SERIES: Remaking Federalism | Renewing the Economy | Number 9 of 26 « Previous | Next »

Cut to Invest: Make the Research and Experimentation Tax Credit Permanent

A simplified and more robust Research and Experimentation (R&E) Tax Credit should be permanently authorized in order to encourage research and development investment by both domestic and foreign-owned firms located in the United States. A permanent R&E Tax Credit will bolster innovation-related investment and activity in U.S. metropolitan areas, foster prosperity, and improve the nation’s standing in the global economy.

Along these lines, extending and expanding the credit would:

  • Send a strong signal to firms throughout the world that the United States remains fiercely committed to cultivating a vibrant innovation ecosystem

  • Encourage companies to engage in long-term planning and undertake R&D projects with longer timelines

  • Reduce the administrative costs incurred by firms seeking the credit and by the IRS in determining qualification and compliance

  • Bolster the power and impact of regional innovation systems, which drive the nation’s metropolitan economies

  • Contribute to the renewal of the U.S. manufacturing sector, which represents the majority of R&D spending in the United States

As these positive effects suggest, a permanent expansion of the R&E Tax Credit would work to enhance the nation’s standing in the global economy both now and in the decades ahead.

SERIES: Remaking Federalism | Renewing the Economy | Number 9