Because tax credits rely on faulty assumptions, I believe we can eliminate tax credits and achieve even higher R&D merely by educating firms on how to identify their optimal R&D investment.
Read MoreA cheat sheet for the RQ 50 approach
Let's use McKesson—No. 1 in the 2014 CNBC RQ 50 ranking—as an example of an under-investing firm.
McKesson reported $456 million R&D investment in 2012, but they should be spending a lot more (assuming everything else about their markets and operations stays the same). The company's RQ score of 130.6 reflects what I call an "elasticity" of 0.276. It sounds complicated, but it's easier than you think to understand RQ.
Doing the math on McKesson
If McKesson increased R&D by 10 percent ($45.6 million), the company should see a revenue increase of 2.76 percent (remember the elasticity score of 0.276). That 2.76 percent increase is equal to $3.8 billion. Even with relatively slim operating margins (6.4 percent), that's still $198 million in incremental profits for McKesson. The company shouldn't need tax credits to increase its R&D. At its current P/E ratio of 35.4, shareholders would increase their wealth $7 billion if McKesson increased its R&D 10 percent.
Assuming a 10 percent increase in R&D across all 697 companies that I have identified as underinvestors, the net increase in R&D is $18.6 billion.
That's three times GAO estimate for the size of the R&D tax subsidy in 2009, which was $5.6 billion. How do we get three times the benefit of the tax credit without a government dime?
Read MoreThe market's R&D Hall of Fame
Doing the math on the R&D underinvestors
The conventional thinking is that each dollar of subsidy translates to a dollar of additional R&D (see the 2011 Ernst & Young report, "The R&D Credit: An Effective Policy for Promoting Research Spending"), which means near-$6 billion in R&D, and much less than the $18.6 billion net increase using the RQ methodology.
Even better, the corresponding shareholder wealth creation is $825 billion, meaning even the government potentially makes out on the change in R&D philosophy, to the tune of $124 billion in capital gains.