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The growth of our economy and in particular our industry is
directly tied to the quality of the entire U.S. system of
education and the labor force it produces.
Public Education (K-12) in the U.S. is, on the average,
demonstrably non-competitive with that in Japan, Germany and
the USSR in mathematics and the sciences.
The revolution of
the computer has caught our educators at secondary schools
unprepared. We are now entering a catch-up period. The loss of gifted youngsters to science and engineering careers
because they do not receive an adequate math, science and
computer literacy education is one manifestation of the problem. But even more important is the current and future level of "technological literacy" in the workforce as a
whole, when the tools of work increasingly call for mental
Industry is woking to combat these deficiencies.
IBM has the following programs underway:
$50 million (over a three-year period) in CAD/CAM
equipment and curriculum development grants in engineer
ing schools to motivate and train engineers for careers
in high productivity, through the use of automated
Over 400 cooperative research projects between university
and IBM laboratories in close to 100 U.S. institutions
totalling $4.25 million in a pilot program in three
Other grants to educational institutions for faculty
development and curriculum improvement totalling about
$2.1 million in 1982 and increasing sharply in the
While these activities are substantial, it is important to
remember that total industrial support for academic R&D in
the U.S. is less than 7% of the total.
industrial philanthropy to higher education in the U.s. is
less than 3% of university operating costs.
Thus, while industry support for research and human resources
has very important direction-setting influence on academic
institutions, it is not a substitute for substantial private
and governmental support, on which universities must depend.
IBM supports in concept s. 1194 and s. 1195 which are significant
efforts to address this critical need.
They include additional
incentives to industry to provide certain scientific and
computing equipment to our schools and in other research
activities. A beginning occurred in 1981 with enactment of
Internal Revenue Code Subsection 170(e)(4) but there is a
need to clarify remaining uncertainties of that legislation
and expand the incentives as reflected in s. 1194 and s. 1195.
PRESIDENT CHARLES W. STEWART
MACHINERY and ALLIED PRODUCTS INSTITUTE
1200 EIGHTEENTH STREET, N.W. WASHINGTON, D.C. 20036 202-331-8430
VICE PRESIDENT AND TREASURER THOMAS F. RUSSELL
Chairman Federal Mogul Corporation, Detroit, Michigan
VICE PRESIDENTS JOSEPH A. BOYD ....
Chairman Harris Corporation, Melbourne, Florida DAVID T. KIMBALL
President General Signal Corporation, Stamford, Connecticut
SENIOR VICE PRESIDENT
CHARLES I. DERR
RICHARD R. MacNABB
June 3, 1983
Dear Senator Packwood and
Members of the Subcommittee:
"Miscellaneous Tax Bills": Public Hearings of May 27, 1983, Concerning Proposed Legislation on Tax Aspects of Research and Experimentation and Charitable
Contributions (s. 738, 1194, and 1195) /1
The Machinery and Allied Products Institute (MAPI) is
pleased to have this opportunity to present its views to the
Subcommittee on Taxation and Debt Management concerning three
of four bills currently under consideration that would (1)
extend certain federal income tax provisions pertaining to
EXECUTIVE COMMITTEE WILLIAM F. ANDREWS ... Chrm, and Pres. Scovill Inc., Waterbury, Connecticut JAMES F. BERÉ
Chairman Borg-Warner Corporation, Chicago, Illinois WENDELL F. BUECHE
......... President Allis-Chalmers Corporation, Milwaukee, Wisconsin A. WILLIAM CALDER Joy Manufacturing Company, Pittsburgh, Pennsylvania E. PAUL CASEY
President Ex-Cello Corporation, Troy, Michigan ROBERT CIZIK
President Cooper Industries, Inc., Houston, Texas W. PAUL COOPER
Chairman Acme-Cleveland Corporation, Cleveland, Ohio J. E. CUNNINGHAM
Chairman McDermott Incorporated, New Orleans, Louisiana CLARK DAUGHERTY Duracell International Inc., Vero Beach, Florida THOMAS I. DOLAN
..... President A. 0. Smith Corporation, Milwaukee, Wisconsin EVANS W. ERIKSON
Chairman Sundstrand Corporation, Rockford, Illinois EDMUND B. FITZGERALD
........ President Northern Telecom Limited, Ontario, Canada T. MITCHELL FORD .... Chrm, and Pres. Emhart Corporation, Hartford, Connecticut JAMES A. D. GEIER
Chairman Cincinnati Milacre Inc., Cincinnati, Ohio K. ROBERT HAHN
Exec. Vice Pres. Lear Siagler, Inc., Santa Monica, California THOMAS A. HOLMES .......... Chairman Ingersoll-Rand Company, Woodcliff lake, New Jersey LEON C. HOLT, JR. ........ Vice Chairman Air Products and Chemicals, Inc., Allentown, Penn. JOHN V. JAMES
Chairman Dresser Industries, Inc., Dallas, Texas ROBERT V. KRIKORIAN ......... Chairman Rexnord Inc., Milwauke., Wisconsin ROBERT H. MALOTT
Chairman FMC Corporation, Chicago, Illinois QUENTIN C. McKENNA ..... President Kennametal inc., Latrobe, Pennsylvania DONALD R. MELVILLE
President Norton Company. Worcester, Massachusetts GERALD B. MITCHELL
Corporation, Toledo, Ohio JOHN C. MORLEY
......... President Reliance Electric Company, Cleveland, Ohio ALFRED G. MUGFORD .... Exec. Vice Pres. White Consolidated Industries, Inc., Cleveland, Ohio ELBERT H. NEESE
Chrm. and Pres. Baloit Corporation, Beloit, Wisconsin WALTER F. RAAB ..
