Tax Policy and Administration:

The Research Tax Credit Has Stimulated Some Additional Research Spending

GGD-89-114: Published: Sep 5, 1989. Publicly Released: Sep 5, 1989.

Additional Materials:


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request and a legislative requirement, GAO reviewed the effectiveness, structure, and administration of the research and experimentation tax credit.

GAO found that: (1) the credit stimulated between $1 billion and $2.5 billion in additional research spending between 1981 and 1985 at a cost of $7 billion in tax revenues; (2) although the amount of spending stimulated by the credit was below the credit's revenue cost, the long-term total benefits from research could be much higher; (3) the credit could provide more of an incentive if the moving-average base were replaced with a fixed base indexed to the growth in gross national product or another indexing factor and if the base and index were periodically reviewed and adjusted as needed; (4) the Internal Revenue Service had difficulty administering the credit and questioned the credit claimed by 79 percent of the corporations it audited; (5) many revenue agents reported that the definition of qualified research expenditures was unclear; and (6) in May 1989, the Department of the Treasury proposed regulations to clarify the definition.

Sep 21, 2016

Aug 3, 2016

Aug 1, 2016

Jul 14, 2016

Jul 5, 2016

Jun 30, 2016

Jun 28, 2016

Jun 23, 2016

Jun 22, 2016

Looking for more? Browse all our products here