(April 9, 2007) California Chamber of Commerce-supported legislation that will strengthen California’s economy by encouraging investments in California-based research and development activities and jobs is before the Senate Revenue and Taxation Committee this week.

SB 928 (Harman; R-Huntington Beach) increases California’s research and development (R&D) tax credit from 15 percent to 20 percent and increases the alternative incremental credit in conformity with federal law. The bill also provides a tax credit for a portion of donations made by biotech and pharmaceutical companies to cancer research institutions.

California currently ranks first in the nation in R&D performance, accounting for more than one-fifth of total U.S. R&D. California universities rank number five in total R&D expenditures nationally. Nevertheless, California cannot afford to rest on its laurels.

The CalChamber believes that California needs to proactively maintain and expand its leading edge in R&D innovation and talent, as it competes for R&D investments, jobs and knowledge capital, not only with other states, but other countries like India and China, which are working aggressively to expand their innovation output. The 2006 Pollina Corporate Real Estate, Inc. study reports that growing numbers of Silicon Valley professionals are heading to India to start new businesses with U.S. funding or to expand R&D labs for Silicon Valley companies. Meanwhile, the Chinese government has tripled its spending on R&D since 1998.

Strengthening California’s R&D credit will bolster R&D activity in both the industry sector and California universities, stimulating the state's economy with additional investments and jobs and helping California to maintain its R&D leadership.

Action Needed
SB 928 will be heard by Senate Revenue and Taxation on April 11. Contact your senator and committee members and ask them to support SB 928.

For an easy-to-use sample letter, visit www.calchambervotes.com.

Staff Contact: Kyla Christoffersen