Bill Overview
Title: Fostering Innovation and Research to Strengthen Tomorrow Act
Description: This bill doubles the rate of the tax credit for increasing research expenses and the alternative simplified research tax credit. It also increases the credit rate for taxpayers with no research expenses during a specified three-year period and the amount of the credit that certain small businesses may apply against payroll tax liabilities.
Sponsors: Rep. Walorski, Jackie [R-IN-2]
Target Audience
Population: People involved in Research and Development activities globally
Estimated Size: 6000000
- The bill affects entities and individuals involved in research and development activities.
- Research and development activities are conducted by businesses, academic institutions, and private researchers, among others.
- The tax credit adjustments are aimed at businesses, including small businesses, that undertake research activities.
- The increased credit for those without prior research expenses will encourage new entrants into research activities.
- Businesses operating in sectors requiring heavy R&D investments, such as technology, pharmaceuticals, and manufacturing, are particularly relevant.
Reasoning
- The policy primarily impacts individuals and companies involved in research and development, especially those looking to increase their R&D efforts or move into such activities.
- Larger companies may experience a moderated impact on wellbeing as their financial reserves and previous R&D incentives already support extensive research activities.
- Small businesses and startups may see more significant improvement in their wellbeing scores as they can benefit greatly from increased tax credits, reducing financial burdens and allowing more resources to be directed towards innovation.
- Academic researchers might not feel a direct impact on individual wellbeing unless they are directly involved in funding decisions or own a stake in startups engaged in research.
- The policy does not directly impact individuals outside the research sector, so including a few such perspectives can provide insight into the breadth of impact across a diverse population.
Simulated Interviews
Research Scientist (San Francisco, CA)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- The additional tax credits will allow my company to invest more in cutting-edge research projects.
- I'm optimistic about the future of innovation in the U.S. with this policy in place.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Startup Entrepreneur (Austin, TX)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- The enhanced tax credits could be a game changer for our startup, helping us scale our R&D efforts.
- It encourages new market entrants, which is great for competition and innovation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 6 |
| Year 2 | 9 | 6 |
| Year 3 | 9 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
University Professor (Boston, MA)
Age: 39 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- The policy seems beneficial, but its impact on my personal research is indirect as it mostly affects funding potential for new projects.
- It might enhance collaboration between academia and industry.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Software Developer (New York, NY)
Age: 28 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- The tax credits may drive more research projects at work, but the direct impact on my role is limited.
- It's a positive step for long-term industry growth.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
R&D Manager (Seattle, WA)
Age: 50 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- Enhancing research tax credits strengthens our position in developing novel medicines.
- My team will have more resources for exploratory projects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
CEO of Manufacturing Company (Dallas, TX)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- The policy offers a strategic opportunity for us to expand our R&D department and innovate in automation.
- I expect an immediate improvement in our ability to compete internationally.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
PhD Student (Chicago, IL)
Age: 40 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 4/20
Statement of Opinion:
- Increased tax credits provide a favorable entrepreneurial environment post-graduation.
- I'm considering applying this knowledge towards a startup now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 6 | 5 |
Retiree (Detroit, MI)
Age: 60 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- While I'm not directly involved, policy changes like these can boost tech stock performance, indirectly affecting my retirement funds.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Freelance Researcher (Houston, TX)
Age: 48 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- I hope the policy broadens funding avenues for independent researchers like myself.
- It might inspire collaboration with established firms.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Government Policy Analyst (Raleigh, NC)
Age: 35 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- The policy is a strategic step towards enhancing national competitiveness in global R&D.
- Professionally, I'm interested in its long-term economic impacts.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $4000000000 (Low: $3500000000, High: $4500000000)
Year 2: $4200000000 (Low: $3700000000, High: $4700000000)
Year 3: $4400000000 (Low: $3900000000, High: $4900000000)
Year 5: $4800000000 (Low: $4300000000, High: $5300000000)
Year 10: $5500000000 (Low: $5000000000, High: $6000000000)
Year 100: $6000000000 (Low: $5500000000, High: $6500000000)
Key Considerations
- The magnitude of change in R&D activities largely depends on the take-up of the tax credits by businesses.
- There is significant long-term potential for economic growth, but these benefits might be delayed.
- There are direct costs in terms of forgone revenue that impact the short-run fiscal balance.