[Congressional Record Volume 170, Number 6 (Thursday, January 11, 2024)]
[House]
[Pages H99-H102]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   RESEARCH AND DEVELOPMENT EXPENSING

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 9, 2023, the Chair recognizes the gentleman from Kansas (Mr. 
Estes) for 30 minutes.


                             General Leave

  Mr. ESTES. Mr. Speaker, I ask unanimous consent that all Members have 
5 legislative days to revise and extend their remarks and include 
extraneous material on the subject of this Special Order.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Kansas?
  There was no objection.
  Mr. ESTES. Mr. Speaker, it is a new year, and the House is already 
busy tackling issues important to Americans. Something that should be 
high on our list is advancing legislation that will benefit our 
economy, U.S. innovators, and American workers--and that is immediate 
R&D expensing.
  Tonight my colleagues and I want to talk about how this critical 
provision encourages research and development in the United States, 
and, in turn, helps fuel job growth and keeps manufacturing inside our 
borders.
  Recognizing this, for nearly 70 years the tax code allowed businesses 
to fully deduct their R&D expenses in the same year in which they were 
incurred. However, since the beginning of 2022, businesses have been 
required to spread out, or amortize, R&D expenses over 5 years for 
domestic R&D or 15 years for foreign R&D.
  As you can see on this graph, since amortization took place, the 
growth rate of R&D spending has slowed dramatically from 6.6 percent on 
average over the previous 6 years to less than one half of 1 percent 
over the last 12 months.
  This slump in U.S. R&D investment is hurting the American economy at 
a time when rising inflation is hurting workers and holding back job 
creators.
  As companies spend far less on R&D, the sector is down by more than 
14,000 jobs. Three-quarters of research and development spending is on 
salaries and wages, making R&D amortization primarily a jobs issue.
  On the other hand, our main competitor, China, has seen its R&D 
investment increase by 400 percent in just two decades. While the 
United States' share of global R&D investment in 2019 had dropped to 30 
percent, China's share had moved up to 24 percent--in fact, up from 15 
percent in 2009, a jump of nearly 10 percentage points in 10 years.
  They achieved this impressive growth by implementing the deduction of 
200 percent on eligible R&D investments. Without action, the United 
States will fall even further behind.
  But we have the solution, and it is backed by Members in 43 States 
and from both sides of the aisle.
  On tax day of this year, I reintroduced H.R. 2673, the American 
Innovation and R&D Competitiveness Act. This bipartisan bill corrects 
the R&D amortization issue and will spur homegrown research and 
development. And we know that where R&D occurs, jobs and economic 
opportunities follow.

                              {time}  1900

  Mr. Speaker, the American Innovation and R&D Competitive Business Act 
has 212 cosponsors in addition to myself and a lead Democrat. Those are 
nearly evenly split between Democrats and Republicans. It is the 17th 
most cosponsored piece of legislation in this Congress. Tonight, my 
colleagues are going to help me share the decisive difference it would 
make for workers and innovators in each of their districts.
  As I wrote in an op-ed in December, the best time to address R&D 
amortization was at the end of 2021. The best next time is now. We need 
to pass R&D immediate expensing for the American people and our U.S. 
economy.
  Mr. Speaker, I yield to the gentleman from Texas (Mr. Arrington), the 
chair of the Budget Committee and my good friend.
  Mr. ARRINGTON. Mr. Speaker, I thank the gentleman from Kansas who 
represents a district that may be the second largest production ag 
district only to west Texas, the food, fuel, and fiber capital of the 
world.
  In all seriousness, spending is out of control like never before in 
this country. Our debt is unsustainable, which is an understatement, 
maybe the biggest one of the night, and America's fiscal health is in 
rapid decline.
  What is the formula? Reverse Biden's spending spree, right-size this 
bloated and weaponized bureaucracy, rein in mandatory spending, reform 
entitlements, root out all of this trillions in waste and fraud, and 
then return to progrowth, prowork, proenergy policies.
  That last piece is critical. In order for us to bring this 
indebtedness in this great country of ours--it has surpassed World War 
II as the highest levels of indebtedness in the history of our country. 
We have to have growth. Growth is essential not only to reining

