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The UK government’s £7.3bn research and development tax credit system is failing to deliver significant additional spending by businesses, according to a report that warns the 20-year-old policy could prove a “costly failure”. Aggregate business expenditure on R&D in the UK, as a percentage of national income and net of tax credits, is estimated to be between 10 and 15 per cent lower than before R&D tax credits were introduced, according to the Centre for Business Research at Cambridge Judge Business School. The report said the government would struggle to meet its target for R&D spending to reach 2.4 per cent of gross domestic product by 2027 as a result. The R&D tax credit scheme, which either reduces corporation tax or generates a cash credit, has grown steadily since its introduction in 2000 and is now used by 60,000 companies a year.

But the report, published on Tuesday, pointed to Office for National Statistics data that show the impact of the tax credits on business investment in R&D has been “insignificant”. “The theory behind R&D tax credits, namely that a reduction in the cost of R&D will lead to an additional increase in a company’s R&D expenditure, is flawed,” it said. The report also questioned government claims that each £1 of R&D tax credits generates between £1.40 and £1.70 of additional R&D spending. “The Treasury’s R&D tax credit scheme has, by accident or oversight, become the government’s flagship industrial policy,” said the report’s author, David Connell, senior research associate at the Centre for Business Research. “But without the scheme stimulating significant additional business spending, it cannot bridge the huge gap between current levels of business R&D expenditure and the level required to deliver on the government’s overall target.” A further £500m of tax credit payments subsidises R&D undertaken outside the UK, according to the report.

The research and development (R&D) tax credit—which is one of the largest corporate “tax expenditures,” with an annual cost of more than $9 billion—is one of about 50 “tax extenders” that Congress reauthorizes on a temporary basis. While the tax credit is intended to encourage economic growth by functioning as an incentive for investment in new and innovative technologies, it may not be the best policy to achieve growth.

According to new research published by the Mercatus Center at George Mason University that surveys the current economic literature on the R&D tax credit, eliminating the credit and using the savings to lower the corporate tax rate for all businesses would be a more effective way to support innovation.

When President Biden signed the Inflation Reduction Act into law in August, most of the headlines covered the law’s climate change and health care provisions. But the law also enhances an often overlooked federal tax break for qualifying small businesses.

The IRA more than doubles the amount a qualified business can potentially claim as a research and development (R&D) tax credit to offset its payroll tax for tax years starting after 2022 — to a maximum of $2.5 million over five years. The credit allows a qualified business to leverage the substantial R&D tax benefit even if it has little to no income tax liability, potentially freeing up significant cash flow.

This is likely not the last time we will see HHS introduce a version of the Sunset Rule. The repeal of the Sunset Rule is one more example of the divergence between the Trump and Biden Administrations, reflecting the significant impact presidential administrations and priorities can have on regulated industries. As HHS indicated when it published the Sunset Rule in 2021, what the Sunset Rule is proposing is not new; there are already executive orders, state laws, and other policies in place that allow the retrospective review of regulations. Retrospective review of laws and agency policies can provide various economic, social, and practical benefits. Through retrospective review, outdated laws and policies may be amended, improved, or eliminated, which may lead to cost savings and reductions in regulatory burdens. HHS under another administration may bring another retrospective review rule back to support its legislative priorities.

What is unique about this Sunset Rule is how quickly HHS completed the rulemaking; the process, from proposed to final rule, took less than three months. As noted in the Santa Clara lawsuit, the Sunset Rule “require[s] a resource-intensive and time-consuming effort on par with full notice-and-comment rulemaking, but at a pace 20 times faster than the Department has ever conducted retrospective review in the past – all without any guarantee that the Department will conduct such review.”

There are some shortcomings of sunset provision, particularly on investments and tax credits. For example, in United States, once this provision was included in the regulations on production tax credits to fuel investment in renewable energy and innovation. This provision was imposed on these tax credits for three years but it appeared to be insufficient and at least three to seven years were required for that project of energy.

