Tax plan would have mixed impact on R&D. that help draw venture capital into high-technology enterprises

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Author: Mark Crawford
Date: June 14, 1985
From: Science(Vol. 228)
Publisher: American Association for the Advancement of Science
Document Type: Article
Length: 910 words

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In another time, Washington lobbyists for industrial research would declare war on a plan that junked the investment tax credit and stretched out depreciation schedules. But research and development companies are being careful not to protest too loudly President Reagan's sweeping proposals for overhauling the tax codes for fear of inviting something worse from congress.

Overall, high-technology companies and firms involved inother forms of high-risk R&D have fared well relative to other sectors of industry. Some research and development companies that have been commercializing new technologies through tax shelters will be hurt. But research and development tax credits would survive, although in more limited form.

"We have been put into a situation where we are ecstatic at losing some of our tax benefits," says Kenneth C. O. Hagerty, vice president of government operations for the American Electronics Association (AEA). The Treasury Department plan issued in November by then-Secretary Donald T. Regan, he notes, would have hurt research firms more.

Whatever emerges from congress, it is sure to be a mix of tax reform plans, plus concessions to special interests. Reagan's plan, however, will serve as an outline for the debate.

Corporate financial officers are still sitting through the 461-page proposal to assess their situations. But initial worse-case findings indicate that the near-term damage to the R&D sector would be slight. Although the 10 percent investment tax credit...

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Gale Document Number: GALE|A3814425