May 1, 2014
As ordered reported by the House Committee on Ways and Means on April 29, 2014
H.R. 4438 would amend the Internal Revenue Code to modify the calculation method and the rate for the tax credit for qualified research expenses that expired at the end of 2013. The modified credit would be made permanent. The bill would not extend the traditional calculation method and its associated 20 percent credit. It would, however, make permanent the “alternative simplified method” for calculating the tax credit for qualified research expenses and generally increase the associated credit to 20 percent of those expenses that exceed 50 percent of the average qualified research expenses for the three preceding taxable years. It also makes permanent a tax credit for basic research and energy research and changes the base period for the basic research credit from a fixed period to a three-year rolling average.
The staff of the Joint Committee on Taxation (JCT) estimates that enacting H.R. 4438 would reduce revenues, thus increasing federal deficits, by about $156 billion over the 2014-2024 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending and revenues. Enacting H.R. 4438 would result in revenue losses in each year beginning in 2014.
JCT has determined that the bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.