More than two dozen state regional technology associations from across the country have voiced support for the Startup Innovation Credit Act of 2013, which would provide qualified startup companies a tax credit for investing in research and development.
CompTIA, the global nonprofit association for the information technology industry, and the Technology Councils of North America are joining the associations in support of the bill, which allows a research and development tax credit against payroll tax liability, as opposed to income tax liability.
Startups are often income-starved in their early years, and there is currently little tax incentive for them to spend their minimal cash on research and development.
“Most startups don’t generate income tax liability in the early years, so they can’t take advantage of the tax credits given for R&D,” said CompTIA President Todd Thibodeaux. “This means that most startups don’t receive any current economic benefit from the existing R&D tax credit.”
“[The legislation] fixes that by giving small startup companies a tax credit against payroll tax, allowing startups to keep more cash on hand,” he continued. “The longer a startup can keep cash, the longer they can live and grow while their new innovations get ready for market.”
Sens. Chris Coons, D-Del., and Mike Enzi, R-Wyo., introduced the bill in the Senate. It’s now sitting in subcommittee.
In addition to CompTIA and TECNA, organizations that have pledged their support for the bill include the Arizona Technology Council, ASCII Group, Colorado Technology Association, Chesapeake Regional Tech Council, Connecticut Technology Council, Council of Smaller Enterprises, Illinois Technology Association, North Carolina Technology Association, New Hampshire High Tech Council, New Jersey Technology Council, Northern Virginia Technology Council, New York Technology Council, Orange County Tech Alliance, Tampa Bay Technology Forum, Technology Association of Georgia, Technology Association of Oregon and the Washington Technology Industry Association.