doing so would likely encourage more small firms to participate in r and d helping them to develop more new products and create more new jobs kitco fiberoptics of business based in my district who unfortunately could not make it here today is just one example of a small business which qualifies for the r and d tax credit yet does not receive the credit the presidency of kitco geoff clark has told me that due to the uncertain nature of the current legislation his business is not made the initial investment to hire an accountant who specializes in r and d tax credit dealings to go through their accounting books in order to determine what would qualify for this credit and my hope is that taking action to both simplify and make permanent the r and d tax credit would encourage kitco and other small businesses to use the incentive to increase their growth and productivity the strength of our economy has always been driven by the innovation and hard work of our small entrepreneurs and as we work to create jobs and get our economy moving again we must once again look to small business to lead the way by strengthening the r and d tax credit and cutting taxes for small businesses we can give our most inventive firms the tools they need to innovate and grow and most importantly as we face increased competition from abroad continued investment in r and d will help us retain our standing as home to the world's greatest technological advances i'd now like to thank today's witnesses in advance for their testimony i know that we're all looking forward to hearing from them and with that i would like to go ahead and recognize our our committee's ranking member mr sharp for any opening statement that he might have and again apologies for the fact that we'll have to break to go vote relatively soon but we'll see how much we can get done before that shock well thank you mr meeting to further study the impact of the research experiment or the what we call the r and d tax credit and what effect it is having on our nation's small businesses i'd also like to thank each one of our witnesses for having taken the time to provide this committee with their testimony and travel all the way to washington here today the r and d tax credit has been available for businesses large and small for over twenty years and during that period tens of thousands of companies have used this important provision of the tax code to help reinvest and grow their businesses and encouraging more american ingenuity and invested jobs now more than ever we must be focused on providing appropriate incentives to those companies which will help grow our economy and make a sustained commitment to conducting long term high cost research right here in the united states the r and d tax credit is a positive motivation for us investment innovation and something which will help contribute to a stronger economy and a higher standard of living for american workers simply put the r and d tax credit stimulates immediate business investment decisions with long term benefits to the u s economy since the r and d credit is only available for research performed in the united states it remains a job creator that cannot be export as such the credit is certainly needed especially in foreign as foreign governments continue to actively recruit american companies to base research operations at a low cost option abroad regrettably congress has repeatedly failed to provide long term insight to extend this credit beyond just a few short years the fact that the r and d credit has proven itself popular enough to be extended thirteen times is all the evidence this congress needs to know that we should stop playing games and make the credit permanent again the r and d tax credit is scheduled to expire at the end of this year and again small businesses are being pushed into a scenario where saving proves wiser than investing for growth due to the lack of certainty of the continued extension of this credit with such confusion businesses are unable to factor the full benefits of the r and d credit into their research budgets long term commitments and their capital needs the bottom line is that either a longer extension or permanency of the and d tax credit would create and help high paying u s jobs and allow for better planning by our nation's businesses i'm optimistic that today we'll hear from those small businesses that are directly affected by this tax credit i look forward to hearing from you create good paying american jobs and you'll back mr chairman thank you mr shock i'm going to go ahead and introduce the panel members one by one we're going to ask you to try to get your remarks into the five minute window if you can and you'll notice in front of you is a set of lights which will be green for four minutes yellow for the final minute and they'll turn red one five minutes is up and to get to the end we've asked you to try to go ahead and conclude as quickly as you can i want to start by  introducing mr barton and c e o of more fix technologies based in virginia beach virginia as the c e o mr heenan leads the strategic direction and day to day operations of the company more fixed technologies provides innovative gas detection products to military first response and industrial users throughout the word world and again thank you for being with us today mr cheney recognized hundred five we make chemical detection products that have the potential to save lives for military for first responders and for industrial workers our niche is providing low cost rugged easy to use chemical detection devices that your average cop your average eighteen year old who goes and volunteers to serve in our military can use with minimal training we now employ thirty five people fifteen of whom are scientists and engineers five of them have ph d s as a business person i'm really not in position to recommend policy however i would like to i share with you some of my thoughts of the practical implications and