9/05/2010

Obama let the R&D tax credit expire in 12/31/09, now says that it is important for recovery

The R&D Tax Credit was originally enacted in 1981. Obama let the credit expire the end of last year, and now says that this is part of his "new ideas" to get things going. To Obama, he wants to increase the marginal tax rates for high income individuals and he is offering re-instating the R&D Tax Credit to mitigate the opposition to that increase. All this is going to be tied up with Obama's "Small Business Jobs" bill, which is a complete mess of micromanaging companies.

So how is this supposed to be paid for? With other tax revenue.

The "pay-for" as reported by the Times, taxing multi-national corporations overseas' income to afford the 10-year credit, has already been used -- at least $9.8 billion worth for the $26b state aid bill that the president recently signed.

As taken from Politifact, here's what the recent "pay-for" did: from "rules to prevent splitting foreign tax credits from the income to which they relate" (worth almost $4.3 billion in newly captured revenue) to "denial of foreign tax credit with respect to foreign income not subject to United States taxation by reason of covered asset acquisitions" (worth more than $3.6 billion), to the "limitation on the amount of foreign taxes deemed paid with respect to section 956 inclusions" (worth $704 million).

Several senior Senate GOP leadership aides also told Fox News that Republicans are not likely to accept any proposal that raises revenue in other sectors to pay for a tax cut. . . .

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