Fact of the Week: Large, Profitable Firms in France Receive Tax Subsidies of 43 Percent on R&D They Perform, Which is More Than 8 Times Greater Than US Subsidies

Source: Silvia Appelt, Fernando Galindo-Rueda, and Ana Cinta González Cabral, “Measuring R&D tax support,” OECD Science, Technology, and Industry Working Paper 2019/06, October 2019.

Commentary: R&D tax incentives are key to fostering innovation, effectively providing needed public support for research without sacrificing private-sector market incentives. According to a new report by the OECD, the United States is well behind much of the rest of the world in this respect. With a tax subsidy rate of 5 percent for the R&D that large firms conduct, it ranks a lowly 26th among the 36 OECD member nations. France, Portugal, and Chile lead the group with R&D subsidy rates of 43 percent, 39 percent, and 34 percent, respectively. In fact, there are more nations with subsidies that are at least four times larger than the United States than there are nations with subsidies that are smaller than the United States (13 versus 10).