Guidance from Treasury and the President on Effectiveness of the R&D Credit

Investing in U.S. CompetitivenessThe Office of Tax Policy, Department of Treasury issued a very informative summary this year outlining the President’s approach to the research credit. In the attached document, the letter reviews proposals from President Obama’s administration on making the federal R&D credit more effective in retaining and creating jobs in the U.S. The President’s plan proposes moving forward with the Alternative Simplified Credit (ASC) in lieu of the historical 1984-1988 base period calculation, and further proposes to increase the ASC rate from the existing 14% to 17%.

The President also proposes making the R&D credit permanent to allow companies to better plan on credit utilization and in making hiring decisions; this is a topic the President has also mentioned in speeches throughout the last two years. This letter presents an interesting read and is the first publication of its type on the R&D credit stating in writing the goals of a Presidential administration on R&D tax credit policy.

INVESTING IN U.S. COMPETITIVENESS: The Benefits of Enhancing the Research and Experimentation (R&E) Tax Credit (PDF)

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