The 114th Congress Has a Chance to Boost Innovation
April 6, 2015
In November 2014, the Congressional Budget Office (CBO) presented the incoming members of the 114th Congress with "Federal Policies and Innovation", a report arguing that "market failure" - whereby "Innovation produces some benefits for society from which individual innovators are not able to profit - results in those innovators tending to "underinvest" in such activity.
Public policymakers, says the CBO, must "endeavor to promote innovation to compensate for that underinvestment." NCPA Senior Fellow Thomas Hemphill says, there are three innovation-related issues which Congress will likely address in this Congress:
- The re-instatement of the federal R&D tax credit. Support for making the R&D tax credit permanent is virtually universal in the American business community. However, it has never been empirically shown that this R&D tax credit convincingly stimulates additional private sector R&D; a more likely scenario is that it "rewards" companies for availability.
- Patent reform. In February 2015, Congressman Bob Goodlatte introduced the Innovation Act of 2015 in the House. This Act, targeted at patent assertion entities (PAEs), or patent trolls, who are accused of filing, or threatening to file, dubious patent infringement lawsuits against businesses to "extort" financial remuneration, contains several provisions designed to mitigate the patent troll problem.
- Regulatory reform. Congress can review the tools of regulatory policy in certain areas to allow for more flexibility in meeting regulatory goals, such as relying on prices and the market system to reduce the costs of regulation and promote increased innovation. Legislation addressing these regulatory challenges can directly improve the innovation environment and competitiveness of American manufacturers.
Source: Thomas Hemphill, "Innovation Policies the 114th Congress Should Consider," Real Clear Markets, March 16, 2015.
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