Max Weber claimed that legal certainty is one of the pillars of capitalism since without sufficient legal stability and predictability, investment may be significantly discouraged.94 To wit, investors may not invest in new technologies, for example, if they fear sudden and disadvantageous legislative changes. According to this perspective, a capitalist system presupposes a sound degree of legislative certainty since uncertain rules, on the one hand, do not allow private actors to predict their rights and duties and, on the other, may grant unconstrained discretion to official decision makers.95 More recently, the EU Mandelkern Group on Better Regulation expressed similar concerns regarding a broad enactment of sunset clauses. Although this legislative instrument could be advantageous in a number of situations, it was equally acknowledged that sunset clauses could have a negative impact on the investment climate. If regulations designed to incentivize substantial investment in a determined technology expire within a beforehand known period of time, private actors may be more reluctant to respond to these incentives. This will be particularly true if the sunset period is shorter than the time span required for recovering the investment made. In addition, individuals might experience distrust in the protection granted by law and feel that the regulations imposing or stimulating them to invest in a new technology are not providing them with sufficient legal certainty upon which they can ground their investment decisions.96

The potential negative impact of sunset clauses on investments may particularly occur when legislators set fixed periods that disregard the development cycles of the regulated sector.97 An example comes from the United States: here a sunset provision was included in the regulations on the production tax credits which were deemed to fuel investment in renewable energy and advance clean energy innovation. Although the sunset provisions imposed on these tax credits could be renewed for a period of one to three years, this renewal appeared to be insufficient since at least three to seven years are required for the development of a wind farm. Under such circumstances, the uncertainty regarding the possible renewal of the tax credit slowed down long-term investment.98.

At the time the Sunset Rule was finalized, commenters had relayed numerous concerns, including that the Sunset Rule would cause significant regulatory uncertainty in the healthcare industry. Commentors feared that potential regulatory changes could create additional compliance and regulatory costs for healthcare providers and force them to adapt to a changing regulatory framework.

For example, the uncertainty created around the expiration of regulations, including those that guide eligibility for participation in Medicare and Medicaid, provider reimbursement, and certification of hospitals and clinics, could disrupt the efficient operation of critical safety-net programs, create regulatory gaps and inconsistent application of the law, and make accessing safety-net services for vulnerable populations even more complicated and difficult than it is today. Other commenters feared that it would be difficult to advise clients on how to comply with HHS regulations, given the risk for withdrawal.

Critics indict the sunset provisions as “the worst kind of tax policymaking because burdens are placed on taxpayers solely to accommodate political concerns that mean nothing to anybody 2006] SUNSETS AND THE TAX CODE 395 374 Id. 375 See Gale & Orszag, supra note 354, at 1184 (“The extensive use of sunsets creates uncertainty with regard to expectations about future tax policy.”). 376 See Sullivan, supra note 373 (stating that taxpayers faced with uncertain tax laws will fail to take into account possibility of future changes, and that tax cut may be more windfall than incentive to save). 377 See id. (noting that this diminishes potential benefit of tax cut). 378 Of course, one could predict that Congress, if prohibited from using sunsets, would simply shift its revenue games to other techniques, such as phase-ins, which may also negatively alter taxpayer incentives. outside of Washington.”374 The sunset provisions, they argue, create uncertainty.375 Uncertainty hurts economic performance by diminishing the incentive effects of the tax cut.376 In addition, uncertainty creates economic waste by increasing planning, administration, and compliance costs.377 In reality, taxpayers must always discount for the possibility of repeal or other legislative changes. The tax code, after all, is not etched in stone. Nonetheless, an expiration date provides an opportunity for legislators to remove a tax benefit without affirmatively acting and thus may increase the possibility of legislative change. Regardless, it is unarguable that sunset provisions complicate the Code.

