Incentives tax credit

Federal Income Taxes. Every company has a basic tax rate that it must pay. Because of tax incentives, tax credits, depreciation write-offs, capital gains, and so on, however, the actual taxes paid may be less than the basic rate. 

Another factor is the potential economic benefit that may be realized due to possible future environmental regulations from utilizing both waste and virgin biomass as energy resources. Carbon taxes imposed on the use of fossil fuels in the United States to help reduce undesirable automobile and power plant emissions to the atmosphere would provide additional economic incentives to stimulate development of new biomass energy systems. Certain tax credits and subsidies are already available for commercial use of specific types of biomass energy systems (93). 

Several states that have a large number of CPI plants offer various types of tax incentives. Louisiana, for instance, offers a 10-yr tax exemption from property taxes on buildings, equipment, and improvements to land (2). Texas, which has a large petrochemical industry, offers a 7-yr tax abatement program. Neither of these states have a state income tax. Both states offer a tax credit for each job created and provide free worker training. 

A variant that addresses this problem are the proposals to target R D tax credits toward research on malaria, HIV/AIDS, and tuberculosis. But tax credits do not even have the reputation incentive (reputation is built up by success fully using previous grant money). If recipient research organizations are put at risk for some of their own funds (e.g., the part not funded through a tax credit or by mandatory subsidy matching), the moral hazard problem should be attenuated. ... 

In Section VI survey evidence about the response of private investment in R D to changes in economic incentives. Evidence about a number of policies (including R D tax credits, intellectual property, defense procurement, and the Orphan Drug Act) and events suggests that private vaccine development and production is likely to be quite responsive to enhanced incentives (or diminished disincentives), and that expansion of the government s role is likely to crowd out private investment. Conclusions are presented in Section VI. 

Hall and van Reenen (2000) surveyed the econometric evidence on the effectiveness of hscal incentives for R D. They described the effects of tax systems in OECD countries on the user cost of R D - the current position, changes over time, and across different firms in different countries. They concluded that a dollar in tax credit for R D stimulates a dollar of additional R D. 

Governments in the industrialized world are quick to respond to pressure from pharmaceutical corporations aimed at putting public funds to work in the service of private wealth. Some of the instruments deployed toward this end include the patent system, tax credits, R D grants, and subsidies from national healthcare systems. This is not to argue that such incentives are bad per se rather, they must be called into question when they are offered without regard to their ultimate social utility. 

Push mechanisms induce firms to undertake research in specific areas by reducing the firm s private cost of research. There are two widely used types of push mechanisms direct funding incentives and tax incentives. Tax incentives reduce the firm s cost of research by allowing tax credits for relevant research and may be useful in some situations. 

The cost of generating electricity from wind has fallen dramatically. In the 1980s, wind power generation cost as much as 30 cents per kilowatt-hour. Today, that cost has dropped closer to five cents to seven cents per hour, after factoring in tax credits and government incentives. The industry s goal today is to enhance wind technologies and systems to the point that wind is competitive without... 

The Senate version of the Windfall Profits Tax bill would extend the exemption to the year 2000. This exemption provides a subsidy equal to 40j per gallon of ethanol. In concert with the tax credit discussed below, it is the most important incentive available to accelerate alcohol production and use. 

Pass legislation to provide for incentives for energy conservation such as a 50 percent tax credit during the first year for installation of coal-fired boilers and energy conservation equipment by industry and similar tax incentives to home owners for installing insulation, etc. 

A second incentive provides tax credits equal to 50% of the costs of human clinical testing undertaken in any given year by a sponsor to generate data required for obtaining FDA market approval through successful completion of the NDA process. The Internal Revenue Service administers the tax credit provisions. 

During these same years, various tax credits were established to provide incentives for the use of battery electric vehicles and alternative fuels. Although many of the alternative fuels received some incentive, the biggest beneficiary by far was ethanol. During the 1990s, ethanol producers did not have to pay 0.54 per gallon of ethanol for road taxes when ethanol was used as a transportation fuel. 

---