practical issues i see with the r and d tax credit clearly as you've already stated the r and d tax credit has a big impact on america's competitiveness can have a big impact on job creation at more fix eighty five percent of r and d is labor cost so it is and those are good paying jobs a well functioning already tax credit i think can help small businesses maybe increase their science staff by five to ten percent however the companies need to believe that they aren't in the r and d tax credit frankly at more fix we don't have that confidence in the  tax credit on a regular basis so we haven't gone out and hired that additional scientist additional engineer that we might otherwise hire for the already tax credit there's three main reasons for that that i'd like to share with you the first both of you have already addressed and that's the permanence issue that a that impacts all you know all companies participating in the already tax credit so i'm not going to discuss that further you've already discussed that very well the second and third issue are both i think very specific to small companies a nd the first of those is that there is a significant administrative burden for small companies to be able to take advantage of the r and d tax credit and that administrative burden is not just going out and hiring a tax accountant but it's having the accounting systems in place that allow you to do what you need to do to comply with the i r s regulations most large companies have those accounting systems in place in my experience most small companies do not so it's not just in  investment once a year in tax accountants actually a big investment change in the infrastructure of the company and that's a very very difficult issue for many small companies the next and last issue i'd like to highlight is probably the one that's most important to me personally and that's the impact of the alternative minimum tax or anti relative to the to the r and d tax credit this issue is really i think pretty simple and that is that many small businesses including mine are taxed through the individuals income tax not through a corporate income tax large companies are often taxed to corporate income tax small companies more through individual tax if the individual owners the business owners who are being taxed through their individual tax tax return are subject to the a m t they are not allowed to take the r and d tax credit as a result i think many business owners feel that it's not worth the effort to go after the r and d tax credit because they're not really going to get the results let me give you an example my personal example more fix we've spent well over a million dollars in r and d over the last three to four years my share of the taxes we've paid for in common employment taxes has been in the hundreds of thousands of dollars and i've personally been able to take one hundred thirty eight dollars an hour and a tax credit over that time period that's really not much of an incentive to go and do something that's going to  to to employ the people and do the things the r and d tax credit is intended to do in summary i fully support the r and d tax credit i think it's a powerful engine for employment growth a powerful engine for competitiveness of the country for the reasons i outlined above i believe that small technology businesses are generally not fully utilizing the tax benefit to their to their full advantage and of course of companies are taking your any tax credit that it's not achieving its economic and social benefits that it's intended to i would ask the committees now like to introduce mr ferris mr scott ferris chief financial officer from black hawk located in norfolk virginia black hawk was founded in one thousand nine hundred five by a former u s navy seal the company is recognized as a world leader in supplying tactical equipment to the military and law enforcement markets mr fa again my name scott ferrall some of the vice president and chief financial officer for blackhawk in norfolk virginia based on small business thank you again for allowing me the opportunity to share my views on the merits of the research and experimentation tax credit as a certified public accountant with over thirty years of very public accounting and industry experience and the chief financial officer of a highly innovative small business i feel somewhat uniquely qualified to convey to you some of my observations on the credit as i'm sure you already know which i've experienced time and time again tax policy does significantly influence tax payer behavior with respect to the r and d credit i believe the economics of the credit stimulate product innovation related spending however the ongoing temporary nature of the legislation along with the administrative complexities of program do create an uncertainty for all users and there is a punitive cost of compliance issues that will limit the use for very small businesses as we meet here today i'd like you to consider a couple  compliance process blacklock is a sixteen year old company with a history of developing new and innovative products solutions which we believe enhanced the effectiveness and safety of our primary end users the war fighter and the law enforcement officer i our collective opinion that blackhawk that the economic benefits of the credit allowed under the internal revenue code have help enable our company to grow from a very small entrepreneurial run business to a product development driven organization that now employs over three hundred people throughout the united states and sells thousands of products to military and law enforcement professionals on a global basis blackhawk has utilize the arni credit since nine hundred ninety nine during this ten year period the company has successfully developed several hundred new products and increase payroll related research and experimentation expense from approximately two hundred thousand dollars in one nine hundred ninety nine