The story of sunset provisions in the code chronicles how these “good government” reform devices are, in actuality, rent-extracting mechanisms that encourage budgetary sophistry. First, sunset provisions evade political constraints in the budget process whose purpose is to safeguard against congressional over-spending. The sunset provisions of the extenders and, much more dramatically, the 2001 and 2003 tax cuts were enacted to underestimate the revenue losses of the provisions to which they apply. Second, sunset provisions further reduce the reliability of revenue loss estimates. Moreover, the existence of sunset provisions in the recent tax acts has created political conditions under which re-enactment of important budget rules, such as the PAYGO provisions, is very unlikely while sunset repeal is on the table.

Third, sunset provisions threaten the continuance of tax benefits and thus allow legislators more possibilities to extract financial and electoral contributions from the recipients of those benefits. Therefore, politicians have an incentive to perpetually endanger provisions that provide rent-extracting opportunities. The case of the tax extenders—in which many popular provisions, such as the R&D credit, were never made permanent—supports this hypothesis. Both EGTRRA and JGTRRA contain core provisions advantaging a narrow group of individuals and entities. These groups vie for the extension of benefits in their interest while legislators, by collecting rents, make the most out of the disagreement over the permanent enactment of the tax cuts.

The URAA and the SAA neither amend nor refine the language of § 1677(4)(C). In fact, they merely suggest, without disqualifying other alternatives, a “clearly higher/substantial proportion” approach. Indeed, the SAA specifically mentions that *1290 no “precise mathematical formula” or “ ‘benchmark’ proportion” is to be used for a dumping concentration analysis. SAA at 860 (citations omitted); see also Venez. Cement, 279 F.Supp.2d at 1329–30. Furthermore, as the Court of International Trade noted, the SAA emphasizes that the Commission retains the discretion to determine concentration of imports on a “case-by-case basis.” SAA at 860. Finally, the definition of the word “substantial” undercuts the CFTVC's argument. The word “substantial” generally means “considerable in amount, value or worth.” Webster's Third New International Dictionary 2280 (1993). It does not imply a specific number or cut-off. What may be substantial in one situation may not be in another situation. The very breadth of the term “substantial” undercuts the CFTVC's argument that Congress spoke clearly in establishing a standard for the Commission's regional antidumping and countervailing duty analyses. It therefore supports the conclusion that the Commission is owed deference in its interpretation of “substantial proportion.” The Commission clearly embarked on its analysis having been given considerable leeway to interpret a particularly broad term.

Because the adverb “substantially” is defined as “in a substantial manner; so as to be substantial,” Webster’s Third New International Dictionary Unabridged 2280, we look to the meaning of the word “substantial.”5 The parties agree that the word “substantial” should be interpreted in light of its common and accepted usage because the word is not defined in Minn. Stat. § 609.26. They also agree that the common and accepted usage of the word “substantial” is “[c]onsiderable in importance, value, degree, amount or extent.” This definition from The American Heritage Dictionary is the same definition used by the court of the appeals in its opinion. Culver, 2018 WL 6837735, at *1. Based on the parties’ agreement and our independent consideration of the common and accepted usage of the word “substantial,” we conclude that Minn. Stat. § 609.26, subd. 1(3), requires a deprivation of parental rights that is “[c]onsiderable in importance, value, degree, amount or extent.”

