In addition to the six key industry areas that our policy committees focus on, the New England Council also advocates for broader economic policies that have an impact on a range of industries and affect businesses’ ability to compete in our 21st century global economy. For example, the Council often weighs in on tax policy and supports initiatives to minimize barriers to international trade.
Fiscal Cliff Tax Advocacy
In December 2012, the New England Council sent a letter to the members of the New England Congressional delegation advocating for consideration of important tax provisions during “fiscal cliff” discussions. Many of these tax provisions, some set to expire at the end of the year without Congressional action, impact the New England region and New England businesses. With this in mind, the New England Council urged the Congressional delegation to consider the importance of several key provisions:
R&D tax credit – The research and experimentation tax credit (better known as the R&D tax credit) is crucial for business to be able to invest and innovate and drives high-salaried employment ,
Active Financing Exception – The active financing exception helps ensure that American companies that earning certain types of banking or finance income in other countries, are not subject to U.S. tax until the funds are repatriated to the United States. This ensures that these companies can compete globally and grow jobs domestically
Bonus Depreciation Allowance – Depreciation allowance provisions allow a business to rapidly deduct its investments in new fixed assets and recover investment costs quickly. These provisions encourage businesses to invest capital and expand operations.
Capital Gains and Dividends Taxes – Finally, rates for capital gains and qualified dividends, currently set at 15 percent, are set to expire at the end of the year. Favorable tax rates for both capital gains and qualified dividends encourage investment in companies large and small and the New England Council supports the extension of these rates.
The active financing income exception was also due to expire at the end of 2010. The Council urged Congress to extend this particular provision to ensure that companies that are headquartered in the U.S., but earning certain types of banking or finance income in other countries, receive equal tax treatment cross-nationally.
As the Bush tax cuts were about to expire at the end of 2010, the New England Council identified two specific tax cuts that, if extended, had the potential to spur economic growth and job creation. The Council supported extending the existing tax rates on capital gains and dividends, in order to encourage investment in companies that in turn grow, create jobs, and drive the economy. The Council also noted that higher tax rates on dividends will have a significant impact on seniors, as seniors are far more likely than any other investor group to own stocks which pay dividends.
Strong federal Research & Development (R&D) funding is a cornerstone of scientific advancement and innovation and is a primary reason why the United States remains a leader in technological advancement. New England is home to some of the most innovative high-tech companies in the world, and it is important that the United States maintain a tax policy that encourages these companies to grow and thrive. The New England Council has long supported making the R&D tax credit permanent. The R&D tax credit helps fuel economic growth, augments private investment and allows business to plan long-term projects knowing that the tax credit is available.
Read a recent letter to the New England Congressional Delegation in support of the R&D tax credit
Read an Op Ed by James Brett about the importance of the R&D tax credit
The Internal Revenue Code allows businesses to recover the cost of capital expenditures over time according to a depreciation schedule. In both 2008 and 2009, Congress temporarily allowed businesses to recover the costs of capital expenditures made during those years faster than the ordinary depreciation schedule would allow by initially deducting 50% (increased from 30%) of the cost of depreciable property acquired during those two years for use in the United States. In 2010, as Congress considered legislation to extend that tax relief for an additional year, the New England Council advocated in favor of the extension. The extension was later passed as part of the Small Business Jobs Act and was signed into law by President Barack Obama in September 2010.