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U.S. R&D Tax Credit Sagging

Mark Marich

The Information Technology and Innovation Foundation (ITIF) continues toargue in favor of corporate tax reform. In “U.S. Continues to Tread Water in Global R&D Tax Incentives”, ITIF’s Robert Atkinson contends that the United States’ R&D credit has fallen so far behind compared to other nations that it would have to increase the Alternative Simplified Credit from its current value of 14 percent to 47 percent to once again be the world leader in R&D tax generosity. The U.S. currently ranks 17th out of the 30 OECD countries in offering R&D tax credit. 

In a recentBusinessWeekblog post, Atkinson also argued that the current U.S. recession is due in part to a shortfall in innovation and competitiveness, and that such shortfall can be traced to the U.S. corporate tax code. According to Mandel, the U.S. corporate tax code provides only minimal incentives for companies to invest in the building blocks of innovation: research, new capital equipment, and laborskills. The blog calls for a redesign of the tax code which will reduce international tax differentials and spur more domestic investment in R&D, productivity-enhancing capital expenditures, and worker training.

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