Research and development, R&D, is the generation of new knowledge. It is the oxygen of a growing and dynamic economy
. In plain language, companies invest in R&D in order to increase productivity. Increased productivity is central to an ever-wealthier nation. Wealthier nations have more resources for necessary spending, including spending on national security
.
Companies invest in R&D with the expectation of higher returns. But R&D spending is risky. Higher risk requires higher returns. That is a fundamental law of economics. Increasing the cost of R&D spending is counterproductive. Higher costs result in less spending and in lower long-run productivity. A tax change that was part of the Republican Tax Cuts and Jobs Act of 2017 will discourage investment in R&D in the future. Beginning in 2022, companies that invest in R&D will no longer be able to deduct their R&D expenses
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