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Manufacturers need a stable, consistent tax code they can rely on—and that’s why Rep. Ron Estes (R-KS) is taking action to restore immediate expensing for manufacturers’ research and development expenditures. 
 
What’s going on: Rep. Estes, chair of the House Ways and Means Committee’s U.S. Innovation Tax Team, recently spoke with the NAM about what he and his colleagues have been doing for manufacturers as Congress prepares for next year’s “tax Armageddon.” The discussion was part of the NAM’s ongoing “Manufacturing Wins” campaign. 

•  “I’ve introduced legislation—the American Innovation and R&D Competitiveness Act—to address [immediate R&D expensing],” Rep. Estes told us. “It’s bipartisan legislation that is supported by 220 colleagues, nearly evenly divided between Republicans and Democrats.” 
• An R&D expensing fix was included in the House-passed Tax Relief for American Families and Workers Act, which is stalled in the Senate. However, the issue is “something the Senate should still address before the next Congress begins in January,” Rep. Estes added. 

Why it’s important: For more than seven decades, manufacturers in the U.S. were able to immediately deduct their R&D expenses. That important provision expired in 2022, however, and manufacturers are now forced to amortize R&D expenses over a period of years. The result: reduced growth and competitiveness.

• “A manufacturer in rural Kansas told me about how the change in immediate R&D expensing has changed their plans for expansion,” Rep. Estes said. “This is a major employer in a small town, so the impact isn’t just about the business, but it’s also about the jobs that are impacted when R&D is stifled.” 
• Meanwhile, China offers manufacturers a 200% “super deduction” for R&D costs, putting the U.S. at a distinct disadvantage, Rep. Estes continued. 

What we need: “[W]e need a stable tax code that encourages innovation through R&D immediate expensing,” among other things, Rep. Estes concluded. “The Tax Cuts and Jobs Act did so much to encourage economic growth and make the United States competitive globally. … The best thing for [manufacturers] to do is to continue talking about the benefits of [tax reform] and the importance of R&D expensing for manufacturers and workers.”  
 
Read the full interview with Rep. Estes here.