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Do Tax Incentives For Research Increase Firm Innovation
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Book Synopsis Do Tax Incentives for Research Increase Firm Innovation? by : Antoine Dechezleprêtre
Download or read book Do Tax Incentives for Research Increase Firm Innovation? written by Antoine Dechezleprêtre and published by . This book was released on 2016 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present evidence of a causal impact of research and development (R & D) tax incentives on innovation. We exploit a change in the asset-based size thresholds for eligibility for R & D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R & D and patenting (even when quality-adjusted). R & D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population of smaller firms and subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design. Over the 2006-11 period aggregate business R & D would be around 10% lower in the absence of the tax relief scheme. We also show that the R & D generated by the tax policy creates positive spillovers on the innovations of techno-logically related firms.
Book Synopsis The Design of R&D Tax Incentive Schemes and Firm Innovation by : Heli Koski
Download or read book The Design of R&D Tax Incentive Schemes and Firm Innovation written by Heli Koski and published by . This book was released on 2022 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Research and development (R&D) tax credits are widely employed among the OECD countries to promote business sector investments in innovation. The implementation of R&D tax credit schemes, however, varies across countries. The empirical research on the effectiveness of R&D tax incentives suggests that the strength of company responses (in R&D expenditures) to more generous tax incentives substantially differ across countries. We use data from 25 OECD countries, collected from 2010 to 2018, to explore the relationship between a set of R&D tax scheme features and innovation performance. Our estimation results show that the business sector R&D expenditure is higher among those countries that have implemented either an R&D tax credit scheme with an incremental deduction basis or a hybrid scheme with both volume-based and incremental tax relief components. The input additionality is highest when the R&D tax incentives are based on the incremental deduction. Further, the hybrid tax credit scheme positively relates to innovation output. The business sector R&D investment are higher in the countries with an R&D tax credit scheme that provides favorable treatment for SMEs or option to carry forward unclaimed R&D tax credits.
Book Synopsis Practical Guide to Research and Development Tax Incentives by : Michael D. Rashkin
Download or read book Practical Guide to Research and Development Tax Incentives written by Michael D. Rashkin and published by CCH. This book was released on 2007 with total page 764 pages. Available in PDF, EPUB and Kindle. Book excerpt: CCH's Practical Guide to Research and Development Tax Incentives--Federal, State, and Foreign by Michael Rashkin, J.D., LL.M., provides something that has been missing in professional tax literature--authoritative, comprehensive coverage of this complex and evolving topic. This newly expanded resource is practical, easy to follow, easy to understand, and is particularly effective at clarifying and demystifying this complex subject. It provides well-written, detailed guidance on claiming the federal credit for increasing research activities and the deduction for R & D expenditures. In doing so, it explains the elements of qualified research, exclusions, computational rules, and basic research payment credits. Historically, the IRS has been vigilant in denying R & D credits. This resource explains how to satisfy the IRS's requirements, document the credit, and defend against IRS challenges. It also examines research incentives offered by individual states and describes the R & D incentives available in the major economies of the world, offering helpful charts that show the key differences among the various countries.
Book Synopsis Handbook of Innovation Policy Impact by : Jakob Edler
Download or read book Handbook of Innovation Policy Impact written by Jakob Edler and published by Edward Elgar Publishing. This book was released on 2016-07-27 with total page 604 pages. Available in PDF, EPUB and Kindle. Book excerpt: Innovation underpins competitiveness, is crucial to addressing societal challenges, and its support has become a major public policy goal. But what really works in innovation policy, and why? This Handbook, compiled by leading experts in the field, is the first comprehensive guide to understanding the logic and effects of innovation polices. The Handbook develops a conceptualisation and typology of innovation policies, presents meta-evaluations for 16 key innovation policy instruments and analyses evidence on policy-mix. For each policy instrument, underlying rationales and examples are presented, along with a critical analysis of the available impact evidence. Providing access to primary sources of impact analysis, the book offers an insightful assessment of innovation policy practice and its evaluation.
