SENATE NATURAL RESOURCES AND ECONOMIC DEVELOPMENT COMMITTEE

 

STATEMENT TO

 

SENATE, No. 449

 

with committee amendments

 

STATE OF NEW JERSEY

 

DATED: MAY 9, 1996

 

      The Senate Natural Resources and Economic Development Committee favorably reports Senate Bill No. 449 with committee amendments.

      This bill extends the carryforward of the research and development tax credit under the corporation business tax from seven to 15 years for certain advanced technology corporations. The research and development tax credit allows a credit for increases in qualified research expenditures over a base amount and for certain basic research payments incurred in New Jersey beginning in January, 1994. Generally, the credit may be carried forward up to seven years if it cannot be used because of tax liability limitations.

      However, high-technology businesses in the fields of advanced computing, advanced materials, biotechnology, electronic device technology often must invest in years of research before reaching a stage in their business development cycle when they can maintain a taxable business profit. Extending the carryforward period of the research and development tax credit for these high-technology firms will increase the likelihood that the credit will serve as a useful tax incentive to those corporations whose research efforts may not bear profits under the corporation business tax for an extended period of time.

      The committee amendments are technical in nature and serve to clarify the intent of the sponsors.