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Silicon Valley leaders like idea of R&D tax credit

September 8, 2010 7:46:24 PM PDT
In his effort to re-kindle the recovery, President Obama is promising to make tax credits for research and development permanent.

And as you would expect, the president's proposed research and development tax plan is getting a pretty warm reception from business leaders, but not from the Republican leadership in Congress.

The president's economic proposals were couched in a very partisan political speech.

"Instead of tax loopholes that incentivize investment in overseas jobs, I'm proposing a more generous permanent extension of the tax credit that goes to companies for all the research and innovation that they do right here in Ohio, right here in the United States of America," Obama said.

It is a good deal, says the president and CEO of the Bay Area Council Economic Institute.

"We've had an R&D credit every year for years and years and years just renewed annually but this would give it predictability and investments are long term," Sean Randolph said. "So this is going to give them predictability and security for their investments that they've never had until now."

How much will it help? Wednesday Palo Alto Democrat Anna Eshoo quoted the president of the information technology and innovation foundation saying, "It's estimated that expansion of the R&D credit would increase annual GDP by almost $100 billion dollars and create 162,000 jobs just in the short-term."

But one of the pioneers of the modern semiconductor age, the founder of Marvell Semiconductors, says there is a more important incentive.

"I do believe the tax credit is a good thing, but probably is even more important to have incentive for people to building manufacturing facilities in the United States," Sehat Sutardja said.

And on that point, the president proposed a write-off of all business investments made next year.

"This will help small business upgrade their plants and equipment and will encourage large corporations to get off the side lines and start putting their profits to work," Obama said.

On Good Morning America, George Stephanopoulos put the president's proposals to the ranking Republican in the house.

"I'm open to the president's ideas but I think the president is missing the bigger point here," House Minority Leader John Boehner said.

The bigger point, according to Boehner, is the government spending.

"Until this uncertainty and spending is under control I don't think these are going to have much impact," he said.

And that is part of the reason it is so difficult to get legislation out of Washington in an election year -- politics trumps policy.


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