Market Institute President Charles Sauer has a new article in The Daily Caller describing the importance of the House Republican conference making certain tax provisions permanent.
Given the yearlong dysfunction within the House Republican Conference, it’s fair to wonder whether they can find agreement on anything. On business tax issues, however, it seems like Republicans are more united than they have ever been.
That’s because in recent weeks, more than half of the Conference signed onto a letter led by Republican Indiana Rep. Rudy Yakym urging House Speaker Mike Johnson to prioritize important pro-growth tax legislation before Congress leaves for the year.
The nearly 150 Republicans are specifically urging action to fix and make permanent key provisions of former President Donald Trump’s 2017 tax reform law. The provisions, part of the Tax Cuts and Jobs Act, were a driver of the economic powerhouse America experienced thereafter. American businesses were able to make big investments in innovation and could reap the rewards of their investments quickly. From manufacturing to healthcare to technology, American businesses put big dollars into high-paying jobs that helped grow our nation’s economy.
While none of the members who signed the letter are on the pivotal Committee on Ways and Means, their ardent support for “extending immediate R&D expensing, full capital expensing, and a pro-growth interest deductibility rule” is an important step toward such legislation passing the entire House.
However, some of the provisions need to be fixed. The United States is now the only developed country requiring amortization of R&D expenditures, and American businesses have warned that without a fix to the R&D provisions, 10,000 American jobs could be lost each year over the next decade. So Republicans who signed the letter are correct in saying that failure to act quickly “will jeopardize hundreds of thousands of American jobs.”
A failure to restore full R&D expensing doesn’t just harm our domestic economy either. While the House and Senate continue to debate whether to solve the issue now or kick the can down the road, China continues to pour millions into R&D for its industries with immediate impact. It’s important to note that these provisions don’t just protect current American jobs while expanding new ones – these provisions reduce the tax burden on U.S. facilities and entice companies to bring back operations from foreign countries.
Despite all of the billions of dollars Congress and the Biden administration have made available to try to accelerate manufacturing and next-generation industry, many businesses’ long-term strategies are still hampered without the tax credits. This has critical implications for our national security as well, as officials in countries like China are pressing for state-funded increases in R&D for their businesses. American leadership in the world is contingent on American innovation outpacing the competition. That means our economic might and our military might are equally critical. To maintain Reagan’s ideal of “peace through strength,” even the U.S. military needs to benefit from increased investment in R&D. Simply put, losing out to China is both unacceptable and avoidable. Congress must act before the end of the year to boost the U.S. economy and support good-paying American jobs.
The GOP letter is the highlight of serious momentum in the House of Representatives at the moment. Yakym’s letter put it best, describing the Tax Cuts and Jobs Act as “a once-in-a-generation tax reform.
Congress must continue active negotiations and accept compromises that grant immediate R&D expensing, full capital expensing, and a pro-growth interest deductibility rule. There is serious momentum, and lawmakers must not let it slip away ahead of the holidays. Congress cannot lose sight of its objective. Failure to preserve these tax provisions will threaten American jobs, stifle American innovation, and jeopardize American security.