[[Page H100]]

in deficits. It generates more revenue for the country and reduces 
spending by giving Americans better-paying jobs and allowing people to 
save and invest more of their hard-earned money.
  CBO projects over the next 10 years we will have a paltry 2 percent 
economic growth. If we grow 1 more percent, we can help bring the 
deficit down by $3 trillion. We need $16 trillion, Mr. Speaker, in 
order to balance the budget, so growth will play a critical role.
  In 2017, Republicans and President Trump passed tax reform. After 
that, we saw unprecedented, record investment in R&D, capital 
investment, growth, job creation, lowest unemployment, lowest poverty 
rates, lifting 6 million people out of poverty in this country. It had 
tremendous value to the country as a whole. All boats rose on the tide 
of prosperity.
  In fact, the CBO projected that we would only grow the revenue from 
the tax cuts by $327 billion in 2021, the year after, and the revenues 
actually grew by tens of billions more. The following year, 2022, the 
CBO projected $353 billion. They were off by $100 billion. We got 
record revenue.
  One of the biggest progrowth provisions in the Tax Cuts and Jobs Act 
was 100 percent business expensing. We need to give businesses the 
certainty to make the investment, supercharge America's 
competitiveness, and create more things in this country instead of 
depending on other countries for important products, making sure that 
we stave off what is projected to be a sustained recession if not 
stagnation.
  We can do this, address inflation, save this country from a debt 
crisis, and reverse the curse of these failed economic policies and 
this unbridled spending. We can do it in part with progrowth, prowork, 
and proenergy policies.
  I am proud to work alongside my friend from Kansas, a true leader on 
the Budget Committee, on the Ways and Means Committee, and on all 
things progrowth and making America the most powerful, most prosperous 
Nation in the world. I thank Mr. Estes for his leadership.
  Mr. ESTES. Mr. Speaker, Mr. Arrington has obviously delved into this 
issue and particularly focused on economic growth and what the impact 
is in terms of the value for not just the economy and workers across 
the country but also the tax revenue to help make sure we can fund the 
operations here in government.
  Mr. Speaker, I yield to the gentleman from Oklahoma (Mr. Hern), the 
chair of the Republican Study Committee, a fellow member of the Ways 
and Means Committee, and my friend and neighbor to the south.
  Mr. HERN. Mr. Speaker, it is great to see my colleague from Oklahoma 
from the Second District, our newest member of our Oklahoma delegation. 
I certainly know where his heart is on these issues that American 
taxpayers rely on us to be responsible for and for the money to be put 
to good use.
  We have a critical tax cliff fast approaching at the end of 2025, 
with the majority of the TCJA's progrowth tax policies expiring. We are 
already seeing the devastating economic effects of TCJA's expired 
provisions, including the EBITDA interest deduction limitation, 
immediate deduction of R&D, and 100 percent bonus depreciation.
  Ernst & Young projects that over 10 years, if the increased 
limitation on the interest deductibility is not repealed, 900,000 jobs 
will be lost; employee compensation will be reduced by $58 billion; and 
GDP will fall by more than $108 billion.
  Twenty-six OECD countries use earnings before interest, tax, 
depreciation, and amortization, otherwise known as EBITDA, as an 
earnings-stripping limit, and zero countries in the OECD use the new 
U.S. EBIT-based limitation.
  This stricter limitation on businesses will fall on the American 
worker in the form of lower wages and employment and make the U.S. less 
competitive in the global marketplace. We need to restore the EBITDA 
interest deduction limitation immediately.
  Since the harmful R&D amortization requirement took effect in 2022, 
R&D spending's rate of growth has slowed dramatically, from 6.6 percent 
on average over the previous 5 years to less than 1 percent over the 
past 12 months.
  China continues to offer a 200 percent super-deduction for R&D, and 
the United States remains uncompetitive at 20 percent. We need to 
restore immediate deduction for R&D costs, something that has been 
around since the middle 1950s.

