Sens. Carper and Toomey Reintroduce Bipartisan Legislation to Boost Private Sector Investment in Research & Development
COMPETE Act would encourage innovation and spur development of groundbreaking technologies by American businesses
WASHINGTON- Today, Sen. Tom Carper (D-Del.) was joined by Sen. Pat Toomey (R-Penn.) to reintroduce the bipartisan 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 modernize incentives to invest in revolutionary, high-value research if we want our country to 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, and inaccessible to many 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.”
“The Carper-Toomey bill makes it easier – and more affordable – to be innovative. Research and development are the building blocks of job creation and a stronger economy for all Americans. Let’s give business owners certainty and make it easier to anticipate customers’ needs,” said Sen. Toomey.
The COMPETE Act would:
- Make the R&D credit permanent;
- Strengthen the credit by increasing the 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; and
- Direct private capital toward small, profitable start-ups by enabling investors in small research companies to claim the R&D credit.
The benefit to society from research and development is far greater than the return that individual companies receive for their investments in that research. In fact, the average private rate of return on R&D investment is estimated to be roughly half of the average return to the broader economy. That is why the R&D credit needs to be extended and reformed, to help ensure that companies have sufficient incentive to undertake research projects. The COMPETE Act will help Congress do its part to encourage the private sector to invest in innovative products and services that enhance our daily lives, grow our economy, and create jobs.
The legislation has the support of a diverse coalition of stakeholders ranging from industrial corporations to organizations that support and promote technological advancements in the private, public, and academic sectors.
The Coalition of Small Business Innovators (CSBI) wrote, “The COMPETE Act would encourage vital investments and support widespread job creation. CSBI believes this legislation is critical to the continued vitality of next generation innovators and is a much-needed step to ensure that America maintains its place as a global leader.”
James C. Greenwood, President and CEO of the Biotechnology Industry Organization (BIO), said, “BIO applauds the COMPETE Act’s efforts to encourage investment in early-stage, R&D-centric businesses. By providing an incentive for investors to partner with a young research company, the COMPETE Act stimulates R&D investment at the earliest, most-critical stages of a company’s research. The R&D Partnership Structures allowed by the legislation will lead to long-term investment strategies, which are critical to the success of innovative research.”
Douglas Muzyka, senior vice president and chief science and technology officer at DuPont, one of the world’s largest chemical companies, said, “DuPont strongly supports the COMPETE Act, which makes the R&D tax credit a permanent part of our tax law. Increasing the rate of the Alternative Simplified Credit (ASC) to 25 percent will help U.S. businesses compete in the global marketplace, attract and fill high-quality R&D jobs, and help American companies continue to innovate their way to do the top.”