The American Research Competitive Act has been on the books of American law for over 20 years. However, every year it expires, so Congress has to take the time to renew it. In the spirit of sensibility, House Republicans have introduced a bipartisan bill that would make the extension permanent.
But what does that bill really mean for hardworking Americans? Chairman of the Science, Space, and Technology Committee Lamar Smith (R-TX), and Rep. Kevin Brady (R-TX) explained this week in Forbes and The Hill:
1. It provides incentives for companies of all sizes to invest in research and development, which is key for American innovation and job growth. More than half of the businesses that take advantage of this are small businesses - the backbone of America’s economy.
The ARC Act strengthens and modernizes the tax credit by increasing the alternative simplified credit rate from 14 percent to 20 percent and making it easier for small, mid-size and large companies to benefit.
-Rep. Kevin Brady
2. Making this extension permanent would give businesses the confidence and security needed to invest in long-term research and development.
U.S. companies continue to hold off on investing during this stagnant economy. They have little confidence in this disappointing economic recovery, the weakest since World War II, and no certainty that their long-term investments will pay off due to an ever-changing tax code.
-Rep. Kevin Brady
3. There are two types of research and development this tax extension applies to: basic research and applied development. Basic research is the fact-finding area of development, where businesses discover the problem, what consumers want, and how it can be fixed. Applied development is the product creation portion of innovation, where American’s create products that change the world.
Basic research is discovery science aimed at expanding knowledge. It is the precursor to technological advances. Applied R&D then uses the knowledge gained through basic research to invent new products and technologies.
-Chairman Lamar Smith
4. Since World War II, the United States has led the world in R&D spending, and subsequently led the world in new discoveries and advanced products. However, we have since fallen behind.
“In fact, our share of global research and development has fallen to 31 percent in 2014, from 39 percent in 1999. During that time, China’s share has increased fourfold, and experts expect China to surpass the United States by 2022.”
-Rep. Kevin Brady
5. The R&D tax extension will help America regain control as the primary leader in tech and science innovation, creating jobs and economic security for individual Americans.
Our industries and our workers have continued to be the leaders in aerospace, the Internet, computer science, health care, engineering and a host of other important areas.
-Chairman Lamar Smith
House Republicans are passing bills to create an America that works. By providing incentives to build and innovate, our economy is strengthened, and most importantly, more Americans are put back to work.