The regulation reads, ‘a 2 x 2 inch guard rail should be installed at the extreme outer edge of these walkways', etc. (Italics added.) The question turns on the effect to be given to the word ‘should.’ One definition of that word is ‘Obligation in various degrees, usually milder than ought; as you should be obedient.’ Funk & Wagnall's New Standard Dictionary. As a reference to the cases cited in 39 Words and Phrases (Perm. ed.) 234 et seq., and Pocket Part 48, will illustrate, ‘should’ frequently implies a command, a duty or an obligation. But this is not always so. See *564 Nashville Ry. & Light Co. v. Lawson, 144 Tenn. 78, 98, 229 S.W. 741, 746; Godchaux v. Carpenter, 19 Nev. 415, 421, 14 P. 140, 142. Here, as in so many other instances, the meaning of the word and the intention to be ascribed to those who used it must be determined by the context. The provision in which it is found is one of several score safety regulations for the sawmill industry, most of which use ‘shall’, as, for example, 5.14(a), which immediately **843 precedes the provision in question and reads, ‘The vertical face of all green chains and sorting tables shall be boarded up to a height not less than eighteen (18) inches from the floor of the walkway.’ The occasional use of ‘should’ instead of ‘shall’ does not appear to be inadvertent but deliberate. Indeed, the entire code bears on its face evidence that it was prepared with great care and scrupulous regard to the right choice of language. We can only conclude that in those instances where departure is made from the mandatory ‘shall’ to the somewhat ambiguous ‘should’, the purpose was to express a different meaning—to convey the notion that the particular precaution was desirable and recommended, but not required. See, 3 Sutherland, Statutory Construction (3d ed.), 116, § 5821. In this view the regulation was not legally binding on the defendant and the instruction complained of was free from error.

3 The verb “should” has various shades of meaning. In its ordinary meaning it does not express certainty as the word “will” sometimes does. In the telegram under consideration it seems to be used in the sense that, from the anticipated profits, plaintiff might receive a bonus of $25 to $50 per month. It is nothing more than an expression of opinion, with no definite assurance that such would be the result. The expression, “twenty–five to fifty dollars per month extra,” adds nothing to the certainty or definiteness of the proposal but is merely suggestive. The whole expression, “a part of profits that should mean from twenty–five to fifty dollars per month extra, to our minds cannot possibly be construed as guaranty or an unconditional promise to pay a minimum of $25 per month or a maximum of $50 per month out of the profits, in addition to the agreed salary. It is merely suggestive. Moreover, no method is provided for determining what the share of plaintiff in the profits might be; no per cent. is named. Whether net or gross profits or whether profits from the whole store or only the furniture department, were to be the basis of settlement, is all left to conjecture. There is no stipulation as to when settlements were to be made, which, obviously, might be either weekly, monthly, annually, or whenever the employment should cease. The expression in the telegram, “if you want to come and work hard, we will take care of you in good shape,” avails plaintiff nothing from the standpoint of law. The whole telegram is one well calculated to mislead, whether deliberate or not. Morally, defendant was under some obligation to increase plaintiff's salary in the event the concern prospered and plaintiff worked hard; but, legally, we are confronted with an insurmountable obstacle in so far as affording relief to plaintiff is concerned. It is an elemental and fundamental rule of law that a contract, to be valid, “must be certain and unequivocal in its essential terms, either within itself or by reference to some other agreement or matter.” 6 R. C. L. 644; 9 Cyc. 245; 18 R. C. L. 494; Burks v. Stam, 65 Mo. App. 455; Blaine v. Knapp & Co., 140 Mo. 241, 41 S. W. 787; United Press v. New York Press Co., 164 N. Y. 406, 58 N. E. 527, 53 L. R. A. 288; Varney v. Ditmars, 217 N. Y. 223, 111 N. E. 822, Ann. Cas. 1916B, 758.

There is, of course, no bar to the Supreme Court adopting a Court of Appeal's reasoning as its own. Yet there is legitimate reason to question whether that was what the Supreme Court intended in 1983. First, as just shown, only the least authoritative of the three sources cited actually supports the word “must,” while the two Supreme Court decisions employ “should.” Second, barely a month later, the Supreme Court—speaking though the same justice—filed another decision which used the “should” formulation from the 1955 Allen decision as quoted in Abbott.20 Third, the 1983 Allen decision involved retirees (and Flournoy the widow of a retiree), who historically receive a heightened degree of judicial protection. (See fn. 19, ante.) Fourth, and most significantly, the “must” formulation has never been reiterated by the Supreme Court, which has instead uniformly employed the “should” *699 language from the 1955 Allen decision. (Olson v. Cory, supra, 27 Cal.3d 532, 541, 178 Cal.Rptr. 568, 636 P.2d 532 [“Although an employee does not obtain any ‘absolute right to fixed or specific benefits ... there [are] strict limitation[s] on the conditions which may modify the pension system in effect during employment.’ [Citation.] Such modifications must be reasonable and any ‘ “changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages” ’ ”]; Legislature v. Eu (1991) 54 Cal.3d 492, 529–530, 286 Cal.Rptr. 283, 816 P.2d 1309 [quoting Olson]; City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462, 472, 14 Cal.Rptr.2d 514, 841 P.2d 1034 [“changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages,” citing Allen v. City of Long Beach, supra, 45 Cal.2d 128, 131, 287 P.2d 765].)

