In a new report, ITIF makes a compelling case for creating over 162,000 jobs in the short run by simply expanding a tax credit that has been working well for almost 30 years.
In a report titled, “Create Jobs by Expanding the R&D Tax Credit,” ITIF President Robert D. Atkinson analyzes how expanding the Alternative Simplified tax Credit (ASC) for research and development from 14 to 20 percent would not only spur job creation at a time when this is desperately needed but also boost the country’s long-term innovation capacity.
In particular, the report models how expanding the ASC from 12 to 20 percent would create a number of critical economic benefits, including:
162,000 jobs in the near term
- A $90 billion increase in the GDP as the nation struggles through economic recovery
- 3,850 new American patents as nations compete for dominance in tomorrow’s technologies
- $17 billion in new tax revenues as Congress and Administration face daunting budget deficits
- The report also contrasts U.S. policy to incentivize private sector investment in R&D with that of other leading industrial nations.
- The U.S. is 17th among OECD countries in terms of R&D tax credit generosity.
- Increasing the current credit to 20 percent would move the U.S. up to just 10th place.
The United States was a pioneer in using the R&D credit. Companies, workers and consumers will benefit from expanding a policy that has been shown by a wide range of scholarly research to work. Congress and the Administration should embrace this proposal as an element of sustained economic recovery.
Read the report.