Rob Atkinson will present during the keynote session on March 19, 2012 at the 2012 Federal Economic Development Forum which brings together federal officials and thought leaders who will share their expertise on why manufacturing matters again, now more than ever, and what your community can do to be a part of the renaissance.
Senate Hearing on Tax Reform Options: Incentives for Capital Investment and Manufacturing
Congress has an opportunity to reform the corporate tax code to explicitly promote the competitiveness of business establishments in America by expanding, not cutting, incentives for investing in America, including the domestic production deduction, the R&E tax credit, and accelerated depreciation. Ideally, Congress would also establish new incentives, such as an investment tax credit for new machinery, equipment and software investment (replacing accelerated depreciation) and a “patent box” incentive, as a number of European nations have recently put in place that taxes corporate income from innovation-based products at a lower rate.
This is not to say that corporate tax reform should not reduce or eliminate special deductions, exemptions and credits that cannot be justified on a productivity, innovation or competitiveness basis. Indeed, a reconstituted corporate tax code which eliminates incentives that do not spur growth could have some positive, albeit likely modest, impacts on growth. But if a dogged faith in simplicity ends up reducing and even eliminating incentives that spur productivity, innovation and competiveness, reform will lead to less economic growth, not more. So the choice should not be between a corporate tax code riddled with particular exemptions and credits and a completely neutral code. Rather the code should reduce ineffective exemptions and incentives while expanding effective ones focused on innovation and growth-enhancing activities characterized by significant spillovers or other market failures, all the while lowering the effective, and statutory, corporate rates.
Why—and Which—Manufacturing Matters: Innovation and Production in the United States
On February 22, Rob Atkinson will moderate Why—and Which—Manufacturing Matters: Innovation and Production in the United States. The forum hosted by the Metropolitan Policy Program at Brookings will be exploring the type of manufacturing the nation is most likely to retain and build, as well as a policy framework for strengthening high-wage, export-intensive production in America. Brookings and CONNECT Innovation Institute scholars will present new arguments from complementary research studies assessing production activities and innovation.
Our Manufacturers Need a U.S. Competitiveness Strategy, Not Special Treatment
Romer’s op-ed gets at least four critical points flat wrong. First, it conflates having a coherent set of policies and strategies to support U.S. manufacturers with them receiving “special treatment.” Second, it wrongly argues that manufacturing jobs are the same as all other jobs in the economy. Third, it misdiagnoses the central challenge facing the U.S. economy as a lack of aggregate demand when the real problem is faltering U.S. competitiveness, especially in the traded sectors of the economy, such as manufacturing. Finally, arguments like this that manufacturing in the United States deserves no specific policy focus refuse to acknowledge the sophisticated strategies that dozens of U.S. competitors around the world have put in place to bolster the competitiveness of their manufacturing sectors.
Manufacturing Policy is NOT “Industrial Policy”
There is much debate over the state of U.S. manufacturing. Many have been arbitrarily using the term "industrial policy" to refer to a host of problems and initiatives in this critical sector. If we’ve come this far (or low) in the debate that a policy to help ALL manufacturers is industrial policy, then essentially neoclassical economists are saying that all policies need to be completely neutral between industries. This is too critical an issue for our nation’s future for it to be decided in the newspaper articles and offhand quotes from neoclassical economists.
Good Speech, Good Ideas, Yet More Needed…
In follow-up analysis of the State of the Union address, ITIF affirmed it praise for the President's focus on competitiveness but makes the case for more robust R&D, tax, trade and energy that should included in the President's upcoming budget proposal