Company Thanks Treasury for Supporting Research Credit Extension

Lester M. Alberthal Jr. of EDS, Plano, Texas, has thanked Treasury for supporting the extension of the research credit. Hopefully next year, Alberthal says, there will be an opportunity for a permanent extension of the credit.

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October 21, 1998

The Honorable Robert E. Rubin

Dear Mr. Secretary:

[1] Thank you for your commitment to the Research and Experiment tax credit, as well as your efforts to ensure that the credit was extended seamlessly before Congress adjourned. The credit provides a major incentive to invest in long-term, high-risk research. Given the uncertain state of the world economy, it is particularly important to the ability of companies to make such investments. Your support for the credit is critical to EDS and the information technology industry.

[2] Information technology companies face a number of challenges including an increasingly competitive global market, a severe shortage of qualified workers, rapidly rising labor costs, and foreign competitors who often benefit from research tax incentives and direct subsidies from home country governments. In such a market, it is difficult for companies to devote large numbers of highly skilled employees to long-term projects that may never yield substantial returns on investment. Yet, it is just such investments that yield the productivity improvements that fuel our economy and generate the products and services that improve our quality of life. Recent studies by Coopers & Lybrand and the National Association of Manufacturers show the R&D credit yields major improvements and productivity for the U.S. economy.

[3] I appreciate the difficult environment in which the tax and budget process played out this year. I hope the next Congress will provide an opportunity to work together to win a permanent extension of the credit.

Sincerely,

Lester M. (Les) Alberthal, Jr.