- The legislation would offer businesses in the area of “life sciences” a choice of 2 tax breaks: 1 is a credit of 40% for the 1st $150M of research. That is double the current 20% R&D tax credit;
- Companies are subject now to a top marginal rate of 35% when repatriating overseas profits. Both options could be renewed annually for 5 years;
- The other would be the opportunity to bring home to the US up to $150M annually in overseas profits at a low tax rate of 5.25%, with the requirement that the money be used to hire scientists or invest in research.
The Bottom Line: Even in times of fiscal constraints, it is extremely important to create an environment for job creation. The intensity of competition from Singapore, China, India and other growing economies justifies using tax policy to reinforce private sector efforts to expand biotechnology specifically regenerative medicine companies and related companies. A potential tax holiday component is a relatively inexpensive way to promote job growth because it focuses on overseas profits that wouldn’t be repatriated to the US without a lower tax.