Tax Cut Brings Bad News for Some

High-tech firms are not pleased with all the aspects of the tax cut that was agreed to over the past weekend. Those firms were hoping Congress would finally make permanent the Research and Development tax credit, which has been on the books as a temporary credit for years.

A provision to make the tax credit permanent was passed by the full Senate last week, but last minute changes to the final tax bill left the credit on the cutting room floor.

The research and development tax credit enables high-tech companies to write off a large portion of their internal R&D expenditures. Without the credit, many companies may be forced to scale back their R&D efforts or to back off from long-term research projects.

The R&D credit is set to expire at the end of 2003. High-tech firms are hopeful that members of Congress will reconsider making the credit permanent and introduce a separate measure later this year.

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