It’s Tax Day, Lets Talk Tax Reform!

It’s tax day, so lets talk about taxes and tax reform.

Now that we have issues like immigration reform, a future post, and gun control currently being debated, tax reform will be the next major issue tacked by president Obama and congress. I am going to outline some of the concerns facing our industry with tax reform, and some opportunities.

I have already covered the Medical Device Tax, if you want more information, click here to read my post.

It is important that U.S. tax code recognizes innovation as a crucial part of the 21st century American economy. The proposed lower corporate tax rate will not support growth and innovation in our community, where most of our companies are pre-revenue.

Comprehensive tax reform should go further than “broadening the base and lowering the rate.” Instead, policymakers need to promote innovative research-intensive businesses through incentives for other companies, individuals, and funds to invest in small companies and support their research. I have talked about the gap in funding that faces our start-up companies, and governments role in promoting investment and providing grants to help those companies.

I will highlight one bill today today to keep this post short, I know that taxes are so exciting that you could spend hours reading posts about it.

H.R. 6559/S. 3595 was introduced last September by Representatives Jim Gerlach and Richard Neal and Senators Robert Menendez and Olympia Snowe. The High Technology Small Business Research Incentives Act (H.R. 6559/S. 3595), is designed to spur capital formation for growing R&D businesses by relaxing the PAL limitations for R&D-focused pass-thru entities. This bill would apply to entities that devote a significant percentage of their expenses to R&D, have fewer than 250 employees, and have less than $150 million in gross assets.

Relaxing the PAL rules to allow investors to enjoy a more immediate return on their investment, despite the long and risky timeline usually associated with groundbreaking research, would incentivize them to invest at an earlier stage, when the capital is most needed. By providing a limited exception for small, R&D-intensive pass-thrus, the High Technology Small Business Research Incentives Act would stimulate capital formation for growing innovative businesses and speed the development of groundbreaking technologies.

Currently the bill is sitting in the House Ways and Means committee, Click here to track the bill.

If you are interested in this topic and want to learn more, don’t miss the Wednesday Keynote by Senator Alan Simpson and Erskine Bowles at BIO2013, “Debt, Taxes, government Services and Politics, is There a Way Out?”.

This is a conversation, not an editorial. Did I forget something, get it wrong or do you agree? Please Comment, Like, Re-Tweet and Share.

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