The article argues for Congress to reinstate immediate deductions for R&D expenses, which were eliminated in the 2017 tax cuts. As a result, U.S. firms are now forced to capitalize and amortize these expenses over longer periods, reducing their incentive to innovate domestically. This policy can lead to companies opting to keep innovations as trade secrets and developing technology overseas, diminishing U.S. competitiveness in the tech sector. The author emphasizes the urgency for this change amidst congressional discussions about a new tax bill.
Congress should consider a tax policy that encourages the development of technology in the U.S. rather than abroad, particularly by restoring immediate R&D expense deductions.
The elimination of immediate R&D deductions in 2017 pushed companies to capitalize and amortize expenses over five years, disincentivizing innovation and patent filings domestically.
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