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July 9, 2009 - ASCE Statement - Research and Development Tax Credit

Statement of the
American Society of Civil Engineers
to the Subcommittee on Contracting and Technology
Committee on Small Business
U.S. House of Representatives
Helping Small Business Innovators through the Research and Experimentation
Tax Credit

July 9, 2009 

The American Society of Civil Engineers (ASCE) supports a permanent research and development (R&D) investment tax credit for corporations, including small businesses. A permanent, meaningful U.S. R&D tax credit is essential to ensure that U.S. corporations keep funding research and development.

ASCE was founded in 1852 and is the country's oldest national civil engineering organization. It represents more than 146,000 civil engineers individually in private practice, government, industry, and academia who are dedicated to the advancement of the science and profession of civil engineering. ASCE is a non-profit educational and professional society organized under Part 1.501(c) (3) of the Internal Revenue Code.

The competitive position of the United States suffers, in comparison with virtually all other industrialized countries, because of our limited R&D investment which is partially due to limited tax credits for R&D. Additionally, foreign engineers compete fiercely for U.S. engineering projects with the assistance of their governments offering tax and other financial incentives.

The R&D tax credit was first established in 1981 and has been extended and revised repeatedly since then. Failure to make the R&D tax credit permanent has substantially reduced its value to business. In order to qualify, corporations must increase their current year R&D spending above a predetermined base. Tax policies have a powerful influence on business investment decisions. Consequently, U.S. R&D tax policy has a tremendous impact on R&D investment.

Research provides an important avenue to meet the fundamental objective of the nation. Research in civil engineering, properly conceived, conducted and implemented, should assure significant advances in the quality of life of individuals by providing essential service with minimal adverse effects on the environment by applying the principle of sustainable development. Research should also provide new developments in civil engineering practice that will keep the profession dynamic.

To be most effective, a R&D tax credit policy should:
• Motivate industry to adopt a longer-term view of return on investment in engineering R&D and encourage the reinvestment of profits;
• Encourage risk taking in the commercialization of new technology and processes;
• Encourage the improvement of structural design standards related to mitigating the effects of man-made and natural hazards;
• Apply equally to both large and small corporations;
• Encourage collaborative research, which leverages federal R&D funds through government-university-industry partnerships; and,
• Encourage investment in new and upgraded research facilities through more favorable depreciation rules and equipment credits.

In order to enhance the public health, welfare and security of the nation, research, development and the dissemination of new applications and methodologies is constantly needed. The nation's infrastructure, as assessed in ASCE’s 2009 Report Card for America's Infrastructure, is in poor condition with an overall grade of D. Significant investment in research and development is needed for the durable, secure infrastructure to meet the nation’s needs in the 21st Century. The R&D tax credit will help to achieve that goal.

The public demands that the operation, maintenance, expansion, rehabilitation and new construction of the nation's infrastructure be performed to enhance economic vitality, disaster resilience and public safety, but with minimal impact on their lives. The public requirement calls for innovative solutions to minimize costs of delays, environmental costs and project costs.

Thank you for the opportunity for the American Society of Civil Engineers to share our views. We look forward to working with the Small Business Committee in efforts to address these serious concerns. If you have any questions, please do not hesitate to contact Martin Hight, ASCE’s Senior Manager of Government Relations, at 202-789- 7843 or mhight@asce.org