• TECHNET HOME
• EDUCATION
• INNOVATION
• BROADBAND AND INTERNET POLICY
• PATENT LITIGATION REFORM
• GREEN TECHNOLOGIES
• SARBANES-OXLEY REFORM
• CYBER SECURITY
• STOCK OPTIONS
• TRADE
• eHEALTH
• AMICUS BRIEF PROGRAM

TechNet supports strengthening the nation's research and development investment through increased federal funding for basic research and enactment of a permanent R&D tax credit.

A sustained public and private investment in R&D will foster a skilled American workforce, stimulate new technologies and maintain U.S. dominance in vital industries — elements critical to retaining the United States' global economic leadership in the new millennium.

The R&D Credit: A Proven Incentive

The R&D Credit is a proven incentive for increasing industry's investment in U.S.-based research and development. Numerous studies support the Credit's effectiveness in encouraging corporate research expenditures above and beyond previous levels. The result has been new and innovative technologies, medicines, products and services that benefit all Americans. Yet, Congress has not made the R&D Credit permanent.

The Need for Permanence

Although significant, the effectiveness and economic benefits of the R&D Credit will not be fully realized until the Credit is made permanent. The uncertainty of a credit which must be renewed and which has the potential to expire makes it impossible for firms to factor the credit into their valuation of long-term research investments. Yet it is exactly this sustained, long-term investment in research and development that will ensure continued innovation and the next generation of critical technologies. In order to be truly effective in supporting critical research, the credit must be permanent.

Basic Research: Spurring Innovation

Investment in research and development is one of the single largest contributing factors to the nation's past, present and future economic growth. The performance of the U.S. economy in recent years has been fueled by the information technology (IT) industries:

• IT was responsible for more than one-third of real economic growth in 1995-1998
• IT industries account for more than $500 billion of the annual U.S. economy
• IT companies create millions of new high-paying jobs and enable productivity throughout the economy

The U.S. high technology industry spends more on R&D than any other industry. However, because corporations feel acute pressure to focus scarce research dollars on market-driven product development, the federal government must play an integral role in the longer-term, basic research that leads to fundamental innovations.

Federal support for basic research has contributed to the development of the Internet, personal computers, the silicon chip, lasers, fiber optics and supercomputers. The first graphical Web browser, high-speed networks, artificial intelligence, databases and the graphical user interface all have their roots in government-sponsored research. Moreover, federally funded research centered at American institutions of higher education plays a critical role in the education and training of America's next generation of innovators.

The Federal Commitment to Research: Fueling the Growth of the New Economy

The President's Information Technology Advisory Committee (PITAC) has reported that the United States is "gravely under-investing in the long-term, high-risk research that can replenish the reservoir of ideas that will lead to innovation in IT in generations to come." An inadequate federal commitment to basic research will threaten our nation's ability to continue its achievements in software, information networks and high-end computing systems.

The PITAC recommended that the federal investment in information technology research be increased and refocused on high-risk, high-payoff research — the primary source of critical new technologies and cornerstone of the federal Information Technology portfolio.

Much of the federally sponsored basic research is performed by the National Science Foundation (NSF) and the Defense Advanced Research Projects Agency (DARPA). In accord with the PITAC recommendations, TechNet urges Congress and the Administration to support the basic research programs of these key federal agencies.