Aerospace Industry Calls on Congressional Leaders to Delay R&D Tax Change as Conference Committee Closes on Final Legislation

Arlington, Va. (June 30, 22) – Today, the Aerospace Industries Association (AIA) called on Congressional leaders to include a delay to the research and development (R&D) tax amortization law change in the final legislation from the Bipartisan Innovation Act conference committee. The letter, signed by 19 aerospace and defense (A&D) companies and CEOs, urges Congress to recognize the bipartisan, bicameral support for reversing course on the harmful tax law change especially at a time when China is doubling down on R&D incentives.

“Addressing this tax change is necessary to revive our manufacturing workforce and incentivize production of American made goods. With less private investment in R&D, our workforce continues to lag behind in high-tech skills and expertise necessary to produce vital technology like semiconductors,” the companies write. “As you know, maintaining America’s competitive edge has never been more essential, and we cannot afford to handcuff innovation with tax policy that disincentivizes R&D.”

Aero-Mark LLC; Click Bond, Inc.; Kratos Defense & Security Solutions, Inc.; Mercury Systems, Inc.; Raytheon Technologies; Verify, Inc.; Huntington Ingalls Industries; Andrews Tool Company; General Dynamics; L3Harris Technologies, Inc.; Norsk Titanium; Sierra Nevada Corporation; IgniteLI, the Manufacturing Consortium of Long Island; Spirit AeroSystems; BAE Systems, Inc.; GSE Dynamics; Leidos; Northrop Grumman Corporation; and Textron, Inc. joined the letter, showing clear and unified support across industry for restoring the ability to immediately write off R&D expenses, encouraging innovation, and ensuring America remains competitive.

Full text of the letter is available here and below.

 

June 30, 2022

Dear Leader Schumer, Republican Leader McConnell, Speaker Pelosi, and Republican Leader McCarthy:

We strongly urge you to include a delay to the R&D amortization tax law change in the COMPETES/USICA Conference. It is of grave concern that without immediate action, this harmful tax change will stifle American manufacturing and innovation investment. Beginning in January 2022, American companies were no longer able to immediately expense the full value of their investments in R&D in the year they were incurred. Fortunately, there is bipartisan and bicameral support for restoring the ability to immediately expense R&D costs in the Bipartisan Innovation Act as reflected in the overwhelmingly strong bipartisan Motion to Instruct vote before the start of conference last month.

Reversing the R&D amortization requirement is not just sound tax policy but will also provide direct benefits to maintaining our competitive edge against China and supporting our manufacturing workforce—two major goals of the COMPETES/USICA Conference.

While China extended its super deduction for R&D expenses allowing manufacturing companies to deduct an extra 100 percent of eligible R&D expenses in addition to actual expenses incurred, the amortization requirement will cost American companies $29.1 billion by September 2022. American companies have always played a leading role in advancing the technology we need to maintain our competitive edge, notably in the defense sector. Similarly, we must use every tool at our disposal to emphasize and encourage research and development like China does.

Addressing this tax change is also necessary to revive our manufacturing workforce and incentivize production of American made goods. With less private investment in R&D, our nation continues to lag behind in high-tech skills and expertise necessary to produce vital technology like semiconductors. Additionally, many companies use R&D for operations research, which makes operations more efficient.

As you know, maintaining America’s competitive edge has never been more essential, and we cannot afford to handcuff innovation with tax policy that disincentivizes R&D. We look forward to working with you to address this issue in the COMPETES/USICA Conference.

Respectfully,

 Eric Fanning

President & CEO

Aerospace Industries Association

 

Mark H. Lee

Chairman

Aero-Mark LLC

 

Karl Hutter

President & CEO

Click Bond, Inc.

 

Eric M. DeMarco

President & CEO

Kratos Defense & Security Solutions, Inc.

 

Mark Aslett

President & CEO

Mercury Systems, Inc.

 

Gregory J. Hayes

Chairman & CEO

Raytheon Technologies

 

Kathleen Boyle

Chairman & CEO

Verify, Inc.

 

Christopher D. Kastner

President & CEO

Huntington Ingalls Industries

 

Sol D. Kanthack

President

Andrews Tool Company

 

Phebe N. Novakovic

Chairman & CEO

General Dynamics

 

Christopher E. Kubasik

Chair & CEO

L3Harris Technologies, Inc.

 

Michael Canario

CEO

Norsk Titanium

 

Fatih Ozmen

CEO & Owner

Sierra Nevada Corporation

 

Patrick Boyle

Executive Director

IgniteLI, the Manufacturing Consortium of Long Island

 

Thomas Gentile III

President & CEO

Spirit AeroSystems

 

Thomas Arseneault

President & CEO

BAE Systems, Inc.

 

Anne D. Shybunko-Moore

Owner & CEO

GSE Dynamics

 

Roger A. Krone

Chairman & CEO

Leidos

 

Kathy J. Warden

Chair, CEO & President

Northrop Grumman Corporation

 

Scott C. Donnelly

Chairman, President & CEO

Textron, Inc.

 

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