Innovation powers the American economy. It drives the manufacturing industry, supports American workers who benefit from high paying jobs, and is essential for our national security. At a time when the U.S. faces growing threats from global competitors like China, U.S. tax policies must not put American businesses and workers at a competitive disadvantage. Countries around the world, including our adversaries, are adopting new tax policies that put them at the forefront of technological progress, allowing them to leapfrog the United States and jeopardize the economic security of all Americans. U.S. tax law that requires R&D and other capital expenditures to be slowly deducted over many years means that China’s R&D incentive could soon be nearly 6 times more favorable than America’s. Our country cannot afford to fall further behind on this front. Restoring full R&D expensing is one simple way to ensure that our businesses can compete, our workers can succeed, and our country can continue to lead in an ever challenging world.

Creating Jobs and Strengthening the Economy

Private sector R&D provides sizable economic benefits and is responsible for millions of jobs in the U.S. 

Without a change to allow for the immediate expensing of R&D and other expenditures, over 400,000 American jobs will be lost over the next 10 years, and the U.S. GDP will be reduced by $45 billion in that same time frame.

Remain Competitive Globally

Worldwide, the U.S. has long had a less favorable R&D incentive than other countries. And in the aftermath of the recent change, the advantage that other countries have had relative to the U.S. has only grown. 

Global competitors like China, who utilize a 200% super deduction for R&D expenses, have a policy 6 times more favorable than the U.S. At the same time, their R&D investments have grown at double the rate of the U.S. 

Maintain National Security

With new threats appearing, a strong national security is more vital than ever. Private sector R&D helps to guarantee that U.S. national security is equipped for any threats that come our way. 

As countries like China invest heavily in R&D, while the U.S. continues to slip further behind, our national security continues to be compromised. Restoring full expensing and ensuring a robust R&D sector can help protect our nation.