To encourage innovation, Congress should pass two bills protecting important R&D tax provision

Originally published by The Hill–

Politicians on both sides of the aisle have expressed a desire to bring the country together and work on a bipartisan basis to help the economy recover as we emerge from the COVID-19 pandemic.

If they are serious about this goal, they must act to protect an important tax provision that encourages American innovation, manufacturing, and competitiveness.

Currently, businesses can immediately deduct the costs of new investments, including costs associated with research and development (R&D). But starting at the end of the year, businesses will effectively face a tax increase on R&D by being forced to amortize (or deduct) R&D costs over a 5-year or 15-year period.

Unless lawmakers act, businesses across the country will see a significant tax increase on this investment. According to the Tax Foundation, forcing businesses to amortize new R&D costs would be a tax hike of $100 to $120 billion over the next decade.

If allowed to go into effect, this tax hike will reduce new investments that help create jobs, raise wages, and make America globally competitive and innovative.

The American Innovation and Jobs Act and the American Innovation and R&D Competitiveness Act was developed by Sens. Maggie Hassan (D-N.H.) and Todd Young (R-Ind.) and Reps. John Larson (D-Conn.) and Ron Estes (R-Kan.) to stop this tax increase. We are grateful to these lawmakers for introducing commonsense and bipartisan legislation, something that is all too rare in Washington these days.

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