While members of the House and Senate meet to fledge out differences in their tax bills, Atlanta's technology companies are sitting on the edge of their seats, worried the legislation may eliminate incentives for research, according to The Atlanta Journal-Constitution.
A number of clauses in the Senate's version of the bill would eliminate nearly all of the current tax incentives for research and it would force them to deduct research spending over a period of five years, instead of one. The bill also sets a new, lower tax rate; however, it does not allow companies to reduce that rate by claiming tax breaks.
"All of these provisions are creating a disincentive to companies doing research and development," Mitchell Kopelman, partner with Aprio, an Atlanta-based accounting firm, told The Atlanta Journal-Constitution.
The research and development tax credit is one of the largest tax breaks, worth more than $100 million over the next 10 years, and this credit is used by companies to lower their tax payments. What's more, corporate tax rates are capped at 35 percent, but there's also a baseline of rate 20 percent. The Senate bill proposes lowering the top corporate tax to 20 percent, adding that a tax break for research and development could not be used to lower a company's tax rate beyond that.
While it's too early to tell whether the changes will be included in the final version of the bill, Atlanta's tech sector has already expressed concern.
Anything that undermines research is a problem, Larry Williams, CEO of the Technology Association of Georgia, told The Atlanta Journal-Constitution. "Research and development, whether it's in-house or in partnership with other institutions, is one of the greatest generators of innovation. And innovation is one of the greatest generators of jobs."
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