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Jon Fleischman

Today’s Commentary: Governor Commits to Preserve R&D Tax Credit In State Budget

Posted by at 12:00 am on Jun 20, 2008

On Tuesday, Governor Schwarzenegger delivered an address at the annual, massive 2008 BIO International Convention.  The event is so large that it is attended by scientists and researchers from over 70 countries.  You can watch the Governor’s remarks on video, courtesy of his website, here (Warning: if you watch the video, it opens with the Governor trying to make a joke after the defeat of the Lakers in the NBA finals.  It falls so flat that it reinforces a stereotype — that scientists don’t watch or follow professional sports).

Since we are heading into the high-stakes season of state budget negotiations, it’s always interesting to listen to what the Governor says to look for his personal budget priorities.  While enduring a few (too many) mentions of "global warming blah blah" from Arnold, I watched the Governor deliver this commitment on preserving the R&D tax credit…

And that is why I think it is so important that California’s research and development tax credit, or the program, that allows companies to carry forward net operating losses and to deduct them later when you show the profits. I will fight for that in my budget negotiations. Biotech is a lot more than just people in white coats doing their research; biotech is a business.


Outstanding.  The credit should not only stay in place, but California government should be looking for more opportunities to reduce regulation and costs to business in California to encourage research and expansion.

Did you know that…

  • 211,800 people were employed in the biotech industry in California in 2007.
  • This is up from 3.6 percent from 204,000 in 2006.
  • California leads the nation in bio medical technology revenues. 
  • Nearly 3,000 California companies are engaged in bio medical technology, leading the nation with estimated annual revenues of $73 billion. 

The Governor’s reiteration of his commitment to retain the R&D tax credit is particularly important because Elizabeth Hill, California’s retiring "activist" Legislative Analyst targeted this credit for a haircut in her alternative budget proposal.

This entry was posted on Friday, June 20th, 2008 at 12:00 am and is filed under Blog Posts.

2 Responses to “Today’s Commentary: Governor Commits to Preserve R&D Tax Credit In State Budget”

  1. ttanton@fastkat.com Says:
    June 20th, 2008 at 12:00 am

    the joke fell flat ’cause it was just a bad joke. Real scientists, just like real men, watch professional sports. ;-)

  2. hudsontn@yahoo.com Says:
    June 20th, 2008 at 12:00 am

    From an economic and tax policy standpoint, the R&D credit is not particularly efficient. I certainly support keeping it (unless it is replaced by something better), but my point is that even companies performing extensive research have a long list of tax issues that they care more about than the R&D credit.

    Whenever the Governor drops hints about raising taxes and fees in other areas, it makes me nervous to hear him drawing a line in the sand to save a very modest credit. I can’t help but expect to see this item on a list of “talking points” telling conservatives why we are supposed to be happy with a horrible budget compromise.

    If legislators are given a choice between giving a “haircut” to the R&D credit or applying the sales tax to actual haircuts, I am confident that legislators will tax haircuts. Barber shop customers just aren’t organized enough to hire a lobbyist.