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Tuesday, December 29, 2009

U.S. Ranks 20th in Tax Support for R&D

Canada's Department of Finance has released a study of the tax support for corporate research and development provided by various foreign countries, An International Comparison of Tax Assistance for Investment in Research and Development.  The U.S. ranks only 20th among the 36 countries:

Rank

Country

Subsidy Rate

1

France

40.2%

2

Spain

34.5%

3

Canada

30.2%

4

India

29.7%

5

Brazil

29.6%

6

Hungary

26.2%

7

Ireland

26.2%

8

Turkey

24.0%

9

Czech Republic

22.5%

10

United Kingdom

21.4%

11

Japan

18.9%

12

China

17.7%

13

Norway

17.4%

14

Australia

14.4%

15

Singapore

12.7%

16

Korea

12.4%

17

Belgium

11.0%

18

Austria

11.0%

19

Netherlands

10.3%

20

United States

9.2%

21

Italy

7.0%

22

Greece

3.4%

23

Finland

3.1%

24

Mexico

2.8%

25

New Zealand

2.6%

26

Luxembourg

2.5%

27

Denmark

2.4%

28

Sweden

2.3%

29

Slovak Republic

2.2%

30

Germany

1.9%

31

Hong Kong

1.9%

32

Portugal

1.8%

33

Poland

1.6%

34

Iceland

1.3%

35

Switzerland

0.8%

36

Russian Federation

0.3%

 

Unweighted average

12.7%

 

Median

10.7%

http://taxprof.typepad.com/taxprof_blog/2009/12/us-ranks.html

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Comments

For the sake of asking, because I don't know, how does the U.S. rank in terms of patent protection? It would be more qualitative than quantitative but still.

Then compare your table against the table I'm asking for. It could be that our patent laws provide the "subsidy" at the back end.

So let's find out.

Posted by: David in San Diego | Dec 29, 2009 1:34:53 PM

That's a huge spread. Depending on what constitutes Tax Support (lower taxation vs looting others for subsidies), I'm not sure we're in a particularly bad spot.

Posted by: egoist | Dec 29, 2009 1:47:03 PM

Hmmm, why are taxpayers being extorted to fund these R&D projects in the first place?

Less government intrusion would be a damn site cheaper and could probably be more private R&D taking place...

I wonder if Thomas Edison could've turned out as many patents as he did under the present day circumstances?

Posted by: juandos | Dec 29, 2009 2:22:01 PM

no tax breaks for those evil corporations ...
unless you are a wind or solar farm ...

Posted by: Jeff | Dec 29, 2009 2:22:13 PM

Yes, but how much profit a company is able to keep must also factor in to the incentive for R&D. France may heavily subsidize, but it's necessary to do so because it heavily takes on the income side. (I think).

Posted by: holmes | Dec 29, 2009 2:26:53 PM

U.S. Ranks 20th in Tax Support for R&D

True, but not
relevant to the
current crisis;
Prizes for
Performance are
the way to go.

Posted by: M. Report | Dec 29, 2009 2:39:02 PM

I'm Canadian and have applied for the "tax support" in the past. It is often a very subjective evaluation by the govt of which technologies it will subsidize and which it won't. Economics In One Lesson?

Posted by: Canuck | Dec 29, 2009 2:50:09 PM

Can some one please give raw numbers? I notice countries with GDP's that might equal Florida's in this list. Percent of what? Actual dollars? What is subsidized? Weapons? Food? Tattoos? what relation does this bear to GDP?

Posted by: Ed Maisch | Dec 29, 2009 2:59:18 PM

Unsustainable deficits are not the only way to fumble the future.

Posted by: gs | Dec 29, 2009 3:03:46 PM

Why should the government sponsor corporate R&D, where the research tends to be incremental and its benefit is primarily to the corporation? It's a more efficient use of taxpayer money to support academic, basic research, in which the results usually are public and therefore benefit *all* corporations rather than just one. Yes, some important basic research has been done by corporations in the past, but that has largely ended -- no company wants to be the chump that funds basic research for everyone else.

Posted by: Andrew Myers | Dec 29, 2009 3:10:08 PM

Why isn't this a good thing? It shows me that corporations in the US have the wherewithal to perform research other than that prescribed by the Government. Does this data correlate to anything at all? Looks like if you want a sclerotic technical community the first step is government funded research.

Oh the shame, we are behind technology powerhouses Brazil, Turkey and India.

Someone says:"no company wants to be the chump that funds basic research for everyone else." Oh horse dip. I would bet that IBM does more basic research in the United States than all of the basic research funded in India, Brazil and Turkey combined. The state of Minnesota runs more clinical trials than any other country in the world.

Posted by: El Presidente Castro | Dec 29, 2009 3:41:41 PM

Because someone asked:

U.S. Issued Patents for 2008
01 IBM 4186
02 Samsung 3515
03 Canon 2114
04 Microsoft 2030
05 Intel 1776
06 Matsushita 1745
07 Toshiba 1609
08 Fujitsu 1494
09 Sony 1485
10 HP 1424

Posted by: El Presidente Castro | Dec 29, 2009 3:59:36 PM

Switzerland's rate is at almost zero and they're hardly suffering from an absence of R&D. My questions of this table would be:

How subjective and selective is the government criteria for subsidy?
What is the initial tax rate?
Is the rate affected by local taxes?

Posted by: chip | Dec 29, 2009 4:17:19 PM

The patent system in Japan is based on the first applicant principle, so they patent a lot of useless invents. The earnings /patent favors the USA by a wide margin.
In Spain , the academy is crying because the subsidy for the next year will be go down .
The % of gdp dedicated by the USA for R&D is only below Japan,because the private investment on R&D in the USA has no parallel in the world
How many Nobel Prizes has won Spain? 3 or 4 And Turkey or Mexico?
420000 europeans health researchers work in the USA

Posted by: jcm | Dec 29, 2009 4:57:12 PM

"I would bet that IBM does more basic research in the United States than all of the basic research funded in India, Brazil and Turkey combined. The state of Minnesota runs more clinical trials than any other country in the world."
Those are weak arguments! First, India, Brazil, and Turkey are not research powerhouses (though actually India is coming along). But I was arguing *against* funding corporate research in any case. So comparing against countries that do fund it just makes my point.

And MN runs more clinical trials? That's because Mayo is there and they are a nonprofit whose research arm is an academic enterprise. The argument cuts the wrong way there too.

Thanks for the help!

So why does the US have the best research in the world? Because historically we have the strongest government funding of research. That research funding not only supports research that is publicly available to everyone, it also
supports universities that can then hire the best researchers, who in turn train students to be the best in the world. When those students go on to research or development careers, they are at the cutting edge, unlike in other countries. Those universities therefore attract the best talent from around the world. Government-funded academic research is one of the best investments that tax dollars can buy -- an MIT study concluded it paid off 50-fold!

Posted by: Andrew Myers | Dec 29, 2009 6:46:35 PM

Man, look how low the Germans and the Swiss are! No wonder they can't engineer their way out of a paper bag.

Posted by: Adam | Dec 30, 2009 12:25:16 PM