Certainly the credit is not perfect. First, because of certain rules governing the use of the credit, its maximum marginal effective rate is substantially lower than its statutory rate. Second, the credit has never been made a permanent feature of the federal tax code. And third, the credit confers uneven marginal benefits among firms performing qualified research. Undertaking basic research is unavoidably expensive and risky.
Some firms derive more tax benefits from the credit than others for no apparent reason.
In fact, even among specific research projects conducted by the same firm, the credit applies quite unevenly. Solutions A total of eight bills pending in the current Congress would permanently extend the credit. The credit should be targeted to produce the maximum research bang for the buck. Also, the tax incentive relies on existing research resources already available, rather than establishing costly, new programs. I urge my fellow Members of Congress and the incoming President not to allow this valuable tax provision to languish in a series of temporary extensions.