to over five million dollars in two thousand and eight during that time credits increased from roughly fifteen to over three hundred thousand dollars last year the gross revenue subject of federal and state tax grew ten fold much of this increase that we've experienced has been driven by new products introduced as a result of the  process which leads us to believe that the payback to the government far surpasses the cost of the program while the benefits of the program appear clear the temporary nature of the credit has caused uncertainty and the compliance complexities of created barriers of entry in a cottage industry supporting the compliance the irony credit was originally acted and acted as part of the one thousand nine hundred one economic recovery tax act and has been revised been amended in the years since through many updated tax but remains still temporary t continuance of the credit is a frequent topic of discussion and speculation between businesses tax advisors members of congress and the department of treasury creating an air of uncertainty for all parties involved we believe that making the credit permanent would encourage more companies to use this credit and therefore stimulate research finally the tax credit and expenses are dressed in internal internal revenue code sections forty one and one seventy four as well as the corresponding regulations the source of the laws well over one hundred pages in length which does not include the thousands of court cases and other rulings pertaining to the same topic an editorial discussion by the b national affairs is nearly three hundred pages in length as evidence by the massive volume of block compliance and access to the credit is extremely difficult the complexity has given rise to a cottage industry of tax advisors specialize exclusively in quantifying there and reporting the credit in our case we justify the compliance and consulting cost to report the credit however quite frankly the professional services associated with this credit are expensive and i believe prevent smaller entrepreneurs from benefiting blackhawk we have a well organized and disciplined r and d division with remarkable employees and distinct financial reporting even with this unique organization were required to produce contemporaneous documentation to support it is for the sole purpose of qualifying for the credit and while we have sufficient size to benefit from from the credit it's not always the case and it was very difficult when we were a small company we believe there are many barriers that prevent smaller and younger companies from claiming this credit not the least of which are the complexities the compliance costs the alternative minimum tax and that operating limitations so mr chairman and members of the committee we strongly recommend that easing these barriers will permit more and smaller companies to claim the credit and drive  great thank you mr farris mr shock if you don't have any opposition i'm going to go ahead and invite mr wilson i think we have time to get one more person's opening statement from left to go take some votes mr wilson thank you for joining us today mr doug wilson is the executive vice president of life net health in virginia beach virginia life in that health is a nonprofit organ procurement organization providing donation systems for heart liver kidney and other organs for transplant and mr wilson thank you for joining us today please good morning congressman and thank you for having us research has played a significant role in life past and will play a significant role in our future today life and health is the largest nonprofit full service provider in the united states and since our formation in one thousand nine hundred two life of health is pioneered technologies to a strong and unwavering commitment to research designed to ensure safety and allograft screening recovery cleaning and delivery allograft tissue is  tissue donated from the gift of tissue donation at the time of one's death life yes is this tissue into implants for surgeons to use in their patients who are suffering from a disease or a specific injury are innovative processes have been benchmarks in the industry allograft tissues are actually transplanted in nearly every hospital every day specifically in orthopedics trauma care neurosurgery cardiac surgery in vascular surgery today's hearing is the following life  health works closely with many for profit companies both in research as well as in the distribution phases of our product life cycles in some cases we rely on them and we will continue to rely on them for their capital investments through contractual programs in joint ventures for research into new bio implant technologies leading to new and improved clinical products in many cases these companies provide life and health and nonprofit with the necessary capital to enhance our research and our production efforts carry the products to the regulatory process and the product development cycle the research tax credit and its many forms can be a factor in the investment decision by our for profit partners most of our new products particularly those emanating from regenerative medicine are very long time horizon projects and they have high fixed costs thus permanent so the tax credits could reduce the risk for the investment and distribution partner that we may solicit equally important permanence provides an environment in which our for profit partners can plan and forecast with more confidence long term the use of the tax credits allows life met through our partners to have flexibility in the selection of projects and products to fun especially those who have high social value and long term impact on our society d will ensure better patient care and more importantly optimize economic options for hospitals which they need like that health commitment to safety and quality and patient outcome is evident everything we do including ongoing research and development