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White House Threatens to Veto Permanent R&D Tax Credit Bill

The White House issued a statement saying that the President would likely veto H.R. 880 which seeks to enhance and make permanent the federal R&D tax credit:

The Administration supports enhancing, simplifying, and making permanent the Research and Experimentation Credit (“R&D credit”), and offsetting the cost by closing tax loopholes. The President’s Budget proposes to do so as part of pro-growth business tax reform that is revenue neutral over the long term. Making the R&D credit permanent will increase its effectiveness, since it will allow businesses to make investments and create jobs today confident that they will continue to benefit from the credit in the future. Moreover, four-fifths of the R&D credit is attributable to salaries of U.S. workers performing U.S.-based research—meaning that the credit helps create high-skilled jobs, as well as encouraging new innovations and future productivity.

However, the Administration strongly opposes House passage of H.R. 880, which would permanently extend and expand the R&D credit without offsetting the cost, adding to long-run deficits. By making the R&D credit permanent without offsets, H.R. 880 would add $180 billion to the deficit over the next 10 years. H.R. 880 violates the very standard that House and Senate Republicans approved less than a month ago in their concurrent budget resolution, which requires offsetting the cost of any tax extenders that are made permanent with other revenue measures. If the House passes H.R. 880, it will have approved nearly $600 billion in deficit increasing tax cuts mainly for corporations and wealthy estates this year – none of which are provided for in the Republicans’ own budget.

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