NEWS
CONTACT:
Alexis Allen
(703) 358-1075 office
(703) 362-0682 cell
Alexis.allen@aia-aerospace.org
FOR IMMEDIATE RELEASE
June 16, 2005
Matt Grimison
(571) 217-0881 cell
matt.grimison@aia-aerospace.org
AIA Urges Congress to Pass Permanent Research and
Development Tax Credit Legislation
Arlington, Va. - The Aerospace Industries Association of America, the nation’s
largest organization of national defense, space and civil aviation manufacturers, is urging
Congress today to pass bipartisan legislation to extend the federal research and
development tax credit on a permanent basis.
The tax credit expires on December 31, 2005, and according to AIA President and
CEO John Douglass, a permanent renewal of the benefit would spur innovation and
create jobs in all segments of the aerospace industry.
“Aerospace and aviation generate productivity equal to nearly 15 percent of the
nation’s gross domestic product and support approximately 11 million domestic jobs,”
Douglass said. “America’s economic growth and national security depend extensively on
the work of companies in many segments of applied research that would advance under a
permanent federal R and D tax credit, including space-based communications, air
transportation, and military operations.”
Douglass also pointed out that while U.S. industries produce the world’s most
reliable aerospace systems and subsystems, we face a trans-Atlantic marketplace in which
government entities underwrite approximately 30 percent of Europe’s civil aeronautics
R and D.
American aerospace and aviation workers would benefit dramatically from the
long-term investment incentives created by R and D tax credit. Although the standard
R and D credit equals 20 percent, the aerospace industry has traditionally qualified only
for an “alternative credit” of less than four percent, an anomaly based on an outdated base
period of defense spending from 1984 to 1988.
Two pending bipartisan bills in Congress, S.627 and H.R. 1736, correct this
inequity by mandating Alternative Incremental Research Credit rates and a new elective
alternative credit formula. These reforms would lower the disproportionate financial
risks that confront many aerospace companies as a result of their high R and D
investments to validate the performance of new technologies before they can enter
production.
AIA….2
Finally, Douglass maintained that a permanent extension of the federal R and D
tax credit would recognize the central role of the manufacturing community in pioneering
cost-efficient and innovative products. A 2001 study by the General Accounting Office
found that the R and D tax credit, which Congress has renewed 13 times since 1981,
stimulated one-third of real economic growth in the U.S. during the late 1990s. Congress
should therefore act on the conclusions of its own investigative agency by passing S. 627
and H.R. 1736 before the end of the year.
-AIAP.A. Rel. 33
6.16.05
1000 Wilson Boulevard, Suite 1700, Arlington, VA 22209-3901 (703) 358-1000
www.aia-aerospace.org
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