TECNA Statement in Support of the American Families and Jobs Act

On behalf of our more than 22,000 technology-related companies that depend upon the US maintaining a globally competitive Research & Development (R&D) program, TECNA strongly supports the American Families and Jobs Act language to reinstate the immediate deductibility of R&D expenditures and rolling back the damaging amortization rule that recently went into effect.

For nearly 70 years, the U.S. tax code has reflected the value of R&D investments and allowed for immediate deductibility.  It provides critical boosts needed to encourage more US-based innovation, local jobs and additional private sector investment in U.S.-based R&D, particular to the small-to-mid sized businesses that provide 15 percent of U.S.-based private sector R&D investment. Starting this year, however, firms are required to amortize R&D investments over five years rather than deducting in the same year in which the costs are incurred. This dramatic shift in tax treatment will adversely affect the cash flow for small businesses engaged in R&D, and in some cases, move their R&D offshore where they receive more favorable tax treatment.

While over 50 other global jurisdictions offer robust tax incentives, the US continues to concede R&D investment to other countries. Once the home of 40 percent of the world’s R&D in 1999, the U.S. now sees only 30 percent of R&D conducted within our borders. China, meanwhile, has surged in fostering R&D investments, now conducting nearly a quarter of the world’s R&D.

Fortunately, the American Families & Jobs Act restores the longstanding accounting treatment of R&D investments by repealing the harmful amortization provisions. Pro-innovation tax policy has a history of broad bipartisan support that continues today. Congress should ensure seamless continuation of the immediate deductibility of R&D expenditures to support the small businesses that are our innovation economy’s lifeblood.

About TECNA  
The Technology Councils of North America (TECNA) represents approximately 60 IT and Technology trade organizations that, in turn, represent more than 22,000 technology-related companies in North America. TECNA serves its members and the industry through its strong peer-to-peer network and its regional initiatives to raise the visibility and viability of the technology industry. This is accomplished by empowering regional technology organizations and serving as their collective voice in growing the North American technology economy. More information on TECNA can be found at: www.tecna.org or @techcouncils on Twitter

Contact: 
Lindsay Ries, Government Affairs Director
lries@tecna.org

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