The research and development tax credit creates high-paying jobs and should be an important tool in efforts to stimulate the U.S. economy, Aerospace Industries Association President and CEO Marion Blakey said in a Jan. 29 letter to Senate leaders.
The tax credit is a proven incentive that helps U.S. companies compete in the global economy by encouraging high technology innovation. Blakey said the credit should be part of the economic stimulus package under consideration in Congress or another tax package that would be considered later this fall.
The letter urged Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Chuck Grassley (R-IA) as well as Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) to reinstate the tax credit this year, preferably in the stimulus package.
"The tax credit is a huge factor in fostering the technological advances that are the cornerstone of America's success," Blakey said. "The credit is needed not only for the sake of the aerospace industry, but to boost the entire U.S. economy."
The credit, which expired at the end of 2007, dates back to 1981. Congress must extend the credit each year, but lawmakers have allowed it to expire 13 times. In each case they have reinstated the credit retroactively.
While the credit is important to virtually all 269 members of AIA, it is especially vital to the small- and medium-sized companies that don't have the large budgets of big corporations to fund independent R&D initiatives. The credit is often their primary vehicle to make technological progress, Blakey said.
The aerospace and defense industry provides 642,000 high-paying jobs across the nation and accounted for a $57 billion positive foreign trade balance last year, the highest of any U.S. manufacturing sector.
AIA is a member of the R&D Credit Coalition, which includes dozens of trade associations and more than 1,000 companies of all sizes. Among the coalition's goals are strengthening the credit and making it permanent.
Founded in 1919, the Aerospace Industries Association represents the nation's leading manufacturers and suppliers of civil, military, and business aircraft, helicopters, unmanned aerial vehicles, space systems, aircraft engines, materiel, and related components, equipment services, and information technology.