ARLINGTON, VA — The National Defense Industrial Association is among seven associations requesting congressional leadership consider relief and a four-year delay for the research and development (R&D) tax amortization that went into effect January 1, the Arlington, Virginia-based defense association announces.
A March 31 letter from the associations to Congress highlights the negative impact the amortization will have on American technological advances and the ability to compete globally. Stemming from the Tax Cuts and Jobs Act of 2017, the bill requires qualifying R&D expenses to be amortized over five years rather than allowing 100% of deductions in the year of the R&D spend.
The letter notes the negative impact this will have on innovative competition as companies can only write off 20% of their expenses per year, particularly as China extended a super deduction for R&D expenses to an additional 100% of actual expenses incurred. This will have a detrimental impact on companies, our warfighters and, ultimately, our national security. Additionally, estimates from an Ernst and Young study show it will also cause job losses, as cited in the letter.
The multi-association letter, available here, requests the delay be included in the final Bipartisan Innovation Act or the next moving piece of legislation. Signing the letter with NDIA were the Aerospace Industries Association, the Center for Procurement Advocacy, the Computing Technology Industry Association, the Information Technology Industry Council, the National Small-Business Association and the Professional Services Council.