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viduals participating in these funds would need to make a minimum investment of $50,000 each year in order to receive the tax credit. Acceptable investments would be restricted to those that meet requirements for revenue size and age of firm.”27

  • “Enact a permanent, restructured R&E tax credit and extend the credit to research conducted in university-industry consortia.”28

  • Allow more favorable tax treatment of purchases of high-technology manufacturing equipment. “Accelerated depreciation or expensing of high technology equipment would have a particularly positive investment impact. Many of our economic competitors—who actively seek to lure investment in semiconductor manufacturing overseas—offer far more favorable tax treatment than that offered in the United States. As part of the discussion of fundamental reforms of the tax code to promote investment and manufacturing in the US, the Congress should consider allowing companies to expense high technology equipment.”29

  • “Use the required repeal of the Foreign Sales Corporation exemption to fund a revenue-neutral tax credit for investment in information-processing equipment, software, and industrial equipment. In response to WTO rulings, Congress passed a reduction of the corporate tax rate, which really does little to encourage companies to be more competitive and innovative. An investment tax credit would help companies increase investment which would in turn boost productivity. Moreover, it would make US companies more likely to invest in equipment in the United States and not overseas.”30

HUMAN CAPITAL

A highly skilled, flexible labor force is an essential component of this nation’s ability to reap the benefits of innovation. Recent debates over workforce issues have revolved around several issues.

The first trend is that growing numbers of service industries and their labor forces are becoming subject to global competition, a condition with which manufacturing industries have long familiarity. Offshore outsourcing of business process and IT jobs, or “offshoring,” is growing rapidly (see

27

Ibid., p. 62.

28

Ibid., p. 59. There are similar recommendations in numerous other reports, including National Academy of Engineering. Mastering a New Role: Prospering in a Global Economy. Washington, DC: National Academy Press, 1993; and American Electronics Association, 2005.

29

Semiconductor Industry Association Web site. Available at: http://www.sia-online.org/backgrounders_ tax.cfm.

30

R. Atkinson. Meeting the Offshoring Challenge. Washington, DC: Progressive Policy Institute, 2004.



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