Senate Should Approve Legislation to Strengthen and Extend R&D Tax Credit

Tuesday, May 26, 2015, 8:30pm

by Semiconductor Industry Association

On May 20, the House of Representatives approved the American Research and Competitiveness Act of 2015 (H.R. 880), bipartisan legislation that would strengthen the R&D tax credit and make it permanent. SIA applauds House passage of this needed legislation and urges the Senate to swiftly approve it as well.

No industry has a greater commitment to research and development than the semiconductor sector. Semiconductor companies invest about one-fifth of revenues each year in R&D – the highest share of any industry. These investments have helped the U.S. semiconductor industry sustain the pipeline of new discoveries that fuel our industry and the overall economy. The R&D credit is a critical incentive for companies to continue performing cutting-edge research in the United States and create jobs, since 70 percent of credit dollars are used to pay salaries of high-skilled R&D workers in the U.S.


Unfortunately, the R&D credit has expired 14 times since its enactment in 1981, and is currently expired after having lapsed again on Dec. 31, 2014. The U.S. has among the weakest research incentives of any developed country, and we continue to lose ground to competitors that have significantly increased tax incentives for private-sector research investments. Additionally, 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.

A robust and reliable R&D credit would drive American innovation, enhance U.S. competitiveness and create high-quality American jobs. H.R. 880 would achieve this by increasing the rate of the Alternative Simplified Credit (ASC) from 12 to 20 percent and seamlessly extending this improved credit retroactive to Jan. 1, 2015. SIA commends House passage of this legislation and urges the Senate to take up this bill and swiftly approve it.