Will the U.S. Build a Better R&D Tax Credit Regime

Will the U.S. Build a Better R&D Tax Credit Regime

The debate resumes over making credits for R&D investments permanent, as the U.S. House of Representatives endorsed a bill to that effect in May before it heads to the Senate and then maybe on to the White House.

Key questions on the best approach to credits, according to experts at Wharton and New York University, include: Should incentives encourage some kinds of research over others? Should investments simply be fully expensed when made? And, should the credits be made permanent?

Advocates of the tax credit maintain it fosters innovation and want it to become a permanent incentive in order to remove uncertainties about possible expiration or revocation down the road. Critics say it is a tax giveaway that some companies abuse and that it would come at the cost of other public programs the government ought to support.

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