Taxes

Misinformation in the Internet Tax Freedom Act Debate

June 25, 2014
| Blogs & Op-eds

The Internet Tax Freedom Act keeps broadband prices down and encourages faster adoption rates of internet technology. However, the Center for Budget and Policy Priorities' Michael Mazerov claims that price is not a significant factor in limiting broadband adoption. The evidence says otherwise, including the evidence that Mazerov himself cites. In reality, the literature shows that cost has a large impact on broadband adoption and is the limiting factor for most non-subscribers.

New Paper Confirms Growth Benefits of R&D

May 22, 2014
| Blogs & Op-eds

A new working paper examines whether R&D policies have short- or long-term economic impacts, finding that there are in fact persistent, long-term benefits for economic growth rates. However, the long-term effects come primarily from R&D tax credit policies, as opposed to R&D subsidies. It is therefore critical to continue to support and even increase the R&D tax credit.

Expand and Make Permanent the Research and Development Tax Credit

May 12, 2014
| Blogs & Op-eds

The Obama Administration should rethink its opposition to the R&D Tax credit bill recently passed in the House. Raising the credit from 14 to 20 percent could boost GDP by $66 billion a year and help create 162,000 jobs.

House GOP Splits Dems on Business Tax Cut

MSNBC
“Given that the Obama Administration has publicly supported increasing the R&D credit and making it permanent, it is troubling that they are now threatening to veto this pro-growth measure,” says Robert Atkinson.

R&D Tax Fight Turns into a Partisan Brawl

MSNBC
We should move forward with pro-growth, tax policy changes that already have bipartisan support, says Robert Atkinson.

White House Threatens Veto in Clash over R&D Tax Credit

Financial Times
U.S. companies are doing more and more R&D offshore, one reason why is cost – not just labor cost – but also tax cost, says Robert Atkinson.

Why The Tax Reform Act of 2014 Should Expand, Not Cut, The R&D Tax Credit

April 14, 2014
| Reports

R&D is a key driver of U.S. productivity growth, innovation and competitiveness. However, relative to societally optimal rates companies underinvest in R&D, which is why since 1954 companies have been able to deduct R&D costs immediately rather than depreciating them, and why since 1981 companies have been able to take a tax credit for R&D expenditures. Unfortunately, the Tax Reform Act of 2014 proposed by House Ways and Means Chairman David Camp (R-MI) would not only significantly reduce tax incentives to invest in R&D but would disqualify R&D expenditures toward software development from the credit.

These changes, if enacted, would reduce the tax incentives for performing R&D in the U.S. by approximately $20 billion per year, raising the effective tax rate of R&D-performing companies. It would also reduce R&D performed in the United States by at least $25 billion annually, which would in turn reduce productivity growth by an estimated 0.18 percent per year going forward. Finally, eliminating the credit for R&D on software, an activity that many industries not just software engage in, would change the allocation of R&D across types of research, negatively impacting innovation. 

The United States cannot afford to be indifferent to where R&D is performed. Given the fact that 26 nations already provide more generous tax treatment of research, these changes will lead to relatively less global R&D being performed domestically, with the negative effects on the economy and jobs to follow. To be sure, America needs sensible reforms that lower corporate tax rates, but these steps should be taken while maintaining, or even expanding, proven incentives to invest such as the R&D tax credit.

America Needs Corporate Tax Reform

April 3, 2014
| Blogs & Op-eds

Corporations have more choices today about how to structure their organizations and finances, where to locate their headquarters and operations and how to send profits to shareholders. All of this will make tax collection more difficult. Other countries are competing for this high-value-added production and jobs by lowering their corporate tax rates. The United States must follow suit.

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