Baucus and Hatch Seek to Make R&D Tax Credit Permanent

Max Baucus (D-Mont.) and Orrin Hatch (R-Utah) have announced proposed legislation that would simplify the research and development (R&D) tax credit and make it permanent. Slated to expire December 31, 2011, the tax credit has been extended 14 times since it became law in 1981. The tax credit is important for the medical device industry—especially early-stage start ups. Advamed has long supported making the R&D tax credit permanent.

The lawmakers hope that the legislation would bolster the U.S. economy and spur job growth. Known as the Greater Research Opportunities with Tax Help Act of 2011 (GROWTH Act), it is sponsored by eight other Senators.

“A permanent R&D tax credit rewards innovation and entrepreneurship, and gives American businesses the certainty they need to invest, grow and hire,” Hatch explained in a press release. “This legislation makes sense, has strong bipartisan support and is essential to ensuring our nation’s job creators have the tools they need to compete around the world.”

Personally, I think the legislation seems to be reasonable. Many countries offer similar R&D incentives because it makes economic sense to do so. It's no surprise then that extending the R&D credit is attracting bipartisan support in the Senate. It's also no secret that R&D is critical for the medical device industry. Doug Cronin, vice president of corporate tax at Boston Scientific has said that "R&D is the critical lifeblood of our industry." And when it comes to R&D incentives, the United States is behind the curve: In 2009, the country ranked in 24th place out of 38 developed nations in that regard.

—Brian Buntz