R&D tax credit, a key element in Oregon semiconductor effort, shuffles forward

A frustrated Joint Semiconductor Committee pushed forward a research-and-development tax credit bill on Wednesday, forced to do so without an amendment that could have clarified key issues.

The R&D credit remains a major unresolved question as Oregon legislators try to position their state for the expansion of semiconductors through the federal CHIPS Act. The Legislature passed and the Governor signed a land-use and incentives bill earlier in the session. Tina Kotek has signed a bill on land use and incentives that was developed in the semiconductor committee.

The committee hoped that it could focus on the eligibility of the tax credit and refine the credit's value before submitting the bill to the Joint Committee on Tax Expenditures.

The committee's hopes were dashed by a 'process,' said Sen. Janeen Sollman at the beginning of Wednesday's meeting. The amendment that largely rewrites Senate Bill 5 hadn't been heard in public, so it could not be voted upon at the Wednesday meeting. Sollman stated that the committee was not given a second opportunity to meet.

Mark Meek was one of the people who felt aggrieved. He had been a major contributor to the writing of the forlorn Amendment.

Meek stated that it was a travesty to stifle us and deny us the chance (to vote on a proposed amendment).

The members of the committee promised to share what they had learned from their work on this amendment with the tax committee. This committee includes some members from the semiconductor committee.

Business Oregon certifies eligibility. A committee working group had looked at narrowing eligibility and making the credit only available to CHIPS Act recipients.

Oregon Business & Industry wants to extend eligibility beyond semiconductors. Some members of semiconductor committee wanted at least aerospace, and defense added to the amendment.

The amendment also caps the tax credit to 25% of any increased research expenditures, with a maximum of $5 million per company with less than 150 employees and $10 million for firms with more employees. Senate Bill 5 has a fixed limit of $9,000,000.

The amendment changes the refundability provisions of the credit, making them more generous for certain people and less generous for others. The refund is available when an organization has R&D costs that exceed its tax liability.

Senate Bill 5 would only allow companies with less than 150 employees to claim up to 100 percent of their qualified expenses. Larger companies are not eligible for refunds. The amendment would allow for 100% refundability for companies with up to 499 workers, 50% for those 500-1,999 employees and no refundability for larger companies.