BILL NUMBER: S303

SPONSOR: RHOADS
 
TITLE OF BILL:

An act to amend the economic development law, in relation to the excels-
ior research and development tax credit

 
PURPOSE:

This legislation expands the Excelsior Research and Development Tax
Credit to allow participants in the Excelsior Jobs Program to claim a
credit equal to the portion of the full cost of the participant's
research and development expenses incurred that relates to the partic-
ipant's research and development expenditures in New York State during
the taxable year.

 
SUMMARY OF PROVISIONS:

Section 1 stipulates that this act shall be entitled the "Empire Inno-
vation. Act."

              

Section 2 amends subdivision 3 of section 355 of the economic develop-
ment law to enable a participant in the excelsior jobs program to be
eligible to claim a credit equal to the portion of the full cost of the
participant's research and development expenses incurred that relates to
the participant's research and development expenditures in New York
state during the taxable year; provided however, if the participant
receives a federal research and development tax credit calculated on the
full cost of the participant's research and development expenses that
relates to the participant's research and development expenditures in
New York, state during the taxable year, then said participant shall
only be eligible to claim a credit equal to fifty percent of the portion
of the participant's federal research and development tax credit that
relates to the participant's research and development expenditures in
New York state during the taxable year.

Section 3 sets forth the effective date.

 
JUSTIFICATION:

For nearly seventy years, the United States has encouraged robust
research and development investment through federal policies, partic-
ularly Section 174 of the Internal Revenue Code which allowed for the
deduction of qualified research and development expenses from a corpo-
ration's tax liability in the year the costs were incurred.  Following
federal policy changes in 2019, companies will have to amortize such
costs over five years for domestic research and development expenses and
fifteen years for foreign research and development expenses. This change
dramatically increases affected companies' tax liability and removes a
major incentive for United States-based companies to conduct R&D by
restricting liquidity, raising the cost of capital, and threatening
returns on these investments.

Incentivizing innovation must be at the forefront of our collective
commitment to promoting economic and technological empowerment, viabil-
ity, and prosperity. The Empire. Innovation Act will promote investment
in research and development conducted in our State and boldly counter
the adverse economic effects and increased revenue costs associated with
federal, policy changes which no longer allow for the deduction of,
qualified research and development expenses from a corporation's tax
liability in the year the costs were incurred. This legislation would
expand the Excelsior Research and Development Tax Credit toòallow
participants in the Excelsior Jobs Program to claim a credit equal to
the portion of the full cost of the participant's research and develop-
ment expenses incurred that relates to the participant's research and
development expenditures in New York State during the taxable year. The
Empire Innovation Act would provide a State-level solution to the
current federal disincentives. This legislation would incentivize
research and development in New York State, discourage crucial resources
and innovation from leaving our State, and lift our beloved, capable,
and forward-thinking Excelsior State to even greater heights.

It is incumbent upon us to reinvigorate domestic innovation, attract and
retain high-skilled talent, and foster an ecosystem that is conducive to
the development of cutting-edge technologies that emerge directly from
our own soil.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.