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Lame-duck Congress passes R&D tax credit extension at 11th hour |
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Dec 10, 2006 at 06:12 PM |
With the outgoing Congress perilously close to adjourning, the U.S.
Senate finally ratified H.R 6111, the Tax Relief and Health Care Act of 2006, in the final hours on Saturday, after the House of Representatives overwhelmingly passed the bill the previous day. Although President Bush has yet to sign it into law---and its unclear when he will do so---the passage brought a collective sigh of relief from SEMI, SIA, and other R&D Credit Coalition members, since the R&D Tax Credit was part of the bill.
I spoke Friday with SEMI's public policy director in Washington, Maggie Hershey. Although she was cautiously optimistic at the time that the bill would eventually pass, she was a little concerned because of the possibility of deal-breaking amendments (which did indeed happen in the House vote, but was defeated). She emailed me later that day with news of the House vote, then followed up today (Sunday) with the info about the Senate's passage of the bill.
The R&D credit will "seamlessly" extend retroactively back to Jan. 1, 2006, and forward to Dec. 31, 2007. Language to strengthen the credit, known as the Alternative Simplified Credit, also passed and will take effect for the 2007 period.
Whether a permanent extension can eventually be passed remains unclear. Maggie told me that although there is broad conceptual support for this, but that it will be difficult. The incoming Democratic Congress has the R&D credit as part of its Innovation Agenda, something pushed by new House Speaker Nancy Pelosi.
But it is an expensive proposition. With the Democrats focused on reining in spending, its chances of passage may not be in the cards, although the idea of a compromise solution, like a multiyear extension, cannot be ruled out. For now though, a critical piece of U.S. technological and manufacturing competitiveness strategy is in place.
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