House Approves R&D Tax Credit - Opposed by White House
May 22, 2015
The House of Representatives voted 274-145 earlier this week to permanently extend the federal tax credit for research and development. The bill – opposed by President Obama – would cost the government about $180 billion over the next decade.
• The House of Representatives voted 274-145 earlier this week to permanently extend the federal tax credit for research and development. The bill – opposed by President Obama – would cost the government about $180 billion over the next decade. The White House threatened to veto the permanent research tax credit as the Obama administration claims that it would only deepen income inequality in the United States. Supporters of the legislation, which include 237 Republicans and 37 Democrats in the House, assert that the bill would boost American infrastructure investment and encourage higher levels of high-tech job growth. While the research tax credit bill is unlikely to become law on its own, it is expected to be used as a leverage point in the soon-to-expire short-term reauthorization of funding for the Highway Trust fund, which was passed 387-35 by the House on Tuesday. [WSJ]
Economic Indicators & News
• Consumer prices increased for the third consecutive month in April with a 0.1% rise, while core prices, which exclude the volatile food and energy components, rose 0.3%, the largest increase since January 2013. Year-over-year, core prices have risen 1.8%, coming close to the Federal Reserve’s general inflation target of 2.0%. Medical costs increased 0.7% on the month while education costs ended 0.5% higher. And though oil prices have recently been increasing, energy costs still fell 1.3% during April, as gasoline was down 1.7%. The consumer price index is down 0.2% year-over-year, which is due almost exclusively to the 19.4% drop in energy prices. [BLS]
• The Bank of Japan announced that it would maintain current interest rates and continue its $662 billion quantitative easing program following Wednesday’s release that Japan’s GDP had expanded by a better-than-expected 0.6% in the first quarter. The central bank upgraded its language on its housing market outlook with claims that the market had, in fact, bottomed out and shows signs for future gains. The bank was optimistic on stable consumer demand and high levels of business investment, which increased by an annualized 1.4% in Q1, higher than Japan’s long-term target growth rate of 0.5%. The quantitative easing program began in April 2013, and the rate of open market bond purchases is not expected to increase in July with recent signs of strong output growth in the country. [FT]