WASHINGTON – Three days after hosting a job fair for more than 2,200 people looking for work, U.S. Senator Chris Coons (D-Del.) on Thursday introduced the Job Creation Through Innovation Act – legislation that will help jumpstart domestic manufacturing and create conditions to help businesses grow and create high-quality, high-paying middle-class jobs. It is the first bill Senator Coons has sponsored since being sworn into the Senate in November.
“Having worked for years at one of Delaware’s most innovative manufacturing companies, I’ve seen firsthand the role of cutting-edge research and development in business success,” Senator Coons said. “Our nation’s economy thrives through an unstoppable combination of an innovative citizenry and investment in cutting-edge research. This bill will help revitalize the manufacturing sector and get Delawareans back to work by investing in the companies already doing cutting-edge work right here, giving those companies the flexibility to expand and grow.”
The Job Creation Through Innovation Act has five primary components:
Expanding, simplifying and making permanent the Research & Development Tax Credit. In 1981, when the R&D credit was originally enacted into law, the U.S. was the best place in the world to perform R&D. Now 30 years and 14 temporary credits later, there still is no commitment to a permanent credit in the U.S. Our inaction is taking a toll on U.S.-based R&D as many countries around the globe now offer attractive, more generous research incentives. The Act would address this problem by simplifying the R&D tax credit, making it permanent and increasing the rate from 14 to 20 percent.
Creating a new Small Business Innovation Tax Credit. Under current law, the R&D tax credit is non-refundable, so only firms with income tax liability can benefit from the credit. The credit’s non-refundable status poses a special problem for small, fledgling research-intensive firms. Even when commercially successful technological innovations come from such firms, most spend substantial sums on R&D during their first few years and experience large financial losses. For this reason, the Act would create a new Small Business Innovation Tax Credit by allowing firms with 500 employees or less to claim a new, refundable R&D credit.
Creating a new Domestic Manufacturing Tax Credit. Although it remains one of America’s largest and most productive industries, U.S. manufacturing has been hit hard over the past decade by business closings and job losses exacerbated by the recession. R&D is a key driver of manufacturing activities, but America’s support for its manufacturers lags behind other nations, including countries like China, Brazil, and India. The Act includes a new Domestic Manufacturing Tax Credit to provide additional tax incentives to companies that both research and manufacture their products in America, stimulating job growth and helping to keep innovative research and development in the United States.
Extending the 1603 Treasury Grants Program. The Section 1603 Program provides payments for specified energy property in lieu of investment and production tax credits. Economic certainty is critical to wind, solar, geothermal, and other clean energy projects and, according to a survey of leading participants in the tax equity market, absent an extension of the 1603 program, the anticipated total financing available for renewables is expected to decrease significantly when it expired in 2010. A one-year extension through the end of 2011 preserved investments that led to additional electricity-generating capacity, increased energy security, and new jobs. The Act provides another one-year extension through December 2012.
Investing in the Advanced Energy Manufacturing Tax Credit. The Advanced Energy Manufacturing Tax Credit – or 48C Incentive – provides a 30 percent investment tax credit to domestic manufacturers to build or expand facilities that make a range of clean energy technologies and products. The original federal investment of $2.3 billion leveraged more than $5.4 billion of private investment that supported the creation of manufacturing jobs. The funds distributed through that first wave of projects created an estimated 17,000 jobs, plus an additional 41,000 jobs through matching private investment. The Act provides an additional $5 billion in incentives, of which up to $1.5 billion would be available for previous applications under the original solicitation.
“Each of the aspects of the Job Creation Through Innovation Act helps our economic recovery in a different way, but they are linked by their focus on encouraging innovation,” Senator Coons said. “This is a critical moment in our nation’s economic history. Not only are we missing opportunities to create jobs, we’re falling behind in the race for innovation. Countries like China, Japan, and Canada offer more robust incentives for research and development – helping them nurture innovation and accelerate the advancement of marketable products. We can and must do better, ensuring domestic manufacturing remains a healthy part of our economy.”
A summary of the Job Creation Through Innovation Act can be downloaded here: http://bit.ly/hENf6L
The full text of the Job Creation Through Innovation Act can be downloaded here: http://bit.ly/foWnsv
A blog post with answers to key questions about the Job Creation Through Innovation Act can be found here: http://bit.ly/i97IU4