On Friday, the National Association of Manufacturers (NAM) announced the rebranding of the Research and Development Credit Coalition, which includes the launch of a new website.
The NAM started the R&D Credit Coalition years ago. At the time, the coalition sought to make the R&D tax credit permanent and achieved that goal in 2015 with enactment of the Protecting Americans from Tax Hikes Act. However, manufacturers face a new threat to R&D, and the NAM and the coalition are again playing a leading role in protecting key tax incentives.
Starting today, the rebranded coalition, which includes more than 65 companies and associations, will go by the name of the “R&D Coalition” to reflect a focus that goes beyond just the R&D tax credit to tax policies that support R&D in America. In particular, the NAM, which is a founding member, is working with coalition members to push back on changes in the recent tax reform bill (the Tax Cuts and Jobs Act) that would make research more expensive.
Currently, companies can expense R&D spending in the year it occurs. This has been a longstanding feature of the tax code that serves to incentivize R&D spending. However, beginning in 2022, that will change as companies will have to amortize their R&D spending over a period of years. This change could have a chilling effect on R&D in the U.S. and pose a threat to innovation, jobs and economic growth as it would increase the cost of doing R&D in the U.S. In fact, if this change were to go into effect, the U.S. would have the dubious distinction of being the lone industrialized country that would treat R&D spending in such a manner. In today’s global economy, the U.S. can ill afford to cede any ground when it comes to R&D. Already the U.S. share of global R&D investment has been falling while that of China’s has been increasing.
R&D is the lifeblood of manufacturing. It is what drives innovation, competitiveness, economic growth and the creation of high-paying jobs. Out of all industries, manufacturers spend the most on R&D. In fact, manufacturers are responsible for two-thirds of all such spending.
Preserving incentives for R&D is a key priority for the NAM. These incentives are not just about R&D investment in the U.S. but about the millions of workers the coalition represents. After all, R&D supports good, high-paying jobs. The coalition is just one way the NAM is working to support policies that help promote economic and job growth.