Arlington, Va. (Jan. 31, 2024) – The Aerospace Industries Association (AIA) and 31 small and mid-sized businesses yesterday sent a letter to congressional leadership urging the passage of the Tax Relief for American Families and Workers Act, restoring research and development (R&D) incentives to spur innovation in the aerospace and defense sector.
“We are the small and medium-sized businesses up and down the supply chain responsible for genuine American innovation in areas that affect civil aviation, commercial space, and our national security. Unfortunately, the requirement to amortize our research and development (R&D) expenses over five years, in effect since January 2022, has already taken a toll on our ability to invest in R&D, affecting our companies and the livelihood of our employees. Some small and medium-sized businesses have laid off up to 40% of their workforce due to the need to amortize expenses,” the letter said.
“Returning the United States to a tax code that drives the development of cutting-edge technologies, incentivizes the creation of good-paying jobs, and supports small businesses is critical to our economic competitiveness and national security. We urge Congress to pass this legislation as soon as possible, enabling businesses like ours to increase private investment in R&D across multiple sectors of our economy,” the letter finished.
AIA has been the leading voice in the fight to reverse the harmful R&D tax amortization requirement. In December, AIA President and CEO Eric Fanning released a statement calling for the restoration of R&D tax credits. Learn more about how changes to America’s R&D tax expensing requirements affect small businesses here.
Read the full letter below or by clicking here.
Dear Speaker Johnson, Majority Leader Schumer, Republican Leader McConnell, and Democratic Leader Jeffries:
The undersigned businesses represent the lifeblood of America’s aerospace and defense industry. We are the small and medium-sized businesses up and down the supply chain responsible for genuine American innovation in areas that affect civil aviation, commercial space, and our national security. Unfortunately, the requirement to amortize our research and development (R&D) expenses over five years, in effect since January 2022, has already taken a toll on our ability to invest in R&D, affecting our companies and the livelihood of our employees. Some small and medium-sized businesses have laid off up to 40% of their workforce due to the need to amortize expenses. With a significantly reduced cash flow, our investment in innovation is deteriorating, and we struggle to hire and retain qualified talent.
For these reasons, we fully support The Tax Relief for American Families and Workers Act, particularly the restoration of full-year expensing for R&D expenditures, and request that you bring this legislation to the floor for a vote as soon as possible. We are grateful for the leadership of Senator Ron Wyden and Representative Jason Smith in crafting this framework and prioritizing a temporary retroactive fix to R&D expensing.
Returning the United States to a tax code that drives the development of cutting-edge technologies, incentivizes the creation of good-paying jobs, and supports small businesses is critical to our economic competitiveness and national security. We urge Congress to pass this legislation as soon as possible, enabling businesses like ours to increase private investment in R&D across multiple sectors of our economy.
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