The Senate has begun debate on the so-called Chips bill, which would provide $52 billion in grants and $24 billion in tax credits to supposedly strengthen the production of semiconductors in the U.S.
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Policymakers should continue to focus on longer term impacts rather than emphasizing the short-term stimulus effects of tax cuts.
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While the bulk of the proposed tax increases and spending programs remain under debate, Democratic lawmakers have reportedly agreed on prescription drug pricing provisions as a starting point for a revived Build Back Better package.
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Our new analysis reviews the basic structure of carbon taxes, how they compare to the existing set of climate policies, and how they could fit into various pro-growth tax reform packages.
26 min read
Starting this year, firms must amortize their research and development (R&D) expenses over five years rather than immediately deduct them from taxable income, a policy change designed to raise federal tax revenue in the short term.
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Federal policymakers are debating a legislative package focused on boosting U.S. competitiveness vis-a-vis China; however, it currently contains little to no improvements to the U.S. tax code.
34 min read
Government-set pricing of prescription drugs is not a fix for today’s rampant inflation and further, it would give rise to new problems of its own.
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The U.S. tax system is biased against capital investments. Ending these tax penalties would boost economic output, productivity, and employment.
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Many countries incentivize business investment in research and development (R&D), intending to foster innovation. A common approach is to provide direct government funding for R&D activity. However, a significant number of jurisdictions also offers R&D tax incentives.
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Policymakers actively marginalized the manufacturing sector by saddling them with cost recovery rules that prevent them from deducting the full cost of investment in physical plant and equipment. Going forward, policymakers should avoid haphazard fixes, targeted measures, and protectionism.
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In his State of the Union Address, President Biden called for leveling the global research & development (R&D) playing field by increasing federal R&D spending, specifically by asking Congress to pass the bipartisan United States Innovation and Competition Act (USICA).
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By reducing the tax code’s current barriers to investment and saving and simplifying its complex rules, lawmakers would greatly enhance the ability of Americans to pursue new ideas, create more opportunities, and build financial security for themselves and their families.
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Consumer prices rose by 7 percent in 2021, the highest annual rate of inflation since 1982. Where did this inflation come from and what might its impacts be? Tax and fiscal policy offer important clues.
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Every so often, you will see headlines highlighting large companies that pay little or no corporate income tax. While these stories may seem shocking, the reality is much more mundane.
When examining how tax policy impacts the economy, researchers typically look at labor supply and investment responses. One other channel through which taxes impact the economy has been less studied: innovation.
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Rather than pursuing policies that have demonstrably reduced R&D and innovation elsewhere, and that would disincentivize R&D in the U.S., lawmakers should continue to ensure an ecosystem that encourages risk-taking and R&D.
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Patent box regimes (also referred to as intellectual property, or IP, regimes) provide lower effective tax rates on income derived from IP. Most commonly, eligible types of IP are patents and software copyrights. Currently, 14 of the 27 EU member states have a patent box regime.
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Lawmakers are considering policy changes within the reconciliation bill that would reduce private R&D within the pharmaceutical industry and reduce the number of new drugs coming to market. Instead of hampering medical progress, policymakers should work to ensure that the tax code remains conducive to R&D spending and the resulting innovation.
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