Thirty-five members of the Aerospace Industries Association (AIA) recently sent a letter to Congressional leaders urging Congress to act immediately on legislation to restore research and development (R&D) tax incentives.
A recent tax change requires companies to amortize R&D expenses over five years instead of in the year they are incurred. This reduces company’s annual tax benefit to 20 percent what it once was, AIA said.
“We are already feeling the very real, punitive effects of this policy,” the letter said. “When filing our taxes last month, many of us were hit by alarming numbers, far beyond what we anticipated. These higher tax bills greatly reduce our cash flow — meaning that we will struggle to hire and retain qualified talent, and for some of us, we will need to take out loans to cover these larger-than-expected expenses. Additionally, we will have fewer dollars to invest into the future R&D that will keep our country on the cutting edge of aerospace and defense technologies — and ahead of our foreign competitors.”
AIA urges Congress to quickly pass the American Innovation and Jobs Act and the American Innovation and R&D Competitiveness Act to restore R&D tax incentives. The bills have bipartisan support in the House and Senate.