Eisner Benefit Theory.... TAX CREDIT FOR CORPORATE SUPPORT OF UNIVERSITY STRUCTURAL CRITICISMS OF THE R&D CREDIT AND Base Period Determinations.... Effect on companies with declining R&D.. credit... Fifty percent minimum base period. Tax Liability Limitation.... Availability of a Tax Credit and a Deduction Concerns Over Possible "Creative Accounting". Functional Not Stylistic Products Financial and Management Products and THE R&D CREDIT AND HIGH TECHNOLOGY TAX BURDENS... CONCLUSION: AN EXTENSION OF THE CREDIT IS NEEDED NOW. 78 79 81 83 85 87 INTRODUCTION: THE FUNDAMENTAL IMPORTANCE OF INDUSTRIAL RESEARCH AND DEVELOPMENT IN THE UNITED STATES Technological leadership is one of this Nation's most important resources. Technological leadership always has been the foundation for America's high standard of living. We have incorporated technology to make innovative "high tech" products that are competitive in world markets. Beyond the high technology industries the application of technology to the manufacturing processes for other products increases our productivity and helps make those products competitive in world markets, even with a workforce that earns a higher wage than the workers of many foreign competitors. Technological leadership has meant not only a higher standard of living but also important opportunities for expanded jobs and exports in the United States. In the 1970's employment in high technology industries grew at a 50 percent higher rate than overall U.S. job growth. This growth rate was sufficiently strong that by 1980 high technology industries were the largest source of U.S. exports of manufactured products, accounting for 44 percent of total U.S. manufacturing exports. 1/ 1/ "An Assessment of U.S. Competitiveness in High Technology Industries" International Trade Administration, U.S. Department of Commerce, February 1983, pp. 9-10. However, our leadership in science and technology is being rapidly matched by competitors throughout the world. The supremacy of American technology and the American high technology industries no longer can be taken for granted. According to a report prepared last year for the Cabinet Council on Commerce and Trade, the United States has lost world export market share in eight out of ten high technology industries over the past fifteen years. 2/ In industries ranging from aircraft and engines to industrial chemicals, scientific and medical instruments and electrical equipment and components, the predominance of U.S. high technology companies is being challenged. The example of the semiconductor industry illustrates this trend. The worldwide market for semiconductor products continues to grow both in sheer volume and in diversity of applications. However, in recent years Japanese companies have significantly improved their market share at the direct expense of U.S. industry. 3/ On a worldwide basis, the United States still is the leader with a 54 percent overall market share, but 3/ Id. pp. 9-10, 14; see also Written Statement of John |