R&D Tax Credit Falls Victim to Republican Vote-Payoff-Orama

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Everybody loves the R&D tax credit. But when you pass a tax bill so fast that no one knows what’s really in it—and then top it off with a 24 hour gold rush of pet giveaways for all your favorite pals—accidents can happen. Like effectively getting rid of the R&D tax credit:

Late Friday, just hours before the Senate voted 51-49 to pass the bill, which included about $1.4 trillion in tax cuts, Republicans decided to preserve the corporate alternative minimum tax instead of repealing it as planned. The change helped them provide money for other priorities lawmakers demanded to include in the legislation.

….The alternative minimum tax is a parallel tax system with low rates and few tax breaks. Under the present system, the corporate alternative minimum of 20% is rarely applicable to business filers, who end up paying a higher 35% tax rate and can have lower effective rates by claiming breaks that aren’t affected by the AMT. But the corporate rate is now proposed to be 20%, so the overhaul could drive many companies into the AMT—and force them to lose some of their breaks in the process.

….Murray Energy Corp., an Ohio-based firm and the largest privately held U.S. coal-mining company, complained that the AMT decision and the Senate’s tougher limits on interest deductions made a “mockery out of so-called tax reform.”

Robert Murray, the company’s chief executive officer, said the Senate tax plan would raise his tax bill by $60 million. “What the Senate did, in their befuddled mess, is drove me out of business and then bragged about the fact that they got some tax reform passed,” Mr. Murray said Sunday. “This is not job creation. This is not stimulating income. This is driving a whole sector of our community into nonexistence.

Pshaw. There’s no longer any need to provide incentives for R&D. The Republican tax bill will unleash a tidal wave of business activity, and all that extra profit will be plowed back into business growth. It will not be used for stock buybacks and higher dividends. That’s just liberal class warfare talk. I’m sure Mr. Murray has nothing to worry about.

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This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

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