  Bonus depreciation will continue to ramp down for ensuing years: 80 
percent in 2023, 60 percent for this year, 40 percent for 2025, 20 
percent for 2026, and zero percent beginning in 2027.
  Last year, the U.K. announced its commitment to make permanent its 
progrowth policy for full expensing. The U.S. should be looking to do 
the same to remain competitive in the global marketplace.
  Mr. Speaker, this is more than just an economic issue. This is a 
national security issue. How can we expect to compete with China when 
it is more expensive to invest, innovate, and grow here in the United 
States of America?
  Mr. ESTES. Mr. Speaker, Mr. Hern highlighted that it is so important 
for us to have a strong America. It means we need to have a strong 
economy and good-paying jobs for workers, which means we need to have 
these provisions that make things work and make the economy grow.
  Mr. Speaker, I yield to the gentlewoman from West Virginia (Mrs. 
Miller), a member of the Ways and Means Committee and a good friend of 
mine.
  Mrs. MILLER of West Virginia. Mr. Speaker, I rise today to express my 
support for American innovation and to highlight the importance of a 
progrowth tax code.
  The United States was built on resourcefulness and good ideas. The 
desire to be successful in whatever we do has made America the top 
place to live, work, and raise a family.
  Part of what makes the United States the best place in the world to 
do business is that we respect our workforce and encourage them to 
think outside of the box.
  Because of the Tax Cuts and Jobs Act, our tax code was strengthened, 
jobs were created, and the economy flourished. Some of the provisions 
have now expired. It is a problem. It is imperative that we make the 
TCJA permanent.
  For example, if we cement the Tax Cuts and Jobs Act, we can reverse 
the current limitation on the deductibility of interest payments on 
business loans. That will save over 850,000 American jobs.
  Another example is in research and development. While it was once a 
paid expense, R&D is now a cost that many small businesses cannot 
afford. China is subsidizing their R&D costs, giving them a huge 
advantage over the United States. Modernization and national security 
shouldn't suffer because of any lapsed tax change.
  Our tax code should work for American workers and businesses and not 
against them.
  Mr. Speaker, I thank Mr. Estes for this Special Order tonight.
  Mr. ESTES. Mr. Speaker, I am glad Mrs. Miller highlighted the impact 
on small businesses because that is one of the things that sometimes we 
think about, business provisions that affect large businesses, but 
small businesses are greatly affected as well by some of these 
provisions just because of being able to manage their cash flow.
  Mr. Speaker, I yield to the gentleman from Tennessee (Mr. Kustoff), 
another good friend of mine who is also on the Ways and Means 
Committee.
  Mr. KUSTOFF. Mr. Speaker, I thank our colleague from Kansas for 
getting this together this evening to discuss our important issues so 
the American public can hear from us.
  Mr. Speaker, I rise today to speak about three progrowth tax policies 
that are critical for businesses and workers across west Tennessee and 
across the Nation: bonus depreciation, business interest deductibility, 
and immediate expensing for research and development costs. These 
policies help businesses grow, create jobs, and invest in our 
communities.
  It is crucial that Congress extend these policies to ensure our tax 
code remains competitive and encourages economic growth.
  Mr. Speaker, Republicans passed the Tax Cuts and Jobs Act of 2017, 
and it led to one of the strongest economies in our Nation's history.
  One important piece of the Tax Cuts and Jobs Act, known as bonus 
depreciation, allows businesses to fully and immediately deduct the 
cost of certain capital investments. If we want businesses to continue 
investing in their

[[Page H101]]

workers and in their future, bonus depreciation must be extended.
  Domestic investment will also be strengthened by restoring business 
interest deductibility. Interest deductibility has served as a vital 
tool for manufacturing and other capital-intensive businesses. 
Restoring this provision will protect American jobs and keep 
manufacturing right here at home in the U.S.
  Mr. Speaker, for decades, America has been the global leader in 
innovation and the go-to destination for startups and entrepreneurs. It 
is important that we keep it that way.
  Allowing U.S. businesses to immediately deduct research and 
development costs will lead to more innovation, more domestic 
investment, and more jobs.
  I have heard from west Tennessee businesses, large, medium, and 
small, and they are asking Congress to pass these three provisions.
  Mr. Speaker, I ask all of my colleagues in the House of 
Representatives to stand with American businesses and workers and 
extend these critical provisions.
  Mr. ESTES. Mr. Speaker, I thank Mr. Kustoff. It is so important, as 
he highlighted, to have innovation and to support that so that we can 
have good economic growth. That is a key thing that has always helped 
America over the long term.
  Mr. Speaker, I yield to the gentleman from Utah (Mr. Moore), the vice 
chairman of the House Republican Conference and a fellow member serving 
on the Ways and Means Committee.
  Mr. MOORE of Utah. Mr. Speaker, I rise this evening, along with my 
colleagues, in support of critical progrowth tax policies House 
Republicans are supporting to bolster good-paying jobs and strong wage 
growth for earners. These are solutions that will ultimately help Utah 
families flourish and help the entire Nation.

  We have seen that tax policy can make a difference for the American 
people. In 2018 and 2019, following the passage of TCJA, real median 
household income rose by $5,000 and real wage growth increased 4.9 
percent, the fastest 2-year growth in real wages in over 20 years.
  Since then, we have seen the expiration of three important tax 
provisions that support these job creators and workers. It is not an 
exaggeration to say that my team and I have had thousands of 
conversations over the last few years about how these provisions 
contribute to the ability of businesses to expand, innovate, and invest 
in workers, communities, and the economy. These include the ability to 
immediately deduct R&D expenses, the more generous limitation on 
business interest expenses, and the 100 percent bonus depreciation for 
equipment and vehicles. These provisions of the tax code were crucial 
for job creators, workers, and their families in Utah.
  Lastly, according to SBA, over 600,000 Utahns are employed by small 
businesses. My Small Business Growth Act, which would lift the 
deduction cap for qualifying equipment for small businesses, would help 
these small businesses grow their workforce in northern Utah.
  Mr. Speaker, I will close by noting that these policies are 
fundamentally about the American workers in every congressional 
district across the country and the investments that we can make in 
them as well as their families and their communities.
  Mr. Speaker, I strongly urge my colleagues to work together to get 
these policies over the finish line.

