House passage of R&D incentives raises heat on tax-credit debate
The R&D incentive is one of more than 50 tax credits that expire every year that are known as “tax extenders” because Congress must vote annually to prolong their existence.
The R&D tax credit bill is the first of the tax extenders bills that Rep. Dave Camp (R-Mich.), chairman of the Ways and Means Committee, said he intended to bring to the House floor individually or in small packages for further scrutiny and debate.
This process stands in stark contrast to action by the Senate Finance Committee, which last month passed a two-year extension of a large package of tax credits including the R&D incentives, renewable energy production tax credits, several biofuels tax credits and building energy efficiency incentives. The bill will cost $85 billion and is also currently unpaid for (Greenwire, April 3).
The Senate is scheduled to begin consideration of that tax extenders package next week.
Rep. Kevin Brady (R-Texas), co-sponsor of H.R. 4438 and chairman of the Joint Economic Committee, has said the intention is to hold a vote on some sort of larger final tax extenders product after the November election and engage in negotiations with the Senate.
“Hypocrisy” was a word used frequently by both sides of the aisle during the bill’s debate, despite the fact that both parties support making the R&D tax credit permanent and a majority agree with the bill’s intention on simplifying and raising the credit from 14 percent to 20 percent.
Democrats accused Republicans of “flip-flopping” on the issue of reducing the deficit because the $156 billion tax credit bill was unpaid for but an extension of unemployment benefits has been stymied due to a lack of offsets; the recently unveiled Republican budget sliced funding from other programs like education or Medicaid in the name of reducing the deficit; and, similar tax credits for renewable energy, child care and earned income do not appear to be coming for a vote anytime soon.
“This throws the Republican budget so out of balance,” Rep. Ann Kirkpatrick (D-Ind.) said. “The first opportunity to go against their budget they take it.”
Camp noted Democrats on his committee have previously voted 71 times for the R&D credit when it was unpaid for and this was a pro-growth bill that would create jobs.
“This provision, among other extenders, has historically not been paid for,” he said. “So, while the change of tune may be for political reasons, I think we all can agree that this is the right policy.”