Ahead of this evening’s House vote on the Tax Relief for American Families and Workers Act, Business Roundtable Vice President for Tax and Fiscal Policy Cathy Schultz penned a Medium post calling on Congress to pass the bill to restore three important, pro-growth tax provisions. These policies include immediate expensing for R&D, full expensing of investments in new equipment, machinery and technology and a pro-investment business interest deduction.
“Essential pro-growth tax policies have expired or are being phased out, making it more difficult for U.S. businesses to invest at home, create American jobs and compete globally. … Thankfully, tax writers in Congress came together in a bicameral, bipartisan manner and introduced the Tax Relief for American Families and Workers Act to restore these important tax provisions. … Business Roundtable welcomes this progress and urges both chambers to advance the bill swiftly because the cost of inaction is too high.”
Tax Relief for American Families and Workers Act Is Must-Pass Legislation for U.S. Jobs and Competitiveness
By: Cathy Schultz
Below are excerpts. Read the full blog post online HERE.
On Immediate R&D Expensing
“… [F]or 70 years, businesses were able to expense R&D investments — experiments, employee wages, new patents, studies and supplies — in the same year in which the investments occurred. But since 2022, businesses are now required to expense those investments over five years. This change makes it more expensive for U.S. companies to invest in R&D in the U.S. while discouraging future investment. According to the most recent data, R&D spending in the U.S. contracted for the second consecutive quarter and has steadily trended downward since 2022 when immediate expensing expired.”
On Full Expensing for Investments in New Equipment, Machinery and Technology
"Likewise, the tax code allowed for full and partial expensing of investments in new equipment, machinery and technology for 21 of the past 23 years. In 2023, however, the provision began to phase out. Companies now can only expense 80% of investments in new equipment, falling to 60% in 2024, 40% in 2025, 20% in 2026 and eliminated completely in 2027. This change discourages domestic investment and limits opportunities for U.S. businesses and workers.”
On a Pro-Investment Business Interest Deduction
“… [T]he business interest deduction, which previously allowed companies to deduct 30% of their earnings before interest, taxes, depreciation and amortization (EBITDA), is now restricted to 30% of a company’s earnings before interest and taxes (EBIT). The details of this change are complicated but the effect is clear — it is a large tax increase on American businesses, making it more expensive for companies to invest in their employees and finance day-to-day operations. No other developed country in the world takes this approach, putting U.S. companies at a disadvantage against their foreign competition and costing the U.S. economy 867,000 jobs, $58 billion in lost wages and $108 billion in GDP.”
Learn more HERE.