Reforming the U.S. tax code has been a hot topic in Washington as of late. President Barack ObamaBarack Hussein ObamaOvernight Energy: Dems ask Pruitt to justify first-class travel | Obama EPA chief says reg rollback won't stand | Ex-adviser expects Trump to eventually rejoin Paris accord Overnight Regulation: Trump to take steps to ban bump stocks | Trump eases rules on insurance sold outside of ObamaCare | FCC to officially rescind net neutrality Thursday | Obama EPA chief: Reg rollback won't stand Ex-US ambassador: Mueller is the one who is tough on Russia MORE mentioned it in his State of the Union address, and Ways and Means Chairman Dave Camp (R-Mich.) made his opinions known as well, including at a late-January Republican Conference retreat.

While tax reform has been a hot topic, there is an important aspect that hasn’t been widely discussed – the R&D tax credit.

The end of 2013 also saw the expiration of this tax credit, which fuels economic growth and spurs hiring in the United States. But all this talk about tax reform presents an opportunity for Congress and the president to not only renew but expand this incentive for innovation and research.

So let’s talk about what an expanded, and more robust, R&D tax credit looks like. It would:

  • be permanent
  • be partially refundable for small startups
  • increase the credit percentage

One goal -- albeit a big one -- of tax reform is to make the United States more competitive with trading partners within the Organization for Economic Co-operation and Development (OECD). Because OECD countries frequently offer more beneficial research incentives, tax reform presents a perfect opportunity to eliminate this advantage for America’s technology industry.

The research credit hasn’t changed much since it was enacted as part of the Economic Recovery Tax Act of 1981. Yet research work has changed immensely in 30-plus years.

Not only does our interconnected world offer a wealth of talented innovators from countries around the globe, but other countries have adapted to change by using R&D fiscal incentives beyond non-refundable income tax credits and deductions for research expenses to attract these brilliant people. Our competitors also offer R&D allowances, reductions in workers’ wage taxes and Social Security contributions, and accelerated depreciation of capital used for R&D.

All this while, the United States has failed to make the research credit permanent. Legislators may view regular “temporary extensions” of the credit as a way to free up money to fund other tax expenditures, yet the credit’s impermanence discourages businesses from investing more heavily in R&D and undermines the very purpose of the credit.

If we want to create and retain higher-paying jobs and remain front and center in technological and other advances — in other words, if we want to be the country that continues to bring the world the next Apple, Google or Facebook — we must make the credit permanent, more attractive to startups by making a portion refundable and by increasing the credit percentage. It’s the only way we can continue to compete.

Stoddard is Credits and Incentives technical leader at Grant Thornton LLP.