efforts we have more than forty five patents that include cleaning technology which is the industry standard in tissue banking as a result of our r and d work life that health is distributed nearly two million allograft with no incidents of disease transmission linked to tissue screened and processed by life as a part of our ongoing commitment to buy implants life not health recently announced the life net health regenerative medicine institute the focus of the new institute will be to utilize our current technologies coupled with the latest in stem cell and growth factor developments to yield new generations of more clinically effective implants for these lofty projects going forward life that help will surely establish alliances with for profit organizations for co development the use of the permanent tax credit for research and development purposes by opportunity alliance partners will no doubt allow us to move ahead in developing better therapies for patients in need and furthering our mission of saving lives thank you very much i thank you mr wilson just want to check the clock here all right what i'm going to do is i'm going to have going to adjourn the session until we have time to go take this vote and i understand we have a series of votes to take that's going to eat up a little bit of time not sure exactly how long it's going to take i'm hoping it'll be less than an hour but it will be a significant bit of time so we're going to german till we finish this round of votes we will come right back as soon as it's over and we'll have the staff kind of keep you up to date on on where we are where we are and how long we think it will take and again apologize but  this is one thing that we as members of congress have to do when they tell us and personally so again thank you for being here and we will adjourn temporarily and then we will reconvene as soon as possible i'm going to go ahead and bring this hearing back to order thank you and apologies for holding you here for so long but i'm glad you stayed i think it's important that everyone here who spent the time to get here have a chance to be heard today on this important topic so what i'd like to go ahead and do is introduce our next panelist for his opening statement dr carl shown by a professor an eminent scholar from the frank ricci research center for bioethics at old dominion university located in norfolk virginia the frank brady research center works to develop medical diagnostics therapeutics and environmental decon time the nation dr chan about forty faculty graduate students and technical stuff we focus on the study of biological effects of electrical pulses and tried to develop new therapies based on these bioelectric effects and one of our major application is treatment of cancer we're doing very well in basic research as shown by the funding which we get mainly from age and the department of defense by a large number of publications and invited talks all over heard we are less successful in transferring however our research to industry two examples already in two thousand and two we have pulses we have tried since then since two thousand and six and actually we forward to find companies who quit us to bring this technology to market and be the only successful this year to find a company who is willing to work with us another example is based on research developed over treatment of melanoma also in this case we have developed an efficient method using electrical pulses to deliver genes directly immediately it took us two years to get support from a small business which helped us to get the equipment in place and financial support from a cancer center do it face one trial and again this gave us  astic results we are still searching for companies who help us to support face to try again because of the limited availability of research dollars we have not been successful yet in both cases the lost valuable time which would have been used to bring our therapies to cancer patients the problem is that the university researchers focused on basic research  only demonstrate feasibility preclinical studies or early phase clinical studies will seldom go towards full development of therapies this is considered to be the task of companies small companies on the other hand would is a gap between university research and research and development at small companies and any incentive which helps to bridge this gap to lower the barrier is extremely important for university thank you very much i'm going to we're going to go and i'm going to actually invite a ranking member mr shock to do the next introduction as i believe our next pa direct logic was founded in one thousand nine hundred eighty eight and has grown substantially since then to help in their clients with direct to consumer marketing direct logic has a number of customers located in central illinois and also around the country they focus on marketing consultation search engine optimization marketing database construction as well as sales forecasting that has been with direct logic from the start for that ran a variety of other different businesses appreciate you making support the continuation of an expansion of the tax credit direct logic employs twenty five people and we specialize interactive marketing which includes web site development as you mentioned database construction email marketing online promotion social marketing t there is such a great ability for people to collaborate on line in real time with colleagues and peers around the u s and around the world a person's physical much less important are programmers who work with people around the world have access to the most recent developments at their fingertips but there is a quality of life and creative environment where they can make the most of our lives the people that we attract to our firm are attracted to peoria for the low cost of living in the higher quality of life that they can enjoy their families are real challenge