An Important Disadvantage of Incremental Tax Credits to Encourage Industrial

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.