Sen. Carper Introduces COMPETE Act to Boost Research & Development
WASHINGTON- Today, Sen. Tom Carper (D-Del.) introduced the Competitiveness and Opportunity by Modernizing and Permanently Extending the Tax Credit for Experimentation, or COMPETE Act, which would simplify, expand and enhance the research and development (R&D) tax credit.
“We must strengthen and improve incentives to invest in revolutionary, high-value research, if we want our country continue to lead the way in global innovation,” Sen. Carper said. “Private investment in R&D is the lifeblood of innovation. Unfortunately, the current R&D credit is too small, too complicated, poorly targeted, and not accessible to some research companies, particularly smaller businesses. The COMPETE Act would update our tax code and help encourage private investment in groundbreaking discoveries that will propel our economy forward.”
Sen. Carper’s legislation would:
- Make the R&D credit permanent;
- Strengthen credit by increasing the credit rate to 25 percent of qualifying research investments, while also simplifying the credit in order to remove administrative barriers that companies are facing with the current credit;
- Expand the reach of the credit by allowing firms undertaking groundbreaking contract-funded research projects in collaboration with other companies to claim a portion of the current R&D credit—opening access to research tax incentives to new sectors of the economy, such as clinical research;
- Direct private capital toward small, profitable start-ups by enabling investors in small research companies to claim the R&D credit; and
- Provide a targeted, limited bonus R&D credit for transformative research projects that are most likely to boost long-term economic growth.
The benefit to society from research and development is far greater than the return that individual companies receive for their innovations. In fact, some studies have concluded that the average private rate of return on R&D investment is roughly half of the average return to the broader economy. That is why the R&D credit needs to be improved, so that companies have sufficient incentive to undertake research projects. The COMPETE Act will help Congress do its part to foster an environment where the private sector is encouraged to invest in innovative products and services that enhance our daily lives, grow our economy, and create jobs.