tax credits

From 2000 to 2008, the U.S. ranked 18th out of 30 countries in the growth of government-funded university research, according to a new report by the Information Technology & Innovation Foundation (ITIF). In University Research Funding: the United States is Behind and Falling, Robert Atkinson and Luke Stewart compared the U.S. government and business funding for public university research against 29 other developed countries. The results indicate that both government-funded and business-funded have fallen dramatically behind and will continue to slip further behind several nations including China, Korea, Taiwan and the United Kingdom.

Gov John Hickenlooper recently signed legislation expanding eligibility for Colorado's Innovation Investment Tax Credit (CIITC). The program provides angel investors with an income tax credit equal to 15 percent of their investment in Colorado small businesses that are less than five years old and are involved in research and development. Originally, the program allowed investors to claim the credits for investments made during the 2010 tax year. Under the new legislation, investments made after 2010 will be eligible until the remaining funds are exhausted. In addition, the rules regarding qualified businesses have been loosened.

Federal Grants are almost twice as effective as tax credits in spurring clean energy innovation, according to Reassessing Renewable Energy Subsidies — a recent report by the Bipartisan Policy Center. From 2005 to 2008, the federal government incurred a liability of almost $10.3 billion due to tax credits given to wind projects totaling almost 19 gigawatts of new generation capacity. However, researchers calculated that direct grants issued at the time of commission could have achieved similar gigawatt production at a cost of only $5 billion. The report also found that state and federal policies have been a significant driver of clean energy's rapid growth over the last decade. However, uncertainty and intermittent incentives have discouraged long-term planning (e.g., infrastructure, transmission and manufacturing), slowed R&D investments from the private sector and hindered the growth of clean sector jobs. Read the report...

Proposals that promise job creation and economic growth have taken center stage in several state legislatures. Lawmakers who recognize the importance of R&D, tech commercialization, access to risk capital, and investment in higher education are fighting for passage of TBED-focused bills in the final months of their states' 2011 legislative sessions. A bill to revive the Missouri Science and Innovation Reinvestment Act, which failed in the legislature last year, recently passed the House with broad, bi-partisan support, restoring hope for the program that aims to grow science and technology companies. Meanwhile, two bills in Connecticut seek to boost technology transfer and lawmakers in Alaska and Florida are pushing for statewide R&D tax credits. An overview of select bills relating to TBED is included below.

Governor Jay Nixon has released the final report from a year-long effort to design a five-year economic strategy for Missouri. The report identifies seven target clusters for development, including advanced manufacturing, energy solutions, biosciences, health sciences and services, information technology, financial and professional services, and transportation and logistics. Recommendations include a new science and technology/innovation fund, an R&D tax credit, an angel investment tax credit and cluster-based career training. Read the plan...

Oklahoma Governor Mary Fallin signed the Oklahoma Aerospace Engineer Tax Credit — reestablishing a tax incentive that was put on moratorium during last year's legislative session. The legislation extends tax credits of $5,000 a year for up to five years to engineers who are hired in Oklahoma. Under the law, companies receive a tax credit equal to 10 percent of the compensation paid to an engineering graduate from an Oklahoma institution of higher education. If the individual did not graduate from an Oklahoma institution of higher education, the company receives a five percent tax credit. The law also grants a tax credit of up to 50% of the tuition reimbursed to a new engineer graduate for the first four years of employment. Oklahoma's aerospace industry is a $12 billion a year industry that employs over 145,000 people. Read the press release...

Expanding the federal research tax credit and making it permanent could help generate $10 billion per year in research activity, according to a report from the U.S. Department of Treasury's Office of Tax Policy. Treasury also suggests that the enhanced credit could expand use of the credits, which already generate a one-to-one match in research spending and help support almost one million jobs. The current credit, which has been reauthorized temporarily 14 times since its introduction in 1981, is set to expire at the end of the year. Recently, a bipartisan group of House members began advocating for expanded, permanent credits, a policy that the Obama administration has incorporated into its last two budget proposals. The current budget debate, however, could derail that effort since the credits would cost the federal government an estimated $106 billion in tax revenue over the next ten years.

Established to focus solely on job creation and replace the state's Department of Commerce, Wisconsin's new public-private partnership would receive nearly $200 million over the next two years for operating expenses and to administer economic development programs. Lawmakers also will consider measures to improve existing tax programs focused on enhancing angel investments and eliminating capital gains taxes during the upcoming legislative session. Gov. Scott Walker unveiled the 2011-13 biennial budget amid a turbulent political climate centered on a budget repair bill for the current fiscal year that involves a controversial provision changing collective bargaining laws.

Lawmakers approved many of Gov. Bob McDonnell's proposals aimed at growing Virginia's technology and life sciences industries by dedicating about half of the funding requested by the governor to support R&D, commercialization, SBIR matching grants, and funding for early stage equity investments. To help reach a goal of adding 100,000 college graduates to the state over the next 15 years, lawmakers also passed the Virginia Higher Education Opportunity Act of 2011, providing enrollment-based funding to increase access to higher education and enhancing science, technology, engineering and mathematics (STEM) fields of study.

The seventh installment of SSTI's Tech Talkin' Govs series includes excerpts from speeches delivered in Alabama, Florida, Ohio, Pennsylvania, and Rhode Island. The first six installments are available in the Jan. 5, Jan. 12, Jan. 19, Jan. 26, Feb. 9 and Feb. 23 issues of the Digest.