The Subcommittee on Technology and Innovation today convened a hearing to better understand how Federal policies and regulations affect competition, innovation and job growth. In testimony, leaders of innovative companies outlined ways to improve Federal economic and regulatory policy.
Subcommittee Chairman Ben Quayle (R-AZ) noted that it is imperative to understand how areas such as taxes, regulation, trade, and protection of intellectual property affect our nation's economic competitive position. "As policy-makers, we need to foster an environment that allows U.S.-based innovators to compete and to flourish. We should enact policies that ensure this country remains the best place to launch or expand a business," Quayle noted in his opening remarks. "Excessive regulations and red tape increase the cost of doing business and create uncertainty for private sector companies."
In the first three years of the Obama Administration, the Federal Government imposed 106 new major regulations with annual costs of more than $46 billion. As of April 1, 2012, the United States will have the highest marginal corporate income tax in the industrialized world. Chairman Quayle warned that "This tax rate harms competitiveness by taking money away from companies that could be better used to conduct research, develop new innovations and create jobs, and it encourages companies to look for more favorable business environments abroad."
While the U.S. continues to have the largest economy in the world, recent trends suggest that other countries are catching up in terms of economic growth and competitiveness. A study by the Information Technology and Innovation Foundation, a non-partisan research and educational institute, ranks the U.S. sixth out of 40 countries in overall innovation-based competitiveness.
Representing a company that manufactures radiation detection instruments, Mr. Mick Truitt advocated tax reform in order to increase competition and improve the American economy. "There is absolutely no doubt that tax policy -- both the burden and the uncertainty -- impacts our competitiveness in what is a very competitive global marketplace," Truitt said. "The bottom line--any increase in marginal income tax rates and the uncertainty of whether increases will take place has a chilling effect on our ability to grow, expand, and create jobs."
Echoing the benefit of lowering corporate tax rates, Sr. Vice President of TeleCommunications Systems, Inc., Mr. Thomas Brandt, Jr., said "Lower corporate tax rates would help U.S. companies attract capital to compete, as well as encourage foreign companies to invest in the United States, resulting in increased employment and higher wages for American workers." Brandt stated that "The best hope for the U.S. to maintain its edge in rising global competition is by fostering and expanding our most prized intellectual asset: innovation."
Representing an emerging biotechnology company, Dr. Ron Cohen discussed the challenges that increasing regulatory complexity creates for the biotechnology industry. Dr. Cohen stated, "Over the last decade or so, the pathway has become so burdensome that the timelines have been increasing and companies are finding it harder and harder to get their products to market, even with drugs that work and can confer benefits." Dr. Cohen went on to describe the effect on biotechnology financing stating, "61% of venture capitalists in a poll last year cited the regulatory uncertainties as the reason that they are reducing their investment in the biotechnology industry."
The following witnesses testified today before the Subcommittee:
Dr. Ron Cohen, President and CEO, Acorda Therapeutics.
Mr. Mick Truitt, Vice President, Ludlum Measurements, Inc.
Mr. Thomas M. Brandt, Jr., Sr. Vice President and CFO, TeleCommunications Systems, Inc.
Mr. Richard Bendis, Interim CEO, BioHealth Innovation; President and CEO, Innovation America.