Ron Estes: “It is a new year, and the House is already busy tackling issues important to Americans. Something that should be high on…”

“It is a new year, and the House is already busy tackling issues important to Americans. Something that should be high on our list is advancing legislation that will benefit our economy, U.S. innovators, and American workers--and that is immediate R&D expensing. Tonight my colleagues and I want to talk about how this critical provision encourages research and development in the United States, and, in turn, helps fuel job growth and keeps manufacturing inside our borders. Recognizing this, for nearly 70 years the tax code allowed businesses to fully deduct their R&D expenses in the same year in which they were incurred. However, since the beginning of 2022, businesses have been required to spread out, or amortize, R&D expenses over 5 years for domestic R&D or 15 years for foreign R&D. As you can see on this graph, since amortization took place, the growth rate of R&D spending has slowed dramatically from 6.6 percent on average over the previous 6 years to less than one half of 1 percent over the last 12 months. This slump in U.S. R&D investment is hurting the American economy at a time when rising inflation is hurting workers and holding back job creators. As companies spend far less on R&D, the sector is down by more than 14,000 jobs. Three-quarters of research and development spending is on salaries and wages, making R&D amortization primarily a jobs issue.…”