Tax Reform Should Expand R&D Tax Credit

November 14, 2017

The United States enacted the world’s first research and development tax credit in 1981. The size of the credit is rather small: The Joint Committee on Taxation estimates that it will cost taxpayers $57.5 billion over five years. Unlike most other special provisions, the credit actually addresses a clear market failure. When firms invest in research, most of the benefit goes to society in general.