Expiration Of R&D Tax Credit May Have Cost More Than 83,000 Jobs - InformationWeek

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8/1/2008
11:13 AM
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Expiration Of R&D Tax Credit May Have Cost More Than 83,000 Jobs

A trade group says inaction by Congress has cost American jobs and harmed innovative companies by reducing R&D activity.

Congress allowed a research and development tax credit to expire last year, and that may have placed more than 83,000 jobs at risk, according to the Information Technology Association of America.

The ITAA said Thursday that the credit could have sustained or created more than 141,753 jobs this year. As companies cut back on R&D activity, more than 388 jobs per day, on average, were at risk, according to ITAA. The tax credit, which lapsed in December, would have kept most new R&D jobs (nearly 86,000) in the United States, the association said.

"Congress' inaction has left our most innovative companies in limbo and is undermining tens of thousands of R&D-related jobs," ITAA president and CEO Phil Bond said in a statement. "How many more jobs must be threatened before Washington will act?"

Technology companies and other U.S. businesses cannot count on the tax credit's renewal when forecasting project costs or reporting financial results, ITAA said.

The association said the R&D credit would have sparked more than $18.594 billion in economic activity this year. That's according to its interpretation of an analysis from the National Science Foundation, Small Business Administration, and the Progressive Policy Institute.

The association said its new jobs analysis came from that report, salary data, and an Ernst & Young study that concluded at least 70% of R&D money goes to jobs.

Those jobs spur enhanced spending, new products, increased investments in equipment, yet more jobs, and increases in consumer spending and business growth, ITAA said.

The association has a running tally of the cost on its Web site.

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