Neutral International Tax Rules Allocating Costs: Successful Formula for U.S. Research and Development

Abstract

The decline of U.S. research and development efforts in recent years dominates political, scientific and academic discourse. It is attributed, in part, to military research cutbacks after the end of the cold war and, in part, to the U.S. economic recession. Many fear that the research and development slowdown portends the demise of the United States as a significant factor in the global market for goods and services. Others believe the decline is only one of many indicators of the diminished competitive position of the United States in the global economy. In a pre-elecion proposal to stimulate technological growth and to strengthen industry for anticipated "international trade wars of the 1990's and beyond," President Clinton advocated a shift of at least thirty billion dollars from military research activities to the private sector over a four year period. The Clinton proposal envisioned cost sharing technology joint ventures between the federal government and private industry.