WDMA Appeals to Legislators Over Amortization of R&D Expenses

March 23rd, 2023 by Travis Rains

The American Innovation and Jobs Act, which would repeal a research and development (R&D) amortization provision included in the Tax Cuts and Jobs Act of 2017, has been reintroduced in legislature. The legislation’s reintroduction came only a few months after the Window and Door Manufacturers Association (WDMA) penned a letter to legislators asking them to repeal the R&D amortization provision, calling it a “harmful tax change that threatens jobs and innovation in America.”

“Innovation is one of America’s greatest strengths and a significant contributor to job and economic growth, competitiveness and national security,” WDMA officials wrote in their letter. “It is for these reasons that for nearly 70 years the tax code has recognized the importance of research and development by allowing businesses to fully deduct their R&D expenses in the same year.”

But the amortization provision required businesses to deduct those R&D expenses over a period of years, which WDMA believes makes conducting those efforts more costly. In fact, WDMA officials say the U.S. is one of only two developed countries requiring the amortization of R&D expenses. Along those lines, WDMA says the provision poses a threat to national security.

“Requiring the amortization of research expenses will reduce R&D spending and lead to a loss of more than 20,000 R&D jobs in the first five years with the number of lost jobs rising to nearly 60,000 over the following five years,” WDMA officials add. “Moreover, when accounting for the spillover effect from R&D spending, nearly three times as many jobs will be affected. This same study also found that for every $1 billion in R&D spending, 17,000 jobs are supported in the U.S.”

Those sentiments seemingly struck a chord with a number of legislators, including Senators Maggie Hassan (D-NH) and Todd Young (R-IN), who now seek to amend the Internal Revenue Code by enhancing tax benefits for research activities. If approved, the bill would restore immediate expensing for research and development investments, expand refundable research credits for new and small businesses, and increase access to research credits among startup companies.

“At a time of increasingly fierce global competition for research dollars, this change will make it harder for the next R&D dollar to be spent in the U.S. which will ultimately hurt future U.S. competitiveness,” WDMA concludes.

This article is from Door and Window Market [DWM] magazine's free e-newsletter that covers the latest door and window industry news. Click HERE to sign up—there is no charge. Interested in a deeper dive? Free subscriptions to [DWM] magazine in print or digital format are available. Subscribe at no charge HERE.

Tags: , , , , , , , ,

Leave Comment

This site uses cookies which allow us to give you the best browsing experience possible. Cookies are files stored in your browser and are used by most websites to help personalize your web experience. By continuing to use our website, you are agreeing to our use of cookies. To find out more, please see our Privacy Policy.