access to credit markets money from ongoing operations to phone fund most of our and many small firms do this and they can be an incredibly important offset to this utilization of scarce capital it's a very important point that the needs to consider small firms of the innovators of tomorrow and represent critical sources of new tax revenue for both the state and federal governments in order to stay competitive and grow wheat for every available tax dollar into our the money freed up by the tax credit plowed back into businesses in the form of additional salaries and investment furthermore the r and d investment we're doing is helping them in the transformation of the workplace a significant percentage of our employees are sons and daughters of large manufacturing companies  any subcontract work with foreign firms but what i am struck by when i speak with executives is the level of work they're doing and the sophistication of the work that they're doing during the past hundred fifty years a competitive advantage the nation's no other commercial air commercial i thank you very much finally i'd like to introduce mr bender mr richard ben president c e o of innovation america located in philadelphia pennsylvania mr venice is a frequent consultant and speaker international technology based economic development organization innovation america works towards accelerating the growth of the entrepreneurial innovation economy in america we're happy to have you mr bennett and thank you chairman and ranking member shock good afternoon my name is richard this and i am the president c e o of innovation america i am also a long time member of the american society of mechanical engineers a founding board member a member of both the national association of seed and venture funds and the state science and technology institute and a former technology an entrepreneur who has benefited from r and d tax credits i want to thank the subcommittee for providing me the opportunity to comment on the importance of extending and making permanent the research and experimentation tax credit innovation america a s m e n n a s b f support this extension innovation america also supports the r and d credit coalition's recommendations of a permanent r and d tax credit at a commensurate rate for all companies a twenty percent simplified credit and a longer extension of the traditional credit hundred one when the federal r and d tax credit was enacted the u s government sought to encourage businesses to look to the future and invest in long term high risk high dollar investments that would create high wage jobs the r and tax credit helps to lower the cost of these high risk investments that are necessary to keep american companies competitive and foster growth in the overall economy especially during these challenging economic times the national academies has cautioned that without high quality knowledge intensive jobs and the innovative enterprises that lead to discovery and new technology our economy will suffer and our people will face a lower standard of living our trading partners around the globe recognize the long term value of r and d and have moved aggressively to implement generous and permanent tax policies that attract these vital investments to their shores in addition to the federal r and d tax program at least thirty eight states utilize tax credit programs as economic development incentives or research paper published in economic development quarterly in state r and d tax credits and high technology ixtapa shipments concluded that state tax credit programs have significant and positive effects on a number of high tech establishments in the state r and d tax credit programs vary from state to state as some offer refundable credits set up in a way that the amount provided to a company utilizing the r and d tax credit may exceed the company's actual state income tax liability some states allow credits to carry forward to future years while others set percentage caps on the tax liability that can be applied to credits and additionally some states allow for transferability or sale of credits in the event the company has no tax liability that generates cash for these entrepreneurial firms which is needed those early stages of growth i also believe that while the r and d tax credit program extension is a critical component of the u s innovation portfolio of programs it is not the only area that this subcommittee should be concerned with  in the chairman's opening comments he referred to job creation is one of the highest priorities this administration and congress has especially those created by innovative entrepreneurial companies if recent history is any indication for three years following both the ninety and two thousand recessions small businesses of less than twenty employees were responsible for over one hundred percent of the net new job creation in america unfortunately what worked after the last two recessions might not work as well today due to the fragile nature of our financial markets the valley of death which represents the entrepreneurial funding gap between a half a million and five million dollars has gotten wider and deeper venture capitalist average investment last year was eight point three million dollars per investment and they had their lowest investment quarter and thirteen years last quarter angel investors last year invested twenty six percent less than the prior year due to their own personal financial crisis and forty seven out of fifty states have budget problems that will negatively impact their entrepreneurial support programs for the first time in u s history we now have a perfect storm affecting our innovation economy in december of two thousand and eight we met with the members of the obama transition team and presented a proposal for creating a national innovation framework the details of this proposal have also been submitted to this subcommittee in a white paper which was published by science