The barrage of self-interest group attacks on the proposed tax reform is slowly starting, and "Congress Should Take Close Look at Tax Reform's Impact on Industry" (Viewpoints, April 28) presents a biased approach. Rather than examining the alternatives for promoting research, an endeavor that would be supported by almost everyone, Charles W. Missler implies that the change in the limited partnership "tax benefit" will cause the demise of entrepreneurial ventures. I disagree.
First, the fairness of the present tax system must be addressed since it is undoubtedly one of the primary considerations causing today's growing demands for tax reform. In this reference, Missler says about the R&D investor, "Most of his investment is written off, for it is 'at risk,' while his return is taxed not as ordinary income but rather as a capital gain, which bears a lower rate." If this investment "write-off" is allowed, the element of risk is minimized and the favored tax treatment on the return gives the appearance of an unwarranted reward. By the nature of these investments, the investor should experience a large return if the venture is successful. This in itself should be incentive enough to provide the sources for investments.
The net result of eliminating the tax favors would be that the partnerships would have to be sold on the merits of the research rather than on the apparent tax savings. It would, I believe, upgrade the caliber of the research projects, since these projects would become the sole basis of judgment regarding possible investments.