Semiconductor Industry Applauds Extension of R&D Tax Credit
Congress extends successful tax credit seamlessly through 2013; President to sign into law
WASHINGTON, D.C.—Jan. 3, 2013—The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing and design, today commended Congress for approving legislation to extend the Research and Development (R&D) Tax Credit through 2013 and reinstate it retroactively for 2012. Seamless renewal of the R&D tax credit was included in legislation to avert the fiscal cliff, the American Taxpayer Relief Act of 2012 (H.R. 8), which passed the House and Senate this week with bipartisan support and is set to be signed into law by President Obama.
“The R&D tax credit has a proven track record of driving American innovation, enhancing U.S. competitiveness and creating high-quality American jobs,” said Brian Toohey, president and CEO, Semiconductor Industry Association. “This critical tax credit has helped enable the U.S. semiconductor industry to invest more of its revenue in R&D than any other industry, sustaining the pipeline of new discoveries that fuel our industry and the overall economy. We commend Congress and the Administration for extending the R&D tax credit and urge them to strengthen it and make it permanent during comprehensive tax reform negotiations this year.”
The R&D tax credit expired on Dec. 31, 2011. H.R. 8 extends for two years – through Dec. 31, 2013 – the credit equal to 20 percent of the amount by which a taxpayer’s qualified research expenses for a taxable year exceed its base amount for that year and provides an alternative simplified credit of 14 percent. The legislation also modifies rules for taxpayers under common control and rules for computing the credit when a portion of a trade or business changes hands.
While other countries around the world have significantly increased tax incentives for private-sector research investments, the U.S. has among the weakest incentives of any developed country. The stop-and-start approach to R&D tax credit policy makes the credit far less effective than it could be as an incentive for greater private-sector research investment. The credit has now been temporarily extended by Congress 15 times since 1981 and has been allowed to expire four times.
In 2011, the U.S. semiconductor industry invested $27 billion – 18 percent of total sales – in R&D, a greater percentage of revenue than any other industry. Click here to view SIA’s Issue Paper on the R&D tax credit.
About the SIA
The Semiconductor Industry Association, SIA, is the voice of the U.S. semiconductor industry, one of America's top export industries and a bellwether measurement of the U.S. economy. Semiconductor innovations form the foundation for America's $1.1 trillion dollar technology industry affecting a U.S. workforce of nearly 6 million. Founded in 1977 by five microelectronics pioneers, SIA unites companies that account for 80 percent of the semiconductor production of this country. Through this coalition SIA seeks to strengthen U.S. leadership of semiconductor design and manufacturing by working with Congress, the Administration and other key industry groups. The SIA works to encourage policies and regulations that fuel innovation, propel business and drive international competition in order to maintain a thriving semiconductor industry in the United States. Learn more at www.sia-online.org