WASHINGTON, D.C. — The introduction of H.R. 942, The American Research and Competitiveness Act of 2011, a bipartisan bill that will strengthen the research and development (R&D) tax credit from 14% to 20%, is being lauded as a boon to GA.
Representative Kevin Brady (R-Texas) introduced the bill, which was cosponsored by Representatives John Larson (D-Conn.), Eric Paulson (R-Minn.) and Anna Eshoo (D-Calif.).
Clay Jones, chairman, president and CEO of Rockwell Collins said, “Enactment of a strengthened, permanent R&D tax credit by the 112th Congress will serve as a springboard for future economic growth. Our nation must invest in the research, ideas and people who produce innovation. This legislation will encourage general aviation manufacturers to make long-term investments, thereby allowing companies to be globally competitive and create more U.S. jobs.”
.mpany’s Jack Pelton, chairman, president and CEO, also commented, “The pace of technological advancements in the general aviation industry is continuous and R&D is essential for manufacturers to produce state-of-the-art products that make aviation safer. Modernizing, strengthening and making permanent the R&D tax credit is vital to the future of our industry as we all attempt to recover from the economic downturn and diversify our products.”
Pete Bunce, president of the General Aviation Manufacturers Association, concluded, “We appreciate Representative Brady’s leadership and the strong bipartisan support of Representatives Larson, Paulson and Eshoo. As an industry that relies on R&D, we strongly support this bill and urge quick approval by Congress.”
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This is a fantastic bill, due in fact that aviation has not been the best for finding investors to help develop a product. Having a tax incentive to do so, should bring much needed funding into the development of low cost/lower emission powerplants and airframes.
To give you an idea of how having a reasonable return on investment will help, I have an example of a real estate developer I had flown for. We were doing projects along the Gulf Coast, as well as in the South Florida region. Investment money continued to flow into the investment pool, because the risk wasn’t that high, and the return on investment was at least 15% annually. With those conditions, who wants to take their money, and invest it in an aviation project that most likely will have delays in development, and a 6% return on the money…if the project flies!
Having incentive to attract investment money, should lead to some good innovation in airframe design, most likely easier to build structures that look more like an airplane that was not designed in the 50’s. Having an attractive airplane that is a fresh design is something akin to the automotive design that is continually refreshed-updated-redesigned. It gives the consumer with the money to afford an airplane, a reason to up-grade to the latest and the greatest. Fresh and exciting sells…look at the Eclipse. People were putting deposits on an airframe that hadn’t flown, and no one really knew how the airplane would fly, but it was exciting and…speculative!
I think where a lot of investment money will funnel to, is the development of a more state of the art powerplant. With electronics so vital to automotive engines, the technology is amazing and yet is barely seen on aviation powerplants. In addition, a reliable powerplant that is less expensive to build and maintain would be something that aviation needs more than anything!