Rep. Rush Holt, D-N.J., has introduced legislation to encourage small business investment and job creation by expanding the research and development tax credit.

Rush Holt

Holt’s legislation, known as the “Create Jobs by Expanding the R&D Tax Credit Act of 2010,” would temporarily boost the most common form of the federal R&D tax credit, the Alternative Simplified Credit for research and development, by expanding it from 14 to 20 percent. Expanding the credit could create 162,000 jobs in the short-term and increase the GDP by $90 billion, according to a report by the Information Technology and Innovation Foundation. In addition, Holt’s legislation would make the credit more useful for start-up businesses by allowing them to sell their unused tax credits, modeled after a successful New Jersey program.

“The strength of our economy comes from small businesses and from innovation. Both have suffered during the economic downturn,” said Holt in a statement. “As we move to a recovery, we need to ensure that we invest in our small businesses and in innovation, and the bills I have introduced would bolster each.”

Another bill that Holt has introduced, the “Creating Jobs from Innovative Small Businesses Act of 2010,” would encourage small business investment by establishing a temporary 20 percent tax credit for investments in research-intensive small businesses. This legislation builds on a successful state initiative in New Jersey and 17 other states, including North Carolina and Wisconsin

Last year, Holt helped pass legislation in the House — awaiting action in the Senate — that would eliminate fees on SBA loans and increase loan guarantees to increase lending to small businesses.