Incentivizing scientific research is one of the best things the federal government can do to promote economic growth with desirable outcomes, and support the development of knowledge that would be lost to humanity without it.
Unsurprisingly, Republicans are trying to pass corporate tax breaks for multinational companies to offshore government funds under the guise of supporting scientific research, while actual important scientific research goes unfunded and unfinished.
If our government is going to fund research, it should go to generating knowledge, not to helping rich corporations avoid paying their fair share.
Congressman Lloyd Doggett made a speech on the floor of the US House to call attention to this gross misuse of funds: “They are not about making it in America; they are about taking it from America.”
Watch his speech and read the text below the jump.Watch the video here:
Here is the full text of Congressman Doggett's remarks:
“I support a permanent research and development credit to incentivize research for new products, and for decades there has never really been any question about whether we should incentivize research. The question has been how–how to pay for that incentive and how to ensure that it actually encourages more jobs, more economic development with desirable research that would not otherwise happen without the credit.
Until today, Republicans, who claimed to be for fiscal responsibility before they were against it, have not been so brash as to demand that we finance this entire research credit on a permanent basis and similar legislation by borrowing more money. A Government Accountability Office investigation of this credit concluded that a few corporations snatch most of the credit and that “a substantial portion of credit dollars is a windfall, earned for spending they would have done anyway, instead of being used to support potentially beneficial new research.”
This credit is just another type of special treatment that a few giant multinationals can count on to lower their already low tax rates. Last month, the Wall Street Journal reported the complaint of one giant, they said that without this credit, their tax rate would climb effectively from 16% all the way to 18%. Another corporation complained that their rate would go from 13% to 19%. You know, most of the small businesses that I represent in my part of Texas would be delighted to have a rate of that level, they pay substantially more.
And multinationals can use this taxpayer subsidy to finance research that produces patents and copyrights and the like that are then owned by offshore tax havens, subsidiaries that pay little or no taxes. One company studied by Senator Levin's Permanent Subcommittee on Investigations did 95% of its research and development right here in America, but then it shifted $74 billion of earnings to an Irish subsidiary.
Apparently, the most effective multinational research anywhere in the world has focused on how to avoid paying their fair share of financing our national security. These are companies that shift both jobs and profits overseas. They are not about making it in America; they are about taking it from America. And that shifts the burden to small businesses and individuals.
Nor is all of this taxpayer-subsidized research beneficial to the public. For example, some of the research that was done for the electronic cigarettes, the latest fad to addict our children to nicotine, qualified for this tax subsidy. Meanwhile, the House Republican budget undermines vital private research that is funded through the National Institutes for Health: for Alzheimer's, for cancer, for Parkinson's, and for other dread diseases. They say we can't afford to do what is necessary in research for those. They cut, also, research for efforts to ensure that taxpayers get their money's worth from our investment in public services. Without adequate research, you cannot determine whether an initiative that is proposed justifies federal dollars or is truly evidence-based .
I think we should reject today's proposal in favor of a research credit that actually incentivizes necessary research made in America, and which is paid for in part by comprehensive reform of the credit itself.
Now as for comprehensive reform: from day one of this Congress, House Resolution 1 was reserved for the much ballyhooed Republicans comprehensive tax reform. And yet we are well through this Congress, and it still says reserved for Speaker. That's because the Republicans couldn't agree on which tax loophole to close to maintain a revenue neutral, of not borrowing more money. Because they told us January of last year they'd be here with a simpler, fairer, lower tax rate, but they can't agree on how to pay for it because they are dominated by lobby groups that want to protect the very complexities and loopholes that plague this tax system. Because they couldn't do that and have not done that, they're now back, as the gentleman says, with the first- not of one or two, but of many- provisions to make them permanent and pay for it with either borrowed money or mandatory cuts. I think that's a serious mistake.
Today's bill represents only the first installment of more tax breaks to come that are not paid for, or paid for with mandatory cuts. Surely, we don't need more research today to know that is the wrong way to go, it's the irresponsible way to go, and it ought to be rejected.