.......... Chairman AMP Incorporated, Harrisburg, Pennsylvania HENRY D. SHARPE, JR.......... Chairman Brown & Sharpe Mfg. Co., N. Kingstown, Rhode Island CRAIG R. SMITH
Chairman Industrial Group, Bendix Corporation, Cleveland, Ohio RICHARD B. STONER ....... Vice Chairman Cummins Engine Company, Inc., Columbus, Indiana JAMES R. STOVER
President Eaton Corporation, Cleveland, Ohio WILLIAM G. vonBERG .......... Chairman Sybron Corporation, Rochester, New York R. J. WEAN, JR........... Chrm. and Pres. Wean United, c., Pittsburgh, Pennsylvania JOHN A. YOUNG
President Howlont-Packard Company, Palo Alto, California
research and experimentation (R&E) beyond their statutory
expiration dates; and (2) introduce liberalized tax treatment
for certain charitable contributions. We refer to s. 738 of
Senator Danforth and others to make permanent the credit for
1/ We understand that the hearing on S. 654 of Senator
Wallop and others, to require the deduction against U.S.-source income of all U.S.-conducted R&E under Section 862(b) has been postponed. MAPI expects to present views on S. 654 when the public hearing is rescheduled. As to s. 1147, we have no position at this time.
MACHINERY & ALLIED PRODUCTS INSTITUTE AND ITS AFFILIATED ORGANIZATION, COUNCIL FOR
(THE FACILITIES OF PRODUCTION, DISTRIBUTION, TRANSPORTATION, COMMUNICATION AND COMMERCE) IN ADVANCING THE TECHNOLOGY AND FURTHERING THE ECONOMIC PROGRESS OF THE UNITED STATES
increasing research activity; and s. 1194 of Senator Danforth and S.
1195 of Senators Bentsen and Chafee to increase the charitable deduction
for certain gifts of computers and scientific equipment, to expand the
tax credit for research activities, and to extend the exclusion from
income for certain amounts received by students.
Our statement is submitted pursuant to Senate Finance Com
mittee Press Release No. 83-139 by which interested parties have been
invited to express their thoughts concerning bills under review by the
Subcommittee in the hearing of May 27, 1983.
We ask that our statement
be included in full text in the printed record of the hearing.
As the Subcommittee may know, MAPI is the national organiza
tion of producers of capital goods and allied products. In that capa
city, the Institute represents industries manufacturing and marketing
the facilities of production, distribution, transportation, communica
tion, and commerce.
More specifically, MAPI's membership includes
corporations in a number of the most research-intensive industries in
the United States, such as, machinery, including office, computing, and
accounting machines; electrical equipment; professional and scientific
instruments; motor vehicles and related equipment; aircraft and mis
siles; and, to some extent, chemicals and allied products./1 The Insti
tute's member companies produce highly engineered--often state-of-the
art--goods that are sold worldwide, and technological advancement is
According to an April-June 1982 survey by the National Science Foundation (NSF), company-funded--i.e., excluding governmentfunded sums--R&D for these industries is expected to reach $40 billion in 1983, Science Resources Studies Highlights, NSF 82324, September 9, 1982.