Camp Floor Statement: H.R. 4438, the "American Research and Competitiveness Act of 2014"
(Remarks as Prepared)
Our current tax code is broken, and it is hurting families and hurting our ability to create good-paying jobs in this country. Last week, we learned that the economy grew 0.1 percent in the first quarter of 2014. One-tenth of a percent growth is unacceptable. Hardworking families and small businesses are struggling in this economy, wages are flat and businesses aren’t growing.
Beyond having the dubious distinction of the highest corporate rate in the world, the United States is also the only country that allows important pieces of its tax code, like the research and development tax credit, to expire on a regular basis. Businesses cannot grow and invest when the tax code is riddled with instability and uncertainty.
The research and development credit, the permanent extension we have before us today, has been part of the U.S. tax code since 1981. Renewed year after year, the credit has long been bipartisan and an effective way to incentivize U.S. companies to innovate, create new products, and invest in the U.S.
The bill we have before us is a result of the years of work Ways and Means Committee Members have put into tax reform. By simplifying the credit, we eliminate the burden on businesses to do substantial amounts of recordkeeping, maintain countless receipts and perform complex calculations. And, notably, the R&D credit has been historically bipartisan. In fact, just a few years ago, Congressman Levin – now the Ranking Democrat on the Ways and Means Committee – and I sponsored the House bill to extend the research and experimentation tax credit. Today, the bill is led by Mr. Brady and Mr. Larson, and has many other Republican and Democratic cosponsors.
Now, many on the other side of the aisle have commented about the fact that this job-creating provision is unpaid for. I would note that this provision, among other extenders, has historically not been paid for. All together, Ways and Means Democrats have cast 71 votes on this floor in favor of unpaid extensions of this policy – that amounts to over 15 years’ worth of extensions. So, while the change of tune may be for political reasons, I think we all can agree that this is the right policy.
Making the R&D tax credit permanent is an important first step to achieve growth and put us on a path toward comprehensive reform that lowers rates and makes the code simpler and fairer. It also supports good-paying jobs. According to the National Association of Manufacturers, 70 percent of R&D credit dollars are used to pay salaries of R&D workers. The United States was once the world leader in providing research incentives so U.S. companies could innovate and create new technologies and products. But, we have fallen far behind. Other countries are moving past the United States, putting American companies at the risk of falling further behind. Countries like Japan, the United Kingdom, Canada, Russia and Slovenia have all invested more in research and development support than the U.S.
This is unacceptable and we can do better. A strong, permanent credit not only provides the certainty businesses need, but the Joint Committee on Taxation estimates that making the R&D credit permanent could increase the amount of research and development American companies undertake by up to 10 percent. That translates into more workers, higher wages and increased innovation here in the U.S.
By supporting permanent policies, Washington can promote certainty for American businesses and generate additional economic growth. But, our work will not end here; this is just the beginning of the conversation that we must have in order to overhaul the tax code so it is simpler and fairer for families. Washington needs to wake up to this reality and start offering concrete solutions and debating real policies that strengthen the economy and help hardworking taxpayers. Today’s legislation is an important step forward in that direction.