Book Synopsis Effectiveness of Fiscal Incentives for R&D by : Irem Guceri
Download or read book Effectiveness of Fiscal Incentives for R&D written by Irem Guceri and published by International Monetary Fund. This book was released on 2017-03-31 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: With growing academic and policy interest in research and development (R&D) tax incentives, the question about their effectiveness has become ever more relevant. In the absence of an exogenous policy reform, the simultaneous determination of companies’ tax positions and their R&D spending causes an identification problem in evaluating tax incentives. To overcome this identification challenge, we exploit a U.K. policy reform and use the population of corporation tax records that provide precise information on the amount of firm-level R&D expenditure. Using difference-in-differences and other panel regression approaches, we find a positive and significant impact of tax incentives on R&D spending, and an implied user cost elasticity estimate of around -1.6. This translates to more than a pound in additional private R&D for each pound foregone in corporation tax revenue.
Book Synopsis Expanding the R&D Tax Credit to Drive Innovation, Competitiveness and Prosperity by : Robert D. Atkinson
Download or read book Expanding the R&D Tax Credit to Drive Innovation, Competitiveness and Prosperity written by Robert D. Atkinson and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The U.S. economy faces a new and formidable competitiveness challenge. Not only has the emergence of a global economy led to the creation of robust new economic competitors, but within the last decade many nations, including most of Southeast Asia and Europe, have made innovation-led economic development a centerpiece of their national economic strategies. Their aggressive use of research and development (R&D) tax incentives is just one indicator of that commitment. Unfortunately, the United States has not kept pace. While we provided the most generous tax treatment of R&D in the late 1980s among OECD nations, by 2004 we had fallen to 17th. Addressing this new competitiveness challenge will require policy makers to take a host of steps, including improving education and significantly increasing funding for research. Yet while these steps are necessary, they are not sufficient to win the competitiveness challenge. Policy needs to do more than boost the supply of innovation resources (e.g., a better trained workforce and increased basic research discoveries); it must also spur demand by companies to locate more of their innovation-based production in the United States. If the United States is to remain the world's preeminent location for technological innovation (and the high paying jobs that result), Congress will need to significantly expand the Research and Experimentation Tax Credit. To do that Congress should: - Make the R&D tax credit permanent, - Double the rate of the regular credit from 20 percent to 40 percent, - Expand the Alternative Simplified Credit, - Create a flat credit for Collaborative R&D, - Allow firms to expense in the first year expenditures on research equipment, and - Exempt the credit from the corporate Alternative Minimum Tax.
Book Synopsis The Incentive Effects of R&D Tax Credits by : Ming-Chin Chen
Download or read book The Incentive Effects of R&D Tax Credits written by Ming-Chin Chen and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates whether an increase in the R&D tax credit rate stimulates firms' incremental R&D spending. We find that the increase in the credit rate has a positive effect on the R&D spending of high-tech firms with taxable status, but does not have the same positive effect on non-high tech firms. These results indicate that tax incentives alone may not be effective to increase R&D spending if firms do not have profitable innovation opportunities. Further, we find that when the tax incentive is structured as a credit based on incremental R&D spending over a moving-average base, firms opportunistically time their R&D spending patterns to obtain additional tax credits, resulting in greater variability in R&D spending and potentially the unintended loss of tax revenues. This study contributes to the ongoing global debate about the efficacy of tax policies towards R&D by providing firm-level evidence from a large cross-section of firms in an emerging economy.
Book Synopsis Government R&D Funding and Company Behaviour Measuring Behavioural Additionality by : OECD
Download or read book Government R&D Funding and Company Behaviour Measuring Behavioural Additionality written by OECD and published by OECD Publishing. This book was released on 2006-06-08 with total page 243 pages. Available in PDF, EPUB and Kindle. Book excerpt: How does government funding of corporate R&D affect the behaviour of firms? Ongoing efforts to boost business investment in R&D demand better methods of evaluating the effectiveness of government policy instruments. Efforts to explicitly measure ...
