Tech giants urge senators to stall jobs bill to save valuable research tax credit

The strategy of defeating the procedural motion to begin debate on the jobs bill is part of an all-out lobbying push to reinstate the research and development tax credit that businesses say will save more than 100,000 jobs.

TechAmerica, which also represents Research in Motion, Boeing and Lockheed Martin, has joined the National Association of Manufactuers and other business groups in the strategic move.

That tax credit isn't in the jobs bill, and if the Senate votes to begin debate on the measure, it isn't likely to be included. Senate Majority Leader Harry Reid (D-Nev.) has said he will not allow amendments to the bill.

If the Senate does not get the 60 votes it needs to launch the debate, the business groups hope Reid will have to go back to the drawing board and will consider including the tax credit in a new bill as a way of building additional support.

The cloture vote is scheduled for 5:30 p.m. Monday evening.

If the effort fails and the Senate votes to begin debate, the technology and business groups will push to get the extender added to another legislative vehicle. One possibility is a bill extending unemployment insurance, which expires Feb. 28.

No Republicans have publicly said they'll support Reid on the procedural motion, and the outcome of the vote is unclear.

The tax credit, which gives companies a tax break when they hire research and development workers, expired Jan 1. That means the cost of hiring workers to create, test and produce new products and services has risen significantly, according to the R&D Credit Coalition that has unsuccessfully lobbied for a permanent extension of the credit.

The House extended the credit by one year in December, but the Senate took no action.

Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) had included a provision in the previous version of the jobs bill to extend the tax credit, which Republicans say contributes about $90 billion in annual economic growth. But Senate Democrats scrapped that version of the jobs bill.

Monica McGuire of the R&D Credit Coalition said 70 percent of the R&D tax credit goes toward paying the wages of workers. Because research and development is inherently risky--it typically takes between five and 10 years to bring a product to market--companies need the credit as an incentive to keep hiring, McGuire said.

“If Congress is serious about creating jobs, this is a clear way to do it,” she told The Hill today. “This is a jobs credit. It keeps high-skilled, high-wage jobs in the U.S.”

Manufacturers, particularly those who make high-tech products, claim about 71 percent of R&D credit amounts.

"There was a sense of disappointment that the tax extender wasn't included in this bill because it's such a great fit for it," said J.P. Fielder of the U.S. Chamber of Commerce. "There will certainly be a continued push from the business community to get it extended."

President Barack Obama's latest budget, released earlier this month, would make the tax break permanent, a move Senate Republicans applauded. They're asking Obama to keep fighting for the proposal and to also strengthen it to help U.S. competitiveness.

Out of the 21 countries that have R&D tax credits, the United States used to rank 17th in terms of the size of the credit and benefit to businesses, according to Organization for Economic Co-operation and Development. Now the United States is at the bottom of the list with an expired tax credit.

This is the 14th time the credit has expired since it was created in 1981.

"Tech companies would certainly be relieved to see an extension, but a stronger, permanent credit is really the right recipe for recovery and long-term competitiveness," said TechAmerica President Phil Bond.

More in Technology

Tech giants cheer GOP lawmakers’ net neutrality moves

Read more »