THE WHITE HOUSE

Office of the Vice President

                      VICE PRESIDENT GORE ANNOUNCES 
                    EXTENSION OF RESEARCH TAX CREDIT:

                  Creating New Jobs for the 21st Century 
                  by Investing in Research and Technology 

January 29, 1998

In a world where imagination is only one small step ahead of reality, a relentless focus on the future -- and targeted investments in research and development -- are the best ways for America to succeed. The research and development tax cut means more high-wage jobs for the 21st Century.

• Vice President Al Gore, January 29, 1997

Today, Vice President Gore announced that the Administration will propose extending the Research and Experimentation tax credit for one year, at a cost of $2.2 billion: The R&E credit is currently scheduled to expire on June 30, 1998; the Administration's proposal would extend it to June 30, 1999.

The R&E credit helps stimulate additional private sector investment in research and development: This incentive provides a 20 percent tax credit based on the increase in a firm's research and development.

The R&E credit encourages technological advancement, leads to higher productivity, and helps generate new American jobs:

• Entirely new industries are created as a result of technological innovation. The credit is helpful for R&D-intensive industries such as the information, communications, and electronics sector, which employs more than 4.2 million Americans at wages that are 73 percent above the private sector average. It also benefits major industries such as chemicals, machinery, and motor vehicles.
• Most research and development dollars are directly invested in the salaries of U.S. employees. The credit is only available for research conducted in the United States.
• Economists estimate that half of U.S. productivity growth stems from technological advances.

Private sector R&D investment also leads to a better quality of life for all Americans:

• R&D also leads to innovations such as new life-saving drugs, a better telecommunications infrastructure, more productive factories, and cleaner sources of energy.

##