December 5, 2022

MSCI Made Its Voice Heard On Federal Research Tax Credit And So Should You

U.S. lawmakers could consider legislation this month to extend the life of several current tax policies and reverse other, more harmful ones. The list of policies includes a provision that went into effect at the beginning of 2022 that forces businesses to amortize or deduct research and development (R&D) expenses over a period of years instead of allowing them to deduct 100 percent of their expenses in the same year.

For nearly 70 years, the U.S. tax code recognized the importance of R&D by allowing businesses to fully deduct these expenses in the same year. The new policy, which, if not reversed, will start to affect businesses when they file in spring 2023, threatens U.S. jobs and innovation.

MSCI already has made its voice heard on this matter. In October, the institute was part of a group of more than 400 organizations that sent a letter to House and Senate leaders asking them to act quickly to restore the 100 percent deduction.

That letter estimated failing to reverse this change will reduce R&D spending and lead to a loss of more than 80,000 R&D jobs over 10 years. It also noted the policy change means the United States is now one of only two developed countries requiring the amortization of R&D expenses. China, meanwhile, provides a super deduction for R&D expenses up to an extra 100 percent of eligible R&D expenses in addition to actual R&D expenses.

To make your voice heard on this important issue, please use the National Association of Manufacturers’ Action Center, which allows interested individuals to send a letter to their representatives in Congress asking them to vote to reverse this harmful tax change. The Action Center also provides background information, R&D policy updates, and industry stories.

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