Taxes

ITIF Debate: Congress Should Retain and Expand the R&D Tax Credit

February 26, 2014
A spirited debate on the R&D Tax Credit.

In 1981, the federal government established the research and experimentation (R&D) tax credit. Today, with Congress considering comprehensive corporate tax reform some have argued that Congress should jettison the credit and use the savings to pay for statutory rate reduction. For example, in a recent Washington Post op-ed, noted tax economist Marty Sullivan, argued for elimination of the tax. In contrast, ITIF has argued that this would be a mistake and that the credit plays a valuable role in spurring investment in U.S. Read more »

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America Needs Tax Reform - But Also More Incentives to Invest

Tax Reform for U.S. Manufacturing

February 12, 2014
| Blogs & Op-eds

The United States has one of the highest effective corporate tax rates in the world, especially for manufacturers. If we want to improve competitiveness and job growth this has to change.

An Innovation and Competitiveness-Centered Approach to Deficit Reduction

January 7, 2014
| Reports

The "Washington Consensus" on the federal budget process is grounded in faulty economic theory which leads to a fixation on reducing the debt and a focus on putting "everything on the table," coming at the expense of growth-inducing investments and long-term economic growth. A new approach to the budget is required to accomplish the dual goals of reducing the budget deficit and growing the economy. This report presents a series of recommendations designed to focus federal spending and tax policy on investments that promote growth while also reducing the national debt.

Critique of OECD R&D Tax Credit Report

December 13, 2013
| Blogs & Op-eds

A recent report by the OECD misses the forest for the trees, providing cautionary advice about R&D credits for policymakers while downplaying their effectiveness and ignoring important rationale behind them. While smart policy design is always welcome, most of the OECD’s worries are overstated or simply nonsensical. The R&D credit continues to provide a critical incentive for American innovation and should be expanded considerably.

"Patent Box" Legislation Offers Unique Incentives For R&D

November 21, 2013
| Blogs & Op-eds

A new research paper shows that reducing the tax on patent income can not only increase R&D spending, but also enhances patent quality. This is good news for countries like the United Kingdom, which just decreased its corporate tax on patent income.

Innovation Economics: How a New Theory Casts Light on an Old Problem of the Budget Deficit

October 21, 2013
| Reports

The recent government shutdown and debt ceiling brinksmanship just postpones the time when the nation’s budget issues will have to be addressed.  Unfortunately the “Washington consensus” on the budget, based on neoclassical economic thinking, leads to the wrong solutions. With its focus on cutting debt, rather than the debt-to-GDP ratio, and its overriding mantra that “everything should be on the table,” this mantra, being promoted by groups such as Simpson-Bowles, Domenci-Rivlin, The Concord Coalition, and the Committee for a Responsible Federal Budget, is generating budget solutions that will lead to less, not more U.S. growth.

It is time for a budget debate that is based on a new approach to economics – innovation economics – that focuses on maximizing innovation and long-term growth. This report argues that any budget solution must set a goal of improving the debt-to-GDP ratio as opposed to simply cutting the debt. It also needs to actually increase public investment and cut corporate taxes to drive growth, even though in the short run these steps will increase the budget deficit. These policies will be much more effective at spurring growth and U.S. competitiveness, which is what the ultimate goal of any economic policy, including budget policy, should be. Moreover, by spurring growth, these policies will help cut the debt-to-GDP ratio, a more accurate measure of the government’s fiscal condition.

R&D Tax Incentives to Stimulate Competitiveness, Jobs and Growth

October 2, 2013
| Presentations

Ezell will moderate a discussion on the use of tax reforms to spur innovation. It will include an analysis of recent laws passed by the government of Belgium to create a tax code that provides stronger support for innovation, R&D and entrepreneurship.

ITIF Endorses House Judiciary's Remote Sales Tax Principles

Don’t Tax Internet Access

August 9, 2013
| Blogs & Op-eds

One of the basic principles of an innovation-based tax policy is that government should “tax bads, not goods.” This is the idea behind proposals such as using carbon taxes to pay for an expanded research and development tax credit. So why would the government want to tax Internet access when, according to the McKinsey Global Institute, the Internet accounts for 3.8 percent of U.S. GDP?

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