Make Your Voice Heard On Research And Development Tax Policy

Federal lawmakers are still deciding whether to proceed with an end-of-the-year tax bill and, if they do, what they should include in it. The possible credits range from an expansion of the child tax credit (CTC) to incentives for companies to invest more in research.

Action on the research component is very important.

As Connecting the Dots reported last week, a provision that went into effect at the beginning of 2022 would allow businesses to amortize or deduct research and development (R&D) expenses over a period of years instead of allowing them to deduct 100 percent of their expenses in the same year.

For nearly 70 years, the U.S. tax code recognized the importance of R&D by allowing businesses to fully deduct these expenses in the same year. If not reversed, could devastate industrial metals companies. In fact, the change effectively tightens the limit for U.S. firms just as interest rates are rising, a problem that would create a tax increase for many firms.

Because it will threaten U.S. jobs and innovation, in October MSCI was part of a group of more than 400 organizations that sent a letter to House and Senate leaders asking them to act quickly to restore the 100 percent deduction. That letter estimated that failing to reverse this change will reduce R&D spending and lead to a loss of more than 80,000 R&D jobs over 10 years.

It also noted the policy change means the United States is now one of only two developed countries requiring the amortization of R&D expenses. China, meanwhile, provides a super deduction for R&D expenses up to an extra 100 percent of eligible R&D expenses in addition to actual R&D expenses.

To make your voice heard on this important issue, please use the National Association of Manufacturers’ Action Center, which allows interested individuals to send a letter to their representatives in Congress asking them to vote to reverse this harmful tax change. The NAM Action Center also provides background information, R&D policy updates, and industry stories.