(Adds background on bill, adds comment by U.S. Rep. Hoyer and
WASHINGTON May 9 The U.S. House of
Representatives on Friday voted 274-131 to approve making a tax
credit for business research and development (R&D) costs a
permanent part of the federal tax code for the first time.
The bill will face an uphill battle in the
Democratic-controlled Senate amid criticism that its estimated
$156 billion cost to U.S. taxpayers over 10 years is not offset
by any new tax revenue. The bill would give businesses a 20
percent tax break for qualifying research expenses.
The credit is one of dozens of U.S. tax laws that are
temporary. It has been extended 15 times since it was enacted in
1981. It technically expired at the end of 2013.
President Barack Obama has already said he would veto the
measure if it arrives on his desk. He has said he wants to make
the R&D credit permanent, too, but he and fellow Democrats want
new tax revenue to pay for the credit's costs, rather than tack
those costs on to the federal budget deficit.
"This vote today requires absolutely no courage ... This is
ice cream without the spinach," said Representative Steny
Hoyer, the No. 2 Democrat in the House, before the vote.
The R&D credit is one of about 50 temporary tax breaks known
as "extenders," so named because they need to be renewed
House Republicans want to make the R&D credit permanent and
eliminate other tax extenders as a first step toward
comprehensive tax reform, analysts said. But the tactic is
unlikely to succeed, they said.
"This approach will die in the Senate," said Greg
Valliere, chief political strategist at Potomac Research Group.
As soon as next week, the Senate is expected to consider a
bill that would renew about 50 tax extenders, including the R&D
credit, through 2015. The two-year extenders package would cost
about $85 billion.
(Reporting by Patrick Temple-West; editing by Kevin Drawbaugh,
Chizu Nomiyama and Matthew Lewis)