Action Alert: US Senate Votes Monday on Stimulus for R&D

On January 30th, the U.S. Senate Finance Committee approved a package of individual and business tax cuts designed to stimulate the U.S. economy. One of the provisions included in this package would allow businesses to more quickly deduct from their taxes the costs of new business investments in capital equipment, commonly known as "bonus depreciation." However, for companies that are not yet profitable and who do not owe federal income tax - such as many small biotech companies - this "bonus depreciation" does not provide any immediate economic benefit. Due to this fact, the Biotechnology Industry Organization (BIO) worked closely with Senators Debbie Stabenow (MI), Orrin Hatch (UT) and Jay Rockefeller (WV) to include an alternative investment incentive for not-yet-profitable companies.

The alternative incentive would allow not-yet-profitable companies to utilize a portion of their R&D or AMT credits. Specifically, the provision would allow a company to elect to use this alternative incentive instead of bonus depreciation. Importantly, this credit would be refundable, meaning that the biotech or device company could get a payment from the IRS even though it owes no federal income tax. This could be incredibly beneficial for a bioscience company that is investing in new business equipment but that does not yet owe federal tax.

Unfortunately, the Finance bill may not have the votes to pass on the Senate floor, where a vote is expected Monday, February 4th. If the Finance package does not garner the 60 votes necessary for adoption, the Senate will likely pass the House economic stimulus bill, which does not include any provision of benefit to not-yet-profitable companies.

As such, BIO and VaBIO are strongly urging that bioscience company representatives call Senator Warner and Senator Webb and ask to speak with the staff who is dealing with the Economic Stimulus Package. Please let them know that any economic stimulus bill should help ALL of America's businesses, not just those that have already achieved profitability.

Senator John Warner: (202) 224-2023. Senator Jim Webb: (202) 224-4024.

Anyone with questions should call Paul Poteet in BIO's Federal Government Relations Department at (202) 312-9268.