Book Synopsis The Impact of R&D Tax Incentives on Country's Location Attractiveness and Firm's Innovation Activities by : Daniela Steinbrenner
Download or read book The Impact of R&D Tax Incentives on Country's Location Attractiveness and Firm's Innovation Activities written by Daniela Steinbrenner and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Impact of R&D Tax Incentives on Country's Location Attractiveness and Firm's Innovation Activities by : Daniela Steinbrenner
Download or read book The Impact of R&D Tax Incentives on Country's Location Attractiveness and Firm's Innovation Activities written by Daniela Steinbrenner and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Government’s Role in Innovation by : Dennis Patrick Leyden
Download or read book Government’s Role in Innovation written by Dennis Patrick Leyden and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inadequate investment in innovation is particularly costly in today's globally competitive environment where continued technological advancements are critical to sustaining economic prosperity. The government has a critical role in ensuring that society's general interest in innovation, and the public good associated with innovation, is represented in private-sector decision making. This can be accomplished through a variety of programs and initiatives that reward innovation at all levels. The various activities that make this possible fall into two general categories: (1) the creation and maintenance of a legal environment that encourages private sector investment in innovation (patents and the relaxation of antitrust); and (2) the provision of incentives to overcome the natural inclination of private parties to consider only their private benefits when choosing the level of innovation in which to invest (governmental grants and contracts to targeted tax incentives). The role of government, more specifically, can be found in three key areas: (1) funding of research and development performed in the private sector; (2) funding of Federal laboratory research activities and the effective transfer of that knowledge to the private sector; and (3) encouraging the industry-university collaboration in research and development. It is these three areas of research that generate technologies fundamental to increasing the rate of technological development in the private sector, and it is these areas that are the focus of this book.
Book Synopsis Estimating Policy Mix Effects by : Stephen Roper
Download or read book Estimating Policy Mix Effects written by Stephen Roper and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study provides empirical evidence on the input and output additionality achieved by UK firms receiving R&D tax incentives only, R&D and innovation grants only, and a combination of both incentives. Four key findings emerge. First, we find strong evidence of input additionality from each type of public support but also some attenuation or substitution effects between the input additionality of grants and tax-incentives. Second, innovation output additionality is consistently positive from tax-incentive-only, and the related policy-mix. However, grant-only output additionality effects are notably smaller in scale and statistically much weaker. Here, we also observe complementarity between tax and grant measures leading to stronger policy-mix output additionality. Third, we find a, perhaps surprising, difference in the scale of input and output additionality effects for tax incentives-only and the related policy mix: input additionality effects are consistently larger - 2-3 times - the scale of output additionality effects. Fourth, the relationship between input and output additionality varies between groups of firms. In terms of productivity, input (output) additionality is stronger (weaker) among low productivity firms, while input (output) additionality is weaker (stronger) in high productivity enterprises. Our results suggest that: (a) policy evaluation or targeting based on input additionality alone may significantly over-estimate or mis-represent long-term policy benefits; and (b) that 'average' estimates for additionality effects may provide a misleading indication of additionality profiles for different types of firms.
Book Synopsis Rethinking Property Tax Incentives for Business by : Daphne A. Kenyon
Download or read book Rethinking Property Tax Incentives for Business written by Daphne A. Kenyon and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The use of property tax incentives for business by local governments throughout the United States has escalated over the last 50 years. While there is little evidence that these tax incentives are an effective instrument to promote economic development, they cost state and local governments $5 to $10 billion each year in forgone revenue. Three major obstacles can impede the success of property tax incentives as an economic development tool. First, incentives are unlikely to have a significant impact on a firm's profitability since property taxes are a small part of the total costs for most businesses--averaging much less than 1 percent of total costs for the U.S. manufacturing sector. Second, tax breaks are sometimes given to businesses that would have chosen the same location even without the incentives. When this happens, property tax incentives merely deplete the tax base without promoting economic development. Third, widespread use of incentives within a metropolitan area reduces their effectiveness, because when firms can obtain similar tax breaks in most jurisdictions, incentives are less likely to affect business location decisions. This report reviews five types of property tax incentives and examines their characteristics, costs, and effectiveness: property tax abatement programs; tax increment finance; enterprise zones; firm-specific property tax incentives; and property tax exemptions in connection with issuance of industrial development bonds. Alternatives to tax incentives should be considered by policy makers, such as customized job training, labor market intermediaries, and business support services. State and local governments also can pursue a policy of broad-based taxes with low tax rates or adopt split-rate property taxation with lower taxes on buildings than land.State policy makers are in a good position to increase the effectiveness of property tax incentives since they control how local governments use them. For example, states can restrict the use of incentives to certain geographic areas or certain types of facilities; publish information on the use of property tax incentives; conduct studies on their effectiveness; and reduce destructive local tax competition by not reimbursing local governments for revenue they forgo when they award property tax incentives.Local government officials can make wiser use of property tax incentives for business and avoid such incentives when their costs exceed their benefits. Localities should set clear criteria for the types of projects eligible for incentives; limit tax breaks to mobile facilities that export goods or services out of the region; involve tax administrators and other stakeholders in decisions to grant incentives; cooperate on economic development with other jurisdictions in the area; and be clear from the outset that not all businesses that ask for an incentive will receive one.Despite a generally poor record in promoting economic development, property tax incentives continue to be used. The goal is laudable: attracting new businesses to a jurisdiction can increase income or employment, expand the tax base, and revitalize distressed urban areas. In a best case scenario, attracting a large facility can increase worker productivity and draw related firms to the area, creating a positive feedback loop. This report offers recommendations to improve the odds of achieving these economic development goals.
