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ACCORDING TO Paul Otellini, Intel President and CEO, “History has shown us that tech breakthroughs and innovation can and do re-shape our destiny. We should be optimistic about the future (because) America is in the best position to create it, and thus continue to control our own destiny. To accomplish this, we must create the conditions where new ideas flourish and innovation is unleashed. I believe there are two simple ways to make this possible.”
The first step, I believe, is to adopt a long-term view and “culture of investment”.
It begins with common understanding that good investments lead to ideas and discovery…..which spawn new businesses….that in turn create new jobs….and ultimately leads to wealth creation and higher standards of living.
The start of this cycle is investment. While the government can help, the primary responsibility for taking action and making investments falls upon private enterprises, both large and small.
And perhaps the most important of these investments, are investments in the things that make innovation possible…even if they don't drive meaningful business results for 5 or 10 years.
I've seen firsthand how leading countries have benefitted from taking such long-term views.
Did you know, for example, that it costs $1 billion more to build, equip and operate a semiconductor manufacturing facility in the U.S.? And contrary to public opinion, this is not because of labor cost differences. Ninety percent of the cost difference is the result of tax and incentive policies.
So I propose we take a page from others' playbooks and provide attractive incentives for companies to build factories here that will employ our workers. We should offer tax credits or a 5-10 year tax holiday to companies, domestic or foreign, that want to set up or expand a factory in the US. This will bring more manufacturing back to the U.S., employ our workers, and stimulate the economy - at no cost to us. It's time to show the world that America is “open for business”.
This brings me to the second step for creating conditions where new ideas flourish and innovation is unleashed. And, it's something that I believe goes hand-in-hand with creating a culture of investment.
The second step involves reducing uncertainty for business leaders.
What we need is a set of policies that let businesses invest confidently in the future, take risks, and feel assured that we're training talent to lead the next generation of industries. We have taken a positive first step by making the R&D tax credit semi-permanent. Business leaders can make long-range decisions when the rules are known and more fixed.
Secondly, the U.S. corporate tax rate is the second highest among the developed economies of the world. I would propose that we adjust our tax rate to a level approximately equal to our global competitors for investment, and reverse the flow of capital and jobs out of this country. The U.S. is still the largest market in the world for many products; our workforce is smart and conscientious with an outstanding work ethic. We need to unleash them and rebuild our manufacturing base.
Thirdly, we need to remove regulations that needlessly deter investment. Regulations can be extremely helpful and effective, but often instead steer investment to other places around the world.
Given the urgency of our situation, we should create a fast track. permitting process for companies that want to build new factories here. Someone who wants to invest and employ Americans shouldn't have to wait for years to get a permit.
And we need to increase our investments in infrastructure, so that we can efficiently get resources, materials and people into factories, and finished goods out. Power and water distribution, highways, railways and bridges all are in need of investment. These investments, both public and private are job creators and are lasting. While I would prefer that we “bank” the unspent portion of the stimulus plan, I believe any and all of our remaining stimulus funds ought to be invested in these areas.
In short, what we need is a clear, forward-looking strategy that promotes innovation and investment.
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