WASHINGTON (Reuters) - The U.S. business tax credit for research and development (R&D) costs would be expanded and made permanent under a measure approved on Tuesday by the U.S. House of Representatives’ tax-writing panel, but the legislation still has a long road ahead before it becomes law.
In a 22-12 vote that was largely along party lines, the House Ways and Means Committee voted to increase the credit to 20 percent from 14 percent for qualifying business expenses.
However, the approvals of the full House and Senate approvals are still needed for the measure to become law.
Making the R&D credit permanent and more lucrative to businesses would cost $155.5 billion over 10 years, according to an estimate from Congress’s Joint Committee on Taxation.
Some Democrats who voted against the legislation said they were concerned it lacked a corresponding revenue source to pay for it and so would increase the federal deficit.
The credit, one of many “temporary” U.S. tax laws that are routinely renewed, has been extended 15 times since it was enacted in 1981. It technically expired at the end of 2013, along with several other so-called tax extenders items.
The committee was considering the R&D credit and five other corporate tax breaks on the extenders list at a meeting.
The six items in total would cost $310 billion over 10 years to renew and make permanent, according to the joint committee.
Reporting by Patrick Temple-West, editing by G Crosse and Kevin Drawbaugh