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Rebuilding Manufacturing: Fixing the Dysfunctional R&D Tax Credit

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TJ McDermott
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Re: Rethinking R&D tax credits
TJ McDermott   2/6/2012 10:01:26 AM
I like the idea proposed in this article, but I doubt it would reverse the overseas manufacturing drain.

The cost to manufacture in the US is high because of labor costs.  US workers expect (RIGHTLY!) a safe work environment (and it is mandated by law).  China does not offer the same safety to its workers.  US workers are paid more than Chinese workers, have better benefits.  Until the disparity is truly acknowledged, there will be no change in manufacturing location.  The "global" market is a fallacy until such differences are leveled.

I am not taking a false moral stand; I'm no different than anyone else.  I know that my desire to purchase things at the lowest cost to me means I will be purchasing Chinese-manufactured items.

Set aside safety (let's assume for sake of argument all factories have the same level of worker safety).  If a factory here were to try to get away with paying its workers what Chinese factory workers earn, the newspapers here would have banner headlines with phrases like "sweat shop" and "slave labor".  If that is what it is here, then why is it not there?

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Re: Rethinking R&D tax credits
williamlweaver   2/6/2012 9:51:33 AM
I'm not an anarchist, but I do consider myself a constitutionalist. Our current situation has been developing for decades and it looks like we have reached a point where there is no longer a concept of freedom to "pursue happiness" but a "regulation of everything". Once all rights and permissions flow from an all-regulating bureaucracy, it can attempt to control the system by increasing regulations here, and providing tax incentives there. We do not have the models and knowledge of the number of variables necessary to calculate our way out of our current situation. Agile Design has taught us the Waterfall method of development doesn't guarantee success but often guarantees cost overruns and fault-ridden work product that arrives too late to be of use. Our Founders praised the Agile Design method of continuous improvement and rampant experimentation by individual stakeholders. I for one hope we can evolve our system in that direction.

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Rebuilding Manufacturing
apresher   2/6/2012 9:08:00 AM
This is an excellent example of what has failed to happen -- an effective chain from government funding research, to product development and manufacturing.  Everyone seems to agree that we need to rebuild manufacturing but it's an area where we need effective legislation that doesn't produce unintended consequences.  Let's hope we can get it done.

Beth Stackpole
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Rethinking R&D tax credits
Beth Stackpole   2/6/2012 7:08:44 AM
I agree that tax incentives have to be a viable tool for enticing manufacturers to keep key R&D and manufacturing jobs on our shores. And the argument seems strong that increasing the credit to a more substantial number (should it ever pass in the Congress and the Senate--an entirely different story) could have some merit. It wasn't clear to me, however, how the curent R&D tax credit encourages companies to park R&D in overseas tax havens? If the credit is tied to U.S. manufacturing, no matter what the rate, how would it foster this overseas investment? Any one care to wade in?



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