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.
© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.