                              {time}  1915

  Mr. ESTES. Mr. Speaker, I thank the gentleman from Utah (Mr. Moore). 
It is important to talk about these very important issues.
  Mr. Speaker, may I inquire how much time is remaining.
  The SPEAKER pro tempore. The gentleman from Kansas has 11 minutes 
remaining.
  Mr. ESTES. Mr. Speaker, I yield 2 minutes to the gentleman from 
Indiana (Mr. Yakym), who has shown great interest in being engaged in 
this issue of how do we actually reinstate the R&D immediate expensing.
  Mr. YAKYM. I thank the gentleman from Kansas, my good friend, for the 
time and for organizing this important event and for this Special 
Order.
  I also thank the gentleman for his leadership on promoting pro-growth 
research and development policies.
  Mr. Speaker, we are living through a time of great economic 
uncertainty created by the Biden administration.
  This Republican House has an opportunity to provide some certainty to 
all American families and businesses by bringing back full and 
immediate deductions for research and development, capital 
expenditures, as well as by undoing lower interest deductibility 
limitations. Doing so would help create high-quality, good-paying jobs 
across our economy for businesses of all shapes and sizes.
  My district in northern Indiana is no different. Many Hoosier 
companies have reached out to tell me what fixing those provisions 
would mean to them.
  A major medical device company in my district had a $60 million 
impact in 2022, because they couldn't fully deduct their research and 
development expenses, and they expect a similar hit for 2023. That is a 
huge sum of money to be sucked out of our local economy unnecessarily.
  However, the impacts aren't just felt in large gashes. There are 
thousands of less-visible cuts across Main Streets in my district, in 
our State, and across our country.
  Family owned restaurants have told me they are putting off buying new 
kitchen equipment. Engineering firms that build our roads and bridges 
are holding off on new cutting-edge software. Also, suppliers to the 
R.V. and auto industry are spending less money on new machinery.
  Mr. Speaker, the small businesses that are the engines of our economy 
have sand in their gears, and we have an opportunity to fix it.
  About a month and a half ago, I was proud to lead a letter to Speaker 
  Mike Johnson signed by 145 of my non-Ways and Means colleagues 
calling for the return of full expensing for R&D and capital 
expenditures, as well as pro-growth interest deductibility. The high 
turnout shows just how important these provisions are to small 
businesses and workers across our great Nation.
  I know my friend, Ways and Means Chairman Jason Smith, is hard at 
work on negotiations to fix these provisions. I hope both sides can 
come together on an agreement that provides wins for hardworking 
Hoosiers of Indiana's Second District.
  I want to close by thanking Mr. Estes once more for his leadership in 
organizing this Special Order.
  Mr. ESTES. I thank the gentleman. It is so important that the 
gentleman has taken such an active interest.
  I now recognize for 2 minutes the gentleman from Alabama (Mr. 
Strong), a friend of mine, and a good guy.
  Mr. STRONG. I thank the gentleman from Kansas for yielding.
  I rise to support the extension of critical provisions from President 
Trump's signature tax law, the 2017 Tax Cuts and Jobs Act. This tax 
policy unleashes America's ingenuity and the full potential of the 
American economy. It helps individuals and families take home more pay 
each month. It supports American investments in research and 
development. It signals to our business community that America values 
and supports domestic innovation.
  This tax policy is also necessary to stay ahead of global 
competitors. Small businesses in north Alabama directly benefit from 
research and development expensing. It allows them to reinvest in their 
products and people. It stimulates the economy, encourages investment, 
and creates jobs.
  President Trump's legislation started an era of increased investment 
in the U.S. and produced an economy with record gains. If we fail to 
extend this critical tax provision, we fail American businesses.
  I urge Congress to act and extend these provisions.
  Mr. ESTES. I thank the gentleman for speaking about some of the 
important impacts on businesses within his district.
  Mr. ESTES. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Texas (Ms. De La Cruz).
  Ms. De La CRUZ. Mr. Speaker, I thank the gentleman for hosting this 
Special Order.
  I stand before you today as a mom and a lifelong small business owner 
to champion the cause of small businesses by encouraging my colleagues 
to work swiftly to extend three vital tax provisions from the TCJA.

[[Page H102]]

  These provisions include the full expensing of critical research and 
development, