Innovation Asset Blog

Congress rejects extension of small business innovation programs due to disagreement on budget tax

The U.S. House of Representatives last week spurned a bill aimed at expanding two federal research and development programs that, for several decades, have helped small tech-focused enterprises bring their innovations and intellectual assets to market. The bill had passed swiftly through the Senate.

Now, the future of the Small Business Innovation Research and Small Business Technical Transfer programs remains in question, as both are set to expire on January 31, 2011.

Writing in Science magazine, Jeffrey Mervis describes how the programs work: "The SBIR and STTR programs, which were begun in 1982 and 1992, respectively, make competitive awards intended to move discoveries into the market. Funding comes from a small tax on the budgets of each of the 11 participating agencies, which generates more than $2.5 billion a year. The grants help companies develop their technology and win additional funding from investors."

The disagreement in Congress stemmed from the size of the budget tax, which is currently at 2.5 percent for SBIR and 0.3 percent for STTR. As the bill called for a broadening of the programs in an effort to boost nationwide investment in innovation, it stipulated an increase in the tax rates to 3.5 percent and 0.6 percent, respectively.

With a month left before the programs expire, as well as an incoming Republican-controlled House touting austerity and budget frugality, it may be even more difficult to bring the debate back to Congress.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.