Innovation

Innovation

America’s global leadership is powered by relentless innovation, fueled by investment in research and development (R&D). To maintain this competitive edge and lead the innovation race, policymakers must champion policies that encourage and sustain R&D investment.

Two key priorities must guide this effort: protecting recent gains and reforming R&D amortization to remove barriers to investment.

1

Preserve Recent Gains

Maintain a Competitive Corporate Tax Rate

Lower corporate tax rates drive innovation. A one percentage point reduction leads to 2.8% more patents, 2.4% more patent citations, and 2.3% more inventors.

Maintain and Strengthen Incentives for Innovation in the U.S.

The TCJA included several provisions that strengthened domestic R&D.  For example, reducing the tax rate on foreign-derived intangible-related income (FDII) shifted companies global-pre tax earnings to the U.S. As a result, in 2022 alone, FDII reductions increased the U.S. tax base by $112 billion.
2

Reform R&D Amortization

Restore Immediate R&D Expensing

Current tax law forces businesses to amortize R&D costs over multiple years, stifling innovation. Without reform, this policy could trigger a $4.1 billion annual decline in R&D investment and cost 23,000 R&D jobs every year for the next five years.

By enacting these policies, the U.S. can ensure that innovation remains a driving force for economic growth, job creation, and global competitiveness.

Maintaining America’s Leadership Through Research and Development Investment

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