Associated Industries of Massachusetts urged Governor Deval Patrick yesterday to sign an economic development bill that would expand the research-and-development tax credit and create multiple initiatives to accelerate job growth.
In a letter to the governor, AIM said that An Act Promoting Economic Growth across the Commonwealth contains provisions “that will have a positive impact on the Massachusetts business climate.”
The research-and-development tax provision creates an Alternative Simplified Credit (ASC) as an alternative to the traditional tax credit. ASC allows employers the option to claim a credit equal to 10 percent of any research expenses that exceed a base amount calculated over a period of three years.
Current law allows credits only for incremental R&D spending over a set base period in the 1980s.
AIM believes the changes are necessary to reverse a troubling 19.3 percent decline in R&D spending among Massachusetts employers between 2007 and 2011. The vast majority of research and development in Massachusetts takes place not in urban innovation districts, but in advanced manufacturing, defense and biopharma companies salted throughout the commonwealth
“And we know that R&D credits work. Massachusetts enacted a set of research and development tax incentives in 1991 that were among the most advantageous in the nation. Over the next five years, R&D spending in the commonwealth increased by more than 50 percent,” said John Regan, Executive Vice President of Government Affairs for AIM.
Other key provisions of the economic development bill include:
- Sales Tax Exemption - Clarifies the eligibility definition in the state’s life sciences research-and- development sales-tax exemption law to include limited partnerships.
- Financial Services Advisory Council – Creates a council to provide the governor with ongoing feedback and recommendations on the ways in which state policy impacts the banking and financial-services sectors.
- Manufacturing Studies – Provides for a comprehensive study of the manufacturing industry by the Massachusetts Manufacturing Extension Partnership (MMEP) and a separate study of the manufacturing supply chain in Massachusetts.
- Massachusetts Computing Attainment Network Program (MassCan) – Promotes and expands computer science education in public schools. MassCan addresses the commonwealth’s need to train the next generation of computer science experts for the jobs of the future.
- One-Stop Shop Business Portal - Enhances the manner in which Massachusetts government provides resources to business by directing the chief information officer of the Information Technology Division to create an online portal to serve as a one-stop shop for businesses seeking information to start or grow a business in the commonwealth.
- Wireless Innovation – Makes Massachusetts the fortieth state in the last 30 years to embrace a national framework for the mobile industry. The framework recognizes the global environment in which businesses operate and encourages a policy environment that promotes innovation for the customer.
- Proof of Concept – Creates the Innovation Commercialization Seed Fundto make initial investments with researchers and students at the University of Massachusetts and other research universities who have invented or developed concepts, goods or services that have commercial potential.
The Legislature passed the economic development bill in the early hours of August 1. Governor Patrick has the option to sign or veto the entire bill, veto individual sections of the bill, or send sections back to the Legislature with proposed amendments.