From time to time, there is a glimmer of hope for bipartisanship on innovation from Congress.The passage of the Patent reform act this year was one example. The American Growth, Recovery, Empowerment and Entrepreneurship (AGREE) Act, sponsored by Sens. Chris Coons (D-DE) and Marco Rubio (R-FL) is another. It is a package of practical actions to encourage and empower American innovators and job creators by focusing on taxes, trade, talent and technology, which ITIF regards as the columns of a solid economy recovery strategy.
The legislation’s tax provisions illustrate how the tax code can be one of the most effective tools we have to encourage job-creating investments, particularly in the critical manufacturing sector. In a welcome departure from the tax simplification mantra, the bill would extend 100 percent bonus depreciation for capital and property investments. Allowing this provision to expire at the end of the year would be precisely the opposite of what we should be doing if we want to breathe life into the otherwise anemic economic recovery.
The legislation also encourages cutting-edge research and innovation, adopting a proposal offered in the House by Reps. John B. Larson (D-CT) and Kevin Brady (R-TX) which would bump up the Alternative Simplified Credit from 14 to 20 percent and make it permanent. The traditional R&D credit would be extended to 2013. To encourage domestic manufacturing, the bill would allow businesses that produce goods domestically to receive a more generous R&D credit. These are practical provisions that not only help to get people back to work. They also make U.S. businesses more competitive internationally for the long term. The legislation recognizes that traded sectors make unique contributions to the overall economy and would therefore help them compete with companies from around the world.
The bill would also take a step toward maintaining and improving the talent and energy of the American workforce. It adopts a proposal recently approved by the House Judiciary Committee by a voice vote, which would eliminate per-country numerical caps on employment-based immigration. The arbitrary cap currently denies American employers the opportunity to hire some the top-tier talent from other countries.
Finally, the bill would clear up ambiguity in current law and make it easier for U.S. Customs Service officials to act when they suspect U.S. intellectual property is being ripped off. It is critical we start taking IP enforcement seriously since it is the source of so much American economic competitiveness.
There is a lot we need to do to restore and strengthen our manufacturing and technology sectors and to take the lead in high-end, and value-added production. The reality is there are good ideas coming from both sides of the aisle. It is good to see examples that innovation is not a partisan issue.
Image: Cover of AGREE ACT