Lawmakers have extended the R&D tax credit, which was originally passed in 1981. The Congressional Budget Office has previously determined that the credit appears to have a positive effect on innovation.
The bill to avert the "fiscal cliff" includes an extension of several tax incentives for the biofuels industry. The measure provides a one-year extension of the special allowance for cellulosic biofuel plant property, the tax credit for alternative fuel vehicle refueling property and the cellulosic biofuel producer tax credit, and expands the list of cellulosic feedstocks to include algae. "The one year extension of the cellulosic producer tax credit and accelerated depreciation provides some measure of certainty to ensure that 2013 will be a year of growth and milestones for the advanced ethanol industry," said Bob Dinneen, president and CEO of the Renewable Fuels Association, in a statement.
The technology industry is applauding lawmakers for extending the research-and-development tax credit through 2013 as part of the "fiscal cliff" package passed by Congress this week. "The R&D credit has been, and will remain, a cost-effective policy for increasing research activity and producing a dollar-for-dollar increase in research spending," said Telecommunications Industry Association President Grant Seiffert.
Although the eleventh-hour deal to avert the "fiscal cliff" avoided tax increases, it also prevented any serious debt reduction. Nobody predicts the U.S. debt-to-gross-domestic-product ratio to fall below the IMF's projections of rising to 90% by 2016. That heavy load could threaten the nation's credit rating with the big three ratings firms of Moody's, Standard & Poor's and Fitch.
The 2.3% medical device tax has taken effect after Congress reached a deal to prevent the "fiscal cliff" on Tuesday. The industry, however, has vowed to continue the push to repeal the levy, which AdvaMed President and CEO Stephen Ubl said has bipartisan support "premised on the recognition that the tax is costing jobs and threatening patient care."
An extension of the Research and Development tax credit is likely to be part of any "fiscal cliff" deal, but many businesses that qualify for this credit aren't taking advantage of it, writes Dean Zerbe of alliantgroup. One major problem is that leaders of small businesses simply aren't aware that the credit applies to them. "The R&D tax credit is not just about test tubes and lab coats (although those certainly count) – but rather, it's about an enormous range of activities, like improving an existing product, making a building greener, and reducing the costs to make a product," Zerbe writes.