Policy and Legal

The new bill—an NAM priority introduced by Rep. Jackie Walorski (R-IN)—would boost the manufacturing industry’s ability to innovate.

The numbers: U.S. manufacturers spent more than $270 billion in R&D in 2018—or nearly two-thirds of all private-sector R&D.

The bill: Rep. Walorski’s bill would further support manufacturers seeking to invest in critical research and development, including:

• Doubling the traditional R&D tax credit from 20% to 40%;
• Doubling the alternative simplified tax credit from 14% to 28%; and
• Making it easier for small businesses to access the R&D tax credit.

An NAM priority: The NAM has consistently pushed lawmakers to include R&D tax policies as part of additional COVID-19 legislation—including in a letter to congressional leadership last week. The NAM’s onshoring plan also calls for enhancing the R&D tax credit.

A word from the NAM: “The manufacturing industry is the backbone of American research and development,” said NAM Senior Director of Tax Policy David Eiselsberg. “This bill would support jobs, boost innovation and help ensure America’s future competitiveness.”

And speaking of NAM tax priorities . . . the Treasury Department sealed a major victory for manufacturers this week by finalizing a rule that will provide relief for manufacturers with high-taxed foreign income.

• The problem: 2017’s tax reform created a new foreign minimum tax, which imposed a minimum 13.125% tax on foreign earnings. Due to the way the tax interacted with existing international rules, manufacturers with high-taxed foreign earnings could be subject to the new minimum tax.
• The solution: Treasury adopted key NAM recommendations in its final rule, which creates an elective high-tax exception that would spare manufacturers from paying additional U.S. tax if foreign earnings are subject to a foreign tax rate greater than 18.9%. The rule represents an important step toward implementing the foreign minimum tax according to congressional intent.