Kyl’s "agenda" disappoints on the R & D tax credit

In today’s Wall Street Journal, Jon Kyl calls for a “uniform and generous treatment of research and development expenses” as part of a “growth agenda for America.”

…we should consider a uniform and generous treatment of research and development expenses that does not favor any particular innovation but will encourage businesses of all kinds to create and grow in ways that could never be achieved if government officials try to pick winners and losers.

This position is in line with Kyl’s view that “our tax system should not be a tool for social engineering; rather it should collect the revenues needed to operate our federal government.” But what exactly does he mean by “uniform and generous” here? It seems odd language to use if you are simply trying to get government out of the business of picking winners and losers, or — more likely — out of business’s way altogether.

“Uniform” for Kyl means non-preferential, I suppose; government will not say that wind or solar energy are deserving of credit while coal mining is not. He does not say that with this autonomy — and with the tax credit — comes responsibility, to respect limits, show restraint, and make the right choices. And this is a telling omission. As for “generous,” Kyl would seem to mean hands off – not too much oversight or scrutiny, allowing businesses to determine what counts as research and what does not — which, as I noted in another post, led to some of the abuses of the original R & D tax credit.

This op-ed may simply be the Republican Whip’s attempt to set himself up as an anti-Keynesian — some public posturing before November. His position on the R & D tax credit seems to say, research is whatever business wants it to be; it will benefit the public because it will produce growth; growth is good in and of itself. This is not particularly original stuff, nor does it take the discussion anyplace new.

There’s nothing wrong with championing the R & D tax credit or trying to minimize government intrusion in business. Where Kyl fails is asking for anything in return for the kid gloves treatment. His position would be much richer and more nuanced if he did. Maybe he’s of the Joe Biden school and thinks you can’t run on nuance or stuff that’s “too hard to explain.”

In any case, we are certainly a long way here from any very interesting thinking about “research” and how it ought to benefit the public who subsidize it. And I am more convinced than ever that in this area, as in so many others, reasonable and intelligent policy — where innovation is balanced with orientation, and a growth agenda is balanced by an agenda for sustainability — will continue to elude us.

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