It thus appears unlikely that the Supreme Court's use of “must” in the 1983 Allen decision was intended to herald a fundamental doctrinal shift. “Should,” not “must,” remains the court's preferred expression. And “should” does not convey imperative obligation, no more compulsion than “ought.” (Lashley v. Koerber (1945) 26 Cal.2d 83, 90, 156 P.2d 441; see People v. Webb (1986) 186 Cal.App.3d 401, 409, fn. 2, 230 Cal.Rptr. 755 [“the word ‘should’ is advisory only and not mandatory”].) In plain effect, “should” is “a recommendation, not ... a mandate.” (Cuevas v. Superior Court (1976) 58 Cal.App.3d 406, 409, 130 Cal.Rptr. 238.)

3 used in auxiliary function to express futurity from a point of view in the past

realized that she should have to do most of her farm work before sunrise—Ellen Glasgow

Brock and Kaitlyn look to the word “should” in the phrase “in the event any of my children should predecease me” and claim the district court improperly found the word looked to the future. They claim the word should be interpreted as the past tense of “shall” to imply a duty or obligation. See Black's Law Dictionary 1379 (6th ed.1990). Looking at the phrase as a whole, however, rather than at a single word, we determine the phrase is considering possible future events. See In re Estate of Grulke, 546 N.W.2d 626, 627 (Iowa Ct.App.1996) (noting we must ascertain a testator's intent from the entire will).

Consider any government that decides to run a deficit by increasing spending. When it goes into deficit, it must sell government bonds to borrow the funds. Imagine those who buy these bonds are the richest in society. However, the burden of the debt financing falls on the whole population—everyone pays taxes. In such a case, the debt redistributes resources from the entire population to the wealthy holders of government debt. When (or if) the government decides to buy back those bonds to reduce the debt, it will also have to use tax revenues to do so. As a result, a transfer will occur towards the richest in society. In essence, it’s thus a regressive policy bound to increase inequality as long as those who buy the bonds are the richest.

We have a strong historical example of this—England during the 18th and 19th centuries. From the early 18th century until 1815, England is intermittently at war with the rest of Europe and wars are costly. England finances these wars mostly by borrowing on financial markets. By 1815, when they defeat Napoleon at Waterloo, the public debt is two-and-a-half times larger than the whole British economy. That proportion is larger than the one observed with the two World Wars. This was a massive debt – largely funded by wealthier British households.

There is only one true superpower. Since the end of the Second World War, we’ve seen the United States bestride the world like a colossus.

What makes the US such a potent ally and formidable adversary? Its nuclear arsenal? This helps. As does its incomparable navy and huge, hi-tech army. The soft power from its ubiquitous contributions to culture is clearly important. But none of these really explains America’s unique ability to project power globally. This is conferred by the mighty US dollar.

Most governments will try to cover their fiscal and trade imbalances by devaluing and making all savers poorer.

“A country with monetary sovereignty can issue all the currency it needs” is also a fallacy.

The New York Times just came out with a big glowing writeup of MMT, entitled “Time for a Victory Lap*”. This article aroused the anger of just about every macroeconomist on Twitter, and with good reason — it demonstrates very little understanding of the issues at play or the state of the policy debate, and it rhetorically elevates a fringe ideology to a position of importance and centrality that it neither occupies nor deserves.

Please consult macroeconomists before writing about MMT!