Yeah, I felt that way too when I started this work. What I've come to realize is that the tax credit is not about conducting science in the strict, academic sense of the word, a la Karl Popper and the received view. The systematic evaluation of hypotheses just doesn't happen that often outside the academy.
Instead, the tax credit is really a political compromise crafted to appeal to both sides of the political spectrum. It's about subsidizing high paying, professional, white collar, technical jobs so that employers don't outsource them. That makes the credit an anti-free market subsidy designed to protect jobs but disguised as a pro-science, pro-innovation policy whose main beneficiaries are large corporations.
And honestly, even in the most "sciencey" firms, most of the R&D going on is dreadfully repetitive and unimpressive. Just as you cut and paste SO code, pharma researchers are just "cutting and pasting" the nth iteration of a chemical formula. They're not unlocking the secrets of the universe, they're just trying random shit until it works. Which, interestingly, is part of how the tax regs define a process of experimentation. Instead of "trying random shit until it works," the regs call that strategy "a systematic trial and error methodology."
Your issue is that you have a mental definition of R&D but the tax codes of the US and Canada do not define R&D in the same way, which to you seems dishonest. But you need to remember that, from a tax perspective, the definition isn't important except insofar as it helps or hinders the underlying policy objectives. Your definition may be closer to a colloquial or idealized definition of R&D, but it's not necessarily the definition which best achieves the policy objectives of the governments in question.
Instead, the tax credit is really a political compromise crafted to appeal to both sides of the political spectrum. It's about subsidizing high paying, professional, white collar, technical jobs so that employers don't outsource them. That makes the credit an anti-free market subsidy designed to protect jobs but disguised as a pro-science, pro-innovation policy whose main beneficiaries are large corporations.
And honestly, even in the most "sciencey" firms, most of the R&D going on is dreadfully repetitive and unimpressive. Just as you cut and paste SO code, pharma researchers are just "cutting and pasting" the nth iteration of a chemical formula. They're not unlocking the secrets of the universe, they're just trying random shit until it works. Which, interestingly, is part of how the tax regs define a process of experimentation. Instead of "trying random shit until it works," the regs call that strategy "a systematic trial and error methodology."
Your issue is that you have a mental definition of R&D but the tax codes of the US and Canada do not define R&D in the same way, which to you seems dishonest. But you need to remember that, from a tax perspective, the definition isn't important except insofar as it helps or hinders the underlying policy objectives. Your definition may be closer to a colloquial or idealized definition of R&D, but it's not necessarily the definition which best achieves the policy objectives of the governments in question.