progress in summary we recommended that a national innovation seed capital jobs fund of funds be created and we support the permanent reauthorization of the f b i our n s t t r programs we also recommend that an integrated national innovation strategy be developed and that the end ministration prioritize innovation as part of their national agenda time does not permit a detailed discussion of this innovation strategy but it is complimentary to the r and d tax credit discussion that has occurred today in this subcommittee hearing in closing i strongly support the permanent extension of the r and d tax credit program as it is an extremely important component of america's innovation program portfolio and i'd like to thank you for the opportunity to present my view to this subcommittee and request that my written statement as well as other supporting documentation be submitted into the record thank you very much we will do that again thank you for your testimony and thank you to everyone not only for making the effort to be in here today but for bearing with us while we are a little bit delayed i'm going to be mindful of the time we've kept you here i'm just going to i'm going to ask a couple of follow up questions and then yield to mr sharp as much time as he would like and then conclude but i want to just pick up on a couple of things that i think are important i've heard today and one is starting with mr here you mentioned the effect of  the a m t of not being able to take advantage of the of the tax credit the r and d tax credit can i just wanna get a poll as anybody else experienced that problem or know folks in our industry have had the same issue by rays of hand if that's could allow that credit to be taken that someone subject to that would eliminate the problem ok sounds very direct and reasonable i want to follow up on also the issue that a number of people have mentioned about the expense of compliance and i believe mr han you and mr harrison also mentioned having some trouble with and again as i mentioned my opening statement i've talked to other business owners in hampton roads area my district who have said they had some trouble with that  mr farris can you comment on how you've handled that and how big of an expense that's been for you blackout well the way we typically handle it is we've had to set up some sophisticated accounting and we do project related accounting that is very specific to the r and d process so our our engineers have to maintain time records project specific records we have a lot of specific documentation that we have to have available for the specialist as they come in to ensure that we not only have sufficient documentation but we put it in place for a potential i r s audit what i've been told from our tax professionals this is a tier one topic consequently every year we submit our tax filings we feel that the r and d tax credit will be subject to review so we go through the extra steps and consequently the extra cost to ensure that we're in compliance for the small business person i think they just typically avoid it because they don't want to deal with the issues nor do they have the available cash to go through the process that's involved in missourian my company we do government contracting so we're required by the d o t and other agencies to have a pretty robust accounting system so it actually is not an issue for my company today but i've had the pleasure of working at three other small companies prior to this none of them did government contracting and none of them all of them did a lot of research none of them went for the r and d tax credit and the reason was simple we just didn't have the accounting systems robust enough to meet the i r s standard for applying for the tax credit ok  one more follow up question for mr harris we're talking about complexity can you make any comments about and i understand and i've heard i think pretty consistently today that the permanence of the program would be a big help and in planning for future years what about the structure  the complexity of the way the tax credit is put together and the difficulty in understanding how it's set up do you have any comments on i did ways to make it easier would something like a flat credit for r and d be something that would be more easy to manage  certainly i'm a proponent of a very simplistic approach again if you're a larger company you can rely on the expertise of professionals they depict the interpretation of the law i'm a certified public accountant i don't understand the law i rely on our professionals to come in and help us be compliant as a small business person somebody that is focusing on truly innovative and thought provoking and hopefully various significant outcomes the last thing they want to think about is tax compliance they're focused on technology they're focused on product innovation they're focused on growing their business consequently we need to keep it simple they need to understand what the net benefit is for them at the end of the day and they should be able to scratch it on a single piece of paper rather than call up their c p a and go through a very time consuming and sophisticated process so i'm all about simplification thank you dr sharon back in your testimony you suggested that one of the challenges you see from your perspective is getting the universities and the businesses together and bridging the gap between the two and do you have any specific suggestions of ways we could make that bridge easier i way thank you and i have one final question for mr bendis you began to lay out i think kind of an ambitious agenda of other ideas that could be very helpful to us in terms of of assisting innovative small businesses i just want to if you could give us any ideas about specific changes to the r and d tax credit that might help us at least get halfway there permanence is number one i think one of the problems is that it's somewhat like the f b i our program which