An Important Disadvantage of Incremental Tax Credits to Encourage Industrial

question 7

Multiple Choice

An important disadvantage of incremental tax credits to encourage industrial research and development is that they

• A) are difficult to administer, requiring more government control and intervention.
• B) disproportionately penalize those firms that do little research and development.
• C) apply only to defense-related research and development.
• D) reward firms for doing research and development they would have done anyway.
• E) raise the after-tax cost of applied research and development, discouraging new technology.

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