Chairman of the Council of Economic Advisors Jason Furman today spoke in favor of enhancement of the research credit over an innovation box regime as the preferred means to boosting domestic innovation. In ticking off a list of six perceived problems with the innovation box concept, Furman noted:
Moving to an innovation box would entail joining in a race to the bottom that is not justified by the economics of an innovation box and certainly not justified when an alternative, proven, effective method exists to encourage greater investment in innovation. The threat that in the absence of change R&D will move overseas is overstated given the relatively strong non-tax considerations that go into the location of actual R&D activities, not to mention the fact that the associated deductions for the activity would become less valuable.
As previously reported—read TaxNewsFlash-United States—members of the Ways and Means Committee have introduced an innovation box proposal and have expressed interest in including that proposal in any international tax reform draft produced by the committee.
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