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Extended R&D Tax Credit Means New Jobs

Monday, June 14, 2010

The following originally appeared as an op-ed with Steve Ballmer in the Salt Lake Tribune. -Team Hatch

The impact of the Greek economic crisis on U.S. markets shows that the global economy continues to face challenges. Despite some recent positive economic signs, too many Americans who are willing and able to work still can't find jobs. Without new jobs, any recovery will be fragile at best.

While there is no easy path forward, two things are certain. First, American innovation will be central to any sustained recovery, both nationally and globally. Second, opening foreign markets to American goods and services is essential to spurring job growth here at home.

The United States is an innovation powerhouse, but to maintain our competitiveness we need to incentivize and protect innovation. Extending and strengthening the research and development tax credit -- which is really a "U.S. jobs credit" -- would be a great first step. The credit provides a proven and effective incentive for businesses to invest in the R&D that leads to long-term growth and new jobs.

Protecting intellectual property and stepping up the fight against piracy and counterfeiting will also help ensure that American inventors and creators are fairly rewarded for their work. According to the Department of Commerce, intellectual property helps drive 40 percent of U.S. economic growth and accounts for more than half of all U.S. exports. In 2008, royalties and license fees from other countries yielded a $75 billion trade surplus. From Thoughtlab, a technology solutions firm in Salt Lake City, to a cloud application designer in Puget Sound, ingenuity fuels growth in every state and across every sector of the economy.

But to really stimulate economic growth, we need to open up global trade. For many U.S. industries, exports already account for more than half of revenues. That number should grow as emerging economies such as China continue to move up the economic ladder.

Today, however, some foreign governments refuse to play by the rules and are closing instead of opening their doors to U.S. goods and services. They mistakenly believe that the way to spur domestic growth and innovation is to insulate local businesses from competition.

That's exactly the wrong approach. Open markets spur growth because they give domestic consumers more choices and better prices, which stimulate spending and production. And there is no better way to spark innovation locally than by opening your doors to innovators. Shutting them out simply leads to stagnation and isolation.

Another way many governments thwart open trade is by tolerating rampant theft of intellectual property. When foreign businesses use U.S. innovations without paying for them, they cheat U.S. workers and businesses twice -- once when they steal the innovation itself, and a second time when they export to the United States and unfairly compete against law-abiding U.S. businesses. The failure to protect intellectual property gives foreign goods an unfair price advantage and effectively acts as an illegal subsidy that deprives U.S. workers of job opportunities.

We need to place opening global markets and respect for intellectual property at the top of our economic agenda. The Obama administration recently announced that it wants to double U.S. exports and open foreign markets to U.S. goods and services over the next five years. That's the right goal; the administration now needs a plan for getting us there. Congress can also play a role by passing the pending trade agreements with Korea, Colombia and Panama.

An energized U.S. policy focused on promoting trade and innovation would benefit everyone, not just Americans. Expanding global trade lifts all boats -- that's the magic of open markets and competition. And protecting intellectual property is like erecting a huge "Welcome" sign to innovators and creators -- the best possible approach for any country seeking to participate fully in the global knowledge economy.

An economic plan based on opening markets and protecting intellectual property would create U.S. jobs, expand U.S. productivity and stimulate global economic growth, all in a single stroke. And the best part: It would not cost U.S. taxpayers a dime.

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