It provides for a research credit of 20 percent of the amount by which a company s qualified research expenditures for a taxable year exceeded its base amount for that year. This credit was originally enacted in 1981 and has been temporarily extended ten times. With the passage of the current 5-year extension in 1999, the credit will be in effect until June 30, 2004. For the U.S. to remain competitive in a global marketplace, companies of all sizes must continue to invest in long-term research projects. Research is not only a recognized key driver of economic growth, but is necessary to maintain U.S. advantage in productivity and innovation.
Most research projects last five to ten years from conception to completion.
Therefore, companies need more certainty than five years to deem the tax credit a sufficient incentive to undertake such a project. The Sacramento Metro Chamber of Commerce supports legislative efforts to permanently extend the credit. We also support increasing the value of the AIRC rates. Support the adoption of S. 41 and H.R. 41 to amend the IRS Code of 1986 to permanently extend the research credit and to increase the rates of the alternative incremental credit. An adequate, reliable and affordable electric supply is essential to the ongoing growth and vitality of the high technology businesses in California.