Senate bill 45 would have extended a tax credit for companies engaged in "research and development" until June 30, 2013. It passed unanimously in the Senate and passed through both of its
assigned House committees, but a vote was not taken on the House floor. As the law stands, the tax credit is currently scheduled to terminate on June 30, 2009. This tax credit, which appears to be ending within the month, relieves small "research and development" businesses from gross receipts, compensating, and withholding taxes owed to the state, potentially saving businesses considerable sums of money.
Reducing taxes is always a great idea, but the criteria for businesses receiving tax credits raises some questions for me. Qualified "research and development" companies receiving this credit must be "discovering information that is technological in nature and the application of which is intended to be useful in the development of a new or improved business component," or engaged in "experimentation related to new or improved function, performance, reliability, or quality." It seems like, with some level of sophistry, one could argue that any company is engaged in these activities, but which ones are actually receiving the tax credit? And who are they connected with, if anyone? We should be reducing taxes (as well as state expenses) for everyone, not just for those engaged in these marginal activities.