MSCI, NAM Ask Congressional Leaders To Fix R&D Tax Credit

Unless Congress acts before the end of 2022, a tax code provision will take effect that requires businesses to amortize or deduct their research and development (R&D) expenses over a period of years versus being able to fully deduct the cost of R&D the same year.

This provision would be especially difficult for manufacturers, who perform nearly 58 percent of private sector R&D.

As such, the Metals Service Center Institute (MSCI) has joined the National Association of Manufacturers (NAM) and dozens other organizations in sending a letter to Democratic and Republican leaders of the U.S. House and Senate asking that they bring up legislation that would eliminate this harmful policy which, if fully implemented, would erode manufacturing industry innovation.

The letter, available here, said, “Failing to reverse this change will cost well-paying jobs and reduce future innovation-directed R&D. Requiring the amortization of research expenses will reduce R&D spending and lead to a loss of more than 20,000 R&D jobs in the first five years with the number of lost jobs rising to nearly 60,000 over the following five years. Moreover, when accounting for the spillover effect from R&D spending, nearly three times as many jobs will be affected. This same study also found that for every $1 billion in R&D spending, 17,000 jobs are supported in the U.S.”

Innovation is one of the United States’ greatest strengths and, as the letter makes clear, is a significant contributor to job and economic growth, competitiveness, and national security. This is why, for nearly 70 years, the federal tax code has recognized the importance of research and development by allowing businesses to fully deduct their R&D expenses in the same year.

MSCI will continue to follow this issue. Stay tuned to Connecting the Dots as additional updates become available.