Diverse Business, Industry Leaders Unite To Advance Research & Development To Drive Economic Growth, Job Creation

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January 9, 2013

Diverse Business, Industry Leaders Unite To Advance Research & Development To Drive Economic Growth, Job Creation

AUSTIN, TEXAS—A new statewide coalition of business and industry leaders says strategic incentives to expand research and development (R&D) are key to sustained and expanded economic growth and job creation in Texas.

Texans for Innovation unites leaders across business and industry sectors and includes the Texas Association of Manufacturers, Texas Association of Business, TechAmerica, TechNet, Texas Healthcare and Bioscience Institute, Texas Taxpayers and Research Association, and the Metroplex Technology Business Council.  Together, coalition members point to the need for an expanded emphasis on research and development to maintain the state’s competiveness in the U.S. and globally.

“For large and small companies in industries like manufacturing, high-tech, energy, biotechnology, the research and development process represents the critical ‘first phase’ where questions, ideas, and problems are fleshed out in labs, the field or production facilities to become the products and solutions that power the Texas economy,” said Tony Bennett, president of the Texas Association of Manufacturers and a founding member of Texans for Innovation.

Texans for Innovation has commissioned an economic impact study by Austin-based TXP to consider the significant, positive impact that expanded R&D could have on the state.  The coalition’s study will be released soon.

“The manufacturing sector is so diverse, and its industries are a driving force in Texas’ economic growth and job creation,” said Jon Hockenyos, President of TXP, who is conducting the study on behalf of Texans for Innovation.

“Texas should be doing all it can to encourage growth in the manufacturing sector.  Broad-based, low-rate taxes and smart incentives that encourage research and development are central to this growth equation,” said Chairman Jim Murphy, House Interim Committee on Manufacturing.

As state leaders prioritize programs and funding during the next Legislative Session in 2013, Texans for Innovation members say they will focus on a two-pronged public policy objective:

Extending the existing manufacturing sales tax exemption to materials and equipment used for research and development purposes

  • Reinstating the R&D franchise tax credit first enacted in 1999 and repealed in 2006.

“Texas is one of only seven states that has a broad-based business tax but that does not allow a credit for investment in research and development,” said Tom Kowalski, president of the Texas Healthcare and Bioscience Institute.  “Without smart, forward-looking public policy, we run the risk of watching private research and development investment – and jobs that go with it – leave our state for greener pastures.”

Texans for Innovation notes that California, the largest high-technology employment state, offers a 15 percent R&D credit (24 percent for university-based research).  Other neighboring states offer business tax credits or sales tax exemptions for R&D.

“Given the challenging economic climate elsewhere, especially in states like California and Illinois, now is an especially good time for Texas to affirm our position as a state where companies can and do grow and prosper,” said Bill Hammond, president of the Texas Association of Business.

According to the National Science Foundation, Texas accounts for 8.3 percent of the nation’s economy and has 8 percent of the nation’s population, but accounts for only 5.2 percent of the nation’s private sector research and development spending.  In terms of R&D as a percent of the economy, Texas ranks 26th—30 percent below the national average.

“Our coalition partners invest billions of dollars each year in R&D,” said Bennett. “R&D delivers a wide range of benefits to consumers, bringing cutting-edge technologies, energy-efficient appliances and other goods to market faster, spurring innovation in health care, and leading the way to putting safe, cleaner cars on the road.”

“By making a smart investment in R&D today, Texas can expect the highest economic multiplier effect and broadest impact for businesses and consumers for years to come,” said Bennett.

 

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