We owe you all an apology. Last week we said we’d publish the positions of the presidential candidates as they relate to manufacturing, trade and tax policies. Surprisingly, there are not too many in-depth analyses or summaries on the candidates’ websites on these specific issues. But luckily, we turned to IndustryWeek.com who had pulled together the various planks and positions without taking a point of view here. You can read our earlier review of the candidate’s positions on trade policies here.
This post will cover the topics of intellectual property and innovation, since they are both so closely tied to one another. Unfortunately, both candidates have said so little about intellectual property and it is difficult to ascertain their positions. But according to that IndustryWeek.com article, both candidates are advocating reform within the United States Patent and Trademark Office. They both advocate for better or more resources for the Office. Obama also suggests the process should be open up to peer review. He suggests creating a different level of patent, one that is “gold-plated” which would be “less vulnerable to court challenge.” McCain supports “additional international agreements and enforcement efforts.” Both have merit and therefore this issue appears to be a toss-up.
On the subject of innovation, on the other hand, each candidate has a different point of view:
Obama: Supports a permanent R&D tax credit (provided the R&D be conducted domestically). He also supports the elimination of capital gains taxes on start-ups and small businesses to spur job growth and innovation. Additional aspects of his platform include a $500 “Making Work Pay” tax credit designed to limit the burden of business owners who pay both the employee and the employer side of the payroll tax. But perhaps the most interesting part of Obama’s position relates to a $250m investment in public-private incubators in disadvantaged communities throughout the country. A public-private incubator designed for all businesses (and not those just in disadvantaged communities) would be more appropriate to spur national innovation. The wording reads to me more like economic development and a lot less like innovation. Economic development has its place for sure, but I wouldn’t call that innovation.
McCain: Also supports a permanent R&D tax credit equal to 10% of wages spent on R&D. And though that sounds great, lots of R&D expense accrues outside of “people”. For example, the development of software and information services may require outside contractors which certainly contribute to R&D but may not fall specifically within the confines of the “wage expense category”. It’s unclear how companies that engage in joint product development would be able to claim the tax credit. But nonetheless, we’re in favor of R&D tax credits. McCain also proposes lowering the corporate tax rate to 25% to keep investment in US technologies. He also mentions that the US has the second highest tax rate in the world. By lowering the tax burden, entrepreneurs will re-invest domestically. Last, McCain is suggesting allowing first-year expensing of new equipment and technology. He believes this expensing will drive economic growth. On the basis of these two positions on innovation, the scales tip toward McCain on this one.
We’ll cover additional issues later this week.