A coalition of 14 aerospace and defense companies, led by the Aerospace Industries Association (AIA), are urging Congress to address research and development tax changes by the end of the year, citing national security and competition with China as key reasons why.
According to the coalition, changes to R&D tax amortization have handcuffed the industry at a time when China is increasing its R&D incentives.
“While Congress is placing a renewed focus on fragilities in our supply chain and the erosion of America’s innovation in critical technologies compared to China, it is important to recognize the important role of the tax code in incentivizing the private sector, and particularly the aerospace and defense industry, to do what it always does best—research and develop the next generation of technologies to keep the warfighter and everyday Americans safe and maintain our global economic competitiveness,” the coalition said in its letter.
The coalition said that since January, American companies are not able to immediately expense the full value of their R&D investments in the year they were incurred. Now, those expenses must be spread out over five years. The change makes R&D more costly to U.S. companies, the coalition said.
Joining AIA in signing the letter were HII, Spirit AeroSystems, Andrews Aerospace, BAE Systems, Inc., Ball Aerospace, General Dynamics, HEICO Corporation, L3Harris Technologies, Inc., Leidos, Mercury Systems, Inc., Northrop Grumman Corporation, Raytheon Technologies, Textron, Inc., and Verify, Inc.