That would be the development part of R&D.

That's fine, as long as the R&D work is done in the US.

R&D doesn't require something to be socially innovative; it's evaluated at a per-company level. It's intended to incentivize companies to recreate wheels in-house (if it is otherwise financially reasonable to do so).

Companies should not need a financial incentive to develop new products. They already have an existential incentive to do so. This also creates a barrier to entry for small companies that don't have the resources to ensure compliance and claim the benefit. It also subsidises product development engineers - a profession that is doing well already. I'm an engineer so I appreciate the artificial wage inflation, but if I take that hat off I don't think it's appropriate for the government to subsidize us.

You're missing the context. The point of the R&D credit is for companies to engage in R&D activities in the US as opposed to other countries. Additionally, it was introduced in reaction to other countries introducing R&D credits to steal R&D work from the US.

It does not create a barrier to small companies. If you're not big enough to handle the paperwork for the R&D credit, you're not spending enough to derive meaningful benefit from the credit anyways. And generally, there exist plenty of accounting firms that will prepare the R&D documentation on a % basis (of the allowable R&D credit identified).

It also subsidises product development engineers - a profession that is doing well already

In the software world, sure. There are plenty of industries where product development staff (many of whom aren't engineers) don't make anywhere close to 6 figures.

If there's anything innovative in the new version of the product, I don't see why not.