House lawmakers on Friday approved a $60 billion package that renews tax incentives aimed at boosting research and development by U.S. businesses, among other provisions.
To pay for the extended tax credits, which follow similar provisions passed by the Senate earlier this week, the package imposes limits on oil industry tax breaks and closes loopholes that allow hedge fund managers to write-off taxes on overseas income, measures Senate Republicans and the White House oppose.
Both the House and Senate tax bills also include tax credits for solar, wind and other renewable energy resources, along with write-offs for purchasing electric cars. They also provide as many as 20 million taxpayers a one-year reprieve from the alternative minimum tax, or AMT.
Created in 1981, the R&D tax credit has expired 13 times, including as recently as December. It allows businesses to cover up to 20 percent of R&D spending.
Senate leaders have warned that any changes to its tax bill, which passed on Tuesday by a vote of 93-2, would derail the entire package. President Bush has also threatened to veto any bill that raises new taxes.
Business and trade groups say the R&D tax credit is crucial for supporting U.S. innovation and global competitiveness.
"The federal R&D credit is a proven incentive for spurring additional R&D activity and investment in the United States," the National Association of Manufacturers said in a statement to Congress earlier this month.
More than half of the companies that claimed the credit in 2005 had total assets of less than $5 million, the trade group said, adding that 40 percent of its small business members used the credit last year.