Written by Karen Gellender Friday, 11 February 2011 00:00
On Friday, Jan. 28 in Plainview, U.S. Senator Kirsten Gillibrand detailed a new proposal to expand, simplify, and make permanent the Research and Development Tax Credit. The senator’s proposal would expand the current credit by changing the formula to provide greater incentive for companies to increase investment; simplify the current credit, which is highly complicated and confusing; and make the new credit permanent, which would provide private companies with the confidence they need to make significant future investments in R&D.
Frank Ingrassia, president and CEO of Clever Devices, the transit technology solutions provider in Plainview that hosted Gillibrand’s announcement, praised the proposal. “Research and development is a significant portion of the corporate budget. R&D credits have been important to Clever Devices in helping offset some of the associated costs of remaining competitive on the global market,” said Ingrassia. “Our competitors are primarily European, Asian and Australian, and these credits help to level the playing field for us, and help us to compete both here in the U.S. and abroad.”
Ingrassia also praised the Senator’s proposal for simplifying the tax credit, explaining how it currently requires “a small army of lawyers and accountants” to analyze the credit on an annual basis.
The R&D Tax Credit has been extended 14 times by Congress, but has never been made permanent, making it difficult for companies to make plans based on the support and investment from the program. Gillibrand explained why she aimed to rectify this: “Experts estimate that if you make the tax break permanent, you increase investments in R&D by more than 7.5 billion dollars, and that would create an additional 162,000 jobs nationwide,” said Gillibrand. “So making it permanent really does spur growth in investment, and gets more money from the sidelines into our businesses.”
New York State Assemblyman Charles Lavine agreed with the importance of making the tax credit permanent. “We need to have these credits embodied in a permanent fashion; it is very, very difficult for industry to be able to plan its future development without this sense of permanence,” said Lavine. The assemblyman also recognized Gillibrand for bringing the federal government “to the table” on technology issues on a consistent basis.
Several of the other speakers present at Clever Devices praised Gillibrand for serving as a consistent ally to the technology sector. “Since the first day she became Senator, she has supported technology growth for New York State, and for Long Island,” said Peter Goldsmith, chairman of Long Island Software and Technology Network (LIST-NET), an organization made up of over 1,000 software and IT companies on Long Island. “She walks the walk, not just talks the talk.”
More praise for the junior senator came from Anne Shybunko Moore, CEO of GSE Dynamics, who thanked Gillibrand for advocating for manufacturers and small businesses on Long Island. “I laughed when you said “a small secret here, on Long Island” [in regard to] Clever Devices; I think you would be amazed to know just how many ‘secrets’ we have here on Long Island,” said Moore.
The last to speak was Nassau County Legislator Judy Jacobs, who welcomed Gillibrand to her district and also praised the proposal. “Bottom line is this: Businesses are very important to our survival. If we do not want to raise taxes, and we do not want to impose any more problems on our individual taxpayers, we have to bring in economic growth. And economic growth can only be brought in by things such as the Senator is striving to do, to make life easier for our R&D companies and the people that are right on the cutting edge,” said Jacobs.
Jacobs also took a moment to recognize Clever Devices, pointing out that the Plainview firm was brought into the Empire Zone of Nassau County, even though they were geographically located outside of it, due to the cutting-edge nature of their work.
In Gillibrand’s proposal, more than four-fifths of the cost of the credit is spent directly on wages for researchers. However, she noted that her proposal would not only create R&D-based jobs, but encourage companies to plan for the future; investing in new ways to streamline their processes and upgrade their products.
She also noted that her idea was not partisan, thus could be pushed through a divided Congress. “You know, this is just a plain old good idea; it’s not a Democratic idea, it’s not a Republican idea, it’s just a good idea,” she said.
Before the economic recession, R&D investment was already on the rise in New York. From 2003 to 2007, New York’s research and development sector grew by 16 percent, creating a 28 percent increase in investment to a total of $10.9 billion in 2007, according to the National Science Foundation.