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U.S. House Passes Permanent R&D Tax Credit

U.S. House Passes Permanent R&D Tax Credit

The U.S. House of Representatives has passed a bill that would permanently extend a popular tax break for companies investing in research. Despite strong bipartisan support, however, the proposal appears unlikely to become law—at least not this year.

The 274 to 131 vote ended several days of sniping over the bill, which would permanently renew the so-called R&D tax credit, which expired at the end of last year. Although both Democrats and Republicans sponsored the legislation, it had drawn a veto threat from the White House because it didn’t provide a way to offset the $156 billion that the tax break is expected to cost over the next decade.

Republican leaders in the House argued that Congress has a long history of extending the R&D tax break—it’s been renewed 15 times since it was first adopted in 1981—without finding a way to pay for it. But Democratic leaders said Republican supporters were guilty of hypocrisy because they typically insist that any new program not add to federal spending deficits. “All of the wringing of hands and gnashing of teeth with reference to the deficit seems to go by the boards when the Republicans talk of tax cuts,” said Representative Steny Hoyer (D-MD), the second-ranking Democrat in the House, at press conference earlier this week.

In a private meeting before this morning’s vote, Hoyer and other Democratic leaders asked members of their party not to vote for the bill, according to media reports. But despite the plea, 62 Democrats joined 212 Republicans to approve the legislation. Just one Republican opposed the measure.

One Democrat who supported the bill, Representative Earl Blumenauer (D-OR), told CQ Roll Call that it would have been inconsistent to vote against a measure he has long supported, and that Congress typically extends the R&D tax credit without a dedicated spending offset. “It has been extended unpaid for 10 times,” he said. Blumenauer also suggested that the vote “does not matter as much because the tax credit will not pass in this form in the Senate.”

The Senate is working on its own version of the legislation which would extend the credit for just 2 years. But Congress is not expected to agree on any fix, permanent or temporary, until after the elections in November.