With contributions from Finnegan Brewer
America’s global tech leadership hinges on strong tax policies, and the stakes for pro-innovation tax policies are even greater right now. Congress has a unique opportunity to address pro-growth tax policies that will help create thousands of new jobs, and bolster U.S. innovation and global competitiveness – all key aims of President Trump.
The tech industry continues to urge Congress to prioritize several tax policy changes that will ensure the U.S. remains a leader in R&D investment, ensure that American companies can compete globally, drive domestic investment and economic growth, and protect U.S. economic security.
These include:
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Restoring full same-year expensing of research and development (R&D) costs;
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Preserving the 21% corporate income tax rate;
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Addressing international tax provisions; and
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Extending and expanding the Advanced Manufacturing Investment Tax Credit.
Here’s how Congress can act now to advance pro-growth tax policies:
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Make the U.S. the Top Destination for Research and Development
The tech sector alone spends over $200 billion annually on domestic research and development or R&D,鈥痑nd for every $1 billion of that investment, 17,000 jobs are supported in the U.S. However, since the beginning of 2022, the U.S. has become less attractive to innovators due to a requirement that restricts companies from expensing R&D investments the year they occur. Expenses towards essential R&D must now be written off over five years for work done in the U.S. and over 15 years for overseas work. This has cost U.S. businesses more than $100 billion. It is imperative that Congress restores the ability to deduct both domestic and foreign R&D expenses in the year they are incurred on a fully retroactive basis. Doing so would create resources to increase salaries for U.S. workers, alleviate supply chain costs, and further the goal of revitalizing chips and other advanced manufacturing in the United States.
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Preserve U.S. Leadership by Protecting the 21% Corporate Income Tax Rate
Until 2017, the U.S. had one of the highest corporate tax rates in the world, which impacted the global competitiveness of U.S. companies. The Tax Cuts and Jobs Act permanently lowered the federal tax rate from 35% to 21% – providing U.S. companies a more level playing field against their international competitors. Congress must protect U.S. companies by preserving the current federal corporate tax rate at 21%, giving U.S. businesses the certainty and stability they need to grow.
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Drive U.S. Competitiveness Through International Tax Provisions
The Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes help keep intangible assets in the U.S. and prevent the offshoring of U.S. intellectual property. The respective GILTI and FDII rates should retain parity to keep the incentives of this complex system aligned and balanced. 91pro视频 asks that Congress suspend the currently scheduled rate 2026 increases for GILTI and FDII, Base Erosion and Anti-Abuse Tax (BEAT), and incorporate improvements to ensure these provisions keep the U.S. competitive globally and boost domestic economic growth.
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Promote U.S. Economic Security Through the Advanced Manufacturing Investment Tax Credit
Semiconductors are an essential technology that underpins鈥疷.S. economic and national security. Investment in domestic semiconductor manufacturing facilities, semiconductor manufacturing equipment, and semiconductor design is crucial to U.S. global competitiveness and national security. Companies are currently facing a significant degree of uncertainty, with the long lead time in constructing a new semiconductor manufacturing facility, despite the 2022 investment tax credit for qualified investments in facilities that manufacture semiconductors or semiconductor manufacturing equipment. To address this risk, Congress should extend the construction deadline of December 31, 2026, so that the U.S. semiconductor supply chain can continue to access the advanced manufacturing credit.
Chip design is a crucial R&D activity that impacts the value and function of every semiconductor device. U.S. policymakers should do everything they can to incentivize even more industry investment in chip R&D and design by expanding the credit to include semiconductor research and design investments.