Book Synopsis Evaluating the Impact of R&D Tax Credits on Innovation by : Dirk Czarnitzki
Download or read book Evaluating the Impact of R&D Tax Credits on Innovation written by Dirk Czarnitzki and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effect of R&D tax credits on innovation activities of Canadian manufacturing firms. Over the 1997-1999 period the Federal and Provincial R&D tax credit programs were used by more than one third of all manufacturing firms and by close to two thirds of firms in high-technology sectors. We investigate the average effect of R&D tax credits on a series of innovation indicators such as number of new products, sales with new products, originality of innovation etc. using a non-parametric matching approach. Compared to a hypothetical situation in the absence of R&D tax credits, recipients of tax credits show significantly better scores on most but not all performance indicators. We therefore conclude that tax credits increase the R&D engagement at the firm level and that the R&D activities induced by fiscal incentives lead to additional innovation output.
Book Synopsis The Internationalisation of Business R&D Evidence, Impacts and Implications by : OECD
Download or read book The Internationalisation of Business R&D Evidence, Impacts and Implications written by OECD and published by OECD Publishing. This book was released on 2008-06-06 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyses trends in the offshoring of R&D, examines its drivers and motivations, and identifies implications for innovation policy.
Book Synopsis Federal Tax Incentives for Research and Development by : Erika Brooks
Download or read book Federal Tax Incentives for Research and Development written by Erika Brooks and published by . This book was released on 2016 with total page 141 pages. Available in PDF, EPUB and Kindle. Book excerpt: Technological innovation is a primary engine of long-term economic growth, and research and development (R and D) serves as the lifeblood of innovation. The federal government encourages businesses to invest more in R and D than they otherwise would in several ways, including a tax credit for increases in spending on qualified research above a base amount. This book describes the current status of the credit, summarizes its legislative history, discusses policy issues it raises, and describes legislation to modify and extend it. Moreover, the book focuses on the effects of a patent box on encouraging research and development in the United States.
Book Synopsis Do Tax Cuts Produce More Einsteins? by : Alexander M. Bell
Download or read book Do Tax Cuts Produce More Einsteins? written by Alexander M. Bell and published by . This book was released on 2019 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many countries provide financial incentives to spur innovation, ranging from tax incentives to research and development grants. In this paper, we study how such financial incentives affect individuals' decisions to pursue careers in innovation. We first present empirical evidence on inventors' career trajectories and income distributions using de-identified data on 1.2 million inventors from patent records linked to tax records in the U.S. We find that the private returns to innovation are extremely skewed -- with the top 1% of inventors collecting more than 22% of total inventors' income -- and are highly correlated with their social impact, as measured by citations. Inventors tend to have their most impactful innovations around age 40 and their incomes rise rapidly just before they have high-impact patents. We then build a stylized model of inventor career choice that matches these facts as well as recent evidence that childhood exposure to innovation plays a critical role in determining whether individuals become inventors. The model predicts that financial incentives, such as top income tax reductions, have limited potential to increase aggregate innovation because they only affect individuals who are exposed to innovation and have no impact on the decisions of star inventors, who matter most for aggregate innovation. Importantly, these results hold regardless of whether the private returns to innovation are known at the time of career choice. In contrast, increasing exposure to innovation (e.g., through mentorship programs) could have substantial impacts on innovation by drawing individuals who produce high-impact inventions into the innovation pipeline. Although we do not present direct evidence supporting these model-based predictions, our results call for a more careful assessment of the impacts of financial incentives and a greater focus on alternative policies to increase the supply of inventors.
