Statement of the Hon. Greg Landsman on American Ingenuity: Promoting Innovation Through the Tax Code
Washington, June 6, 2023
American innovation is key to our country’s success as a global economic powerhouse. Our standing in the world is built on our collective investments in new ideas, cutting-edge technology, and competition between and talent among our country’s best and brightest.
American entrepreneurs play a crucial role in the innovation ecosystem by attracting investment to bring ideas in university labs to market, advancing our quality of life, and growing our productive capacity.
However, to turn these innovative ideas into reality, these businesses need a supportive and nurturing tax code, among other things.
For nearly 70 years, Section 174 of the Internal Revenue Code has allowed companies to write off all of their R&D costs immediately.
Unfortunately, the 2017 tax law upended this long history.As a result, starting this year, businesses will be forced to claim only 20 percent of their R&D tax benefit every year for five years, instead of all at once in one year. In effect, this will impact small businesses, specifically many early-stage startups.
Right now, our tax code is sending mixed signals to our country’s innovators. On one hand, we invested over $300 billion for advancing clean energy in the Inflation Reduction Act, but on the other, we are stifling this development by weakening this tax credit under the 2017 tax law.
To continue this country’s robust economic recovery, my hope is that this hearing will give us the opportunity to bring them back in line.
With that, I would like to thank all the witnesses for joining us. We look forward to your testimony. I yield back.