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U.S. Reps. Susan Davis (CA-53) and Allyson Schwartz (PA-13) have introduced the Qualifying Therapeutic Discovery Project Tax Credit Extension Act of 2011, H.R. 1988, a bill aimed at continuing the earlier tremendous success of a tax credit that spurred research and investment in life sciences and biotechnology.
Building off of the earlier tax credit’s success, this new initiative will provide one billion in tax credits and grants per fiscal year through 2017 to small U.S. biotech firms that show significant growth potential in new and cost-saving therapies. The bill does not add to the deficit as it directs the Office of Management and Budget to cut duplicate spending in order to offset the loss in revenues.
“From scientists and business leaders to doctors and researchers, every single day critical work is done in America in the field of biotechnology, one of the leading growth industries in the 21st century global economy. Biotechnology companies are transforming the field of medicine by developing life-saving cures and groundbreaking new and improved medicine. Smart, targeted tax credits and grants like this effort are exactly the types of investments we must make to ensure America leads in a global economy driven by innovation and forward-thinking ideas,” said Rep. Allyson Schwartz.
“It’s important to encourage innovation in the areas in which it has a competitive advantage, such as biotechnology and medical device development,” said Rep. Susan Davis. “Medical technology industries create products that improve human health and help Americans to manage illnesses. Americans will ultimately live healthier and more productive lives with the investment made by the program. These fields also provide high-paying and stable employment, and investment will lead to additional hiring,” Davis added.
Rep. Schwartz has long been a leading advocate in Congress for increased investment and support of the growing biotechnology and life sciences field. In 2010, she led the way to pass the inaugural effort of the qualifying tax credit. During the past year the program achieved enormous success with over 4,000 companies from 47 states applying for funding, and more than 3,000 companies received either a grant or tax credit totally one billion dollars.
Qualifying Therapeutic Discovery Project Tax Credit Extension Act of 2011
The Qualifying Therapeutic Discovery Project Tax Credit Extension Act of 2011 extends the therapeutic tax credit through 2017 by providing tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies, support U.S. jobs and increase U.S. competitiveness. Applicants will be required to have their research projects certified as eligible for the credit or grant.
The credit or grant will cover up to 50 percent of the cost of qualifying biomedical research, up to a maximum credit of $5 million per firm and $1 billion overall, and is only available to firms with no more than 250 employees. Firms can opt to receive a grant instead of a tax credit, so start‐ups that are not yet profitable can benefit as well. Credits and grants are available for investments made in 2009 and 2010.
"The legislation introduced by Representatives Davis and Schwartz extends the Therapeutic Discovery Project to support continued American innovation and accelerate the development of life-saving cures for numerous prominent diseases, such as cancers, mental illnesses, heart disease and Parkinson's disease,” said Jim Greenwood, president and CEO, Biotechnology Industry Organization (BIO).
“It is critical for the U.S. to maintain its leadership in biotechnology innovation and retain jobs in this country. Leaders of American biotech companies say that the Therapeutic Discovery Project will help them sustain or create high quality jobs by providing capital assistance that supports their work and their work force. The biotechnology industry is a thriving sector, directly and indirectly employing millions of Americans in high-quality jobs, and is an important growth engine for our economy,” Greenwood added.
PENNSYLVANIA LEADS WAY IN BIOTECH
As one of the top ten biotech states in the nation, Pennsylvania companies were on the frontlines of benefiting from the critical investment under the earlier tax credit program. In Pennsylvania, 161 small biotech firms received funds from this initiative totaling $48 million to support cutting-edge research and development in biotech and life sciences. Renewing this program will grow high-skilled, high-wage jobs in the Keystone State, and ensure Pennsylvania has the resources it needs to compete for the top talent nationwide.
The state’s biotech firms are pivotal to the Commonwealth’s economic growth, by creating jobs and generate economic opportunity. Over 80,000 Pennsylvanians working in the life sciences, with workers earning an average salary of more than $82,262, almost twice the statewide average.