i know you just the house passed yesterday i think there's a little frustration amongst all of the practitioners in the united states and small businesses that they really can't plan long term on a number of items based on  the temporary nature that some of these programs exist or there are always going back for reauthorization so there are a number of countries around the world who basically look at what the united states creates they basically simplify it and improve upon it and then they build it into their innovation strategy and make it permanent so the question is why should we continue to be the one the designs of programs other people benefit around the world and then we debate our own programs which everybody agrees with are the best working in the world and we come back and debate them every couple years here in congress so permanence i think for these kind of programs as well as other critical programs in the innovation portfolio is extremely important simplification is another area  and that's been talked about by some other panelist anything that can be done to simplify the program to where a non accounting non legal person can understand the legislation and whether or not they can qualify for it very quickly quickly would be very advantageous to entrepreneurial and innovative businesses all right well again i want to thank all of you for giving us some some really good ideas to take into account as we look at reauthorization and i'd like the follow up chairman nice question about transferring that technology to business is part of the the bill yesterday was the s t t r provision the small business technology transfer program and i'm just wondering if your university is able to or if you target businesses who may already participate in that program as potential customers for your for your technology that you're developing at the university if there's a way for you to get that information of recipients in the words of those entrepreneurs who are already involved with that that are interested in taking the risk in developing the technology that a university like yours would use  has made a decision this is funding a certain delay that in all these procedures but definitely i think for many projects this is a very it's an excellent program and we have made use of it several times so the limitations on the program are so much in the way the rules are written but as much in the grant award sizes don't allow for some of the research best but my opinion is in some of the some of the projects as quickly as possible innovations to industry and move way to do it is for example i go into the internet and look at what is available at an engineer so this would be my first thing to do  t and then i see and i look through all the different topics which offered and some of them might fit but most of them will not fit if i do something which is really innovative so i require some additional i think to make people available which takes time to do so this is a matter maybe of involving research or more in the decision making about topics which are funding and i don't know how perhaps we could offer some incentives for what i would interpret as like an accelerated depreciation or some kind of incentive for the capital required for the r and d is that what you're thinking of is like an accelerated depreciation method for those investments or do you have some specific ideas on what we could do as a part of the r and d tax credit to help and to help lessen the the  burden required for some of the more capital intensive research i think that more rapid depreciation would be a very good thing because in our business the hardware becomes obsolete much more rapidly than one five years i think is a typical d research and on the tax credit i'm wondering if there are specific states that are exceptionally good at this or they have a better are indeed than other states that we can model our legislation at or least look to for ideas as i mentioned there are thirty eight states and a number of them have modeled their programs based on what the earlier states have done and tried to improve them i know that new jersey has done some modifications recently pennsylvania has a very aggressive program but i think would be very easy and the state science and technology institute which is a technology based economic development national association working with these kind of organizations and fifty states could very easily summarize for you in this committee what some of the best practices are and what some of the improvements have been made as well as the national association seen venture capital we'd be glad to work with the committee to look at what some of the innovative things are that are occurring in the states that may benefit this legislation as you're trying to either extend or make it permanent you know i don't know if it's too late but it's never too late to look at constant improvements and i think that the platforms of innovation are really occurring in the state level so how do you take advantage of some of the things that they've learned from best practices that can be incorporated to the federal level and we are glad to work with you on that i don't think it's too late i mean that's why we're having the hearing some good ideas and feedback and ways to improve so very good thank you all for you for your traveling here and most importantly for putting up with their very crazy schedule welcome to congress thank you again i want to add my word of thanks everyone for spending this time with us and for sharing your expertise you all are on the front lines here and see this in execution every day and it's our job to listen to you and then to try to make policy which reflects the reality of what's going on out in the economy so i thank you again i'm going to ask unanimous consent members have five days to submit statements and supporting materials for the record without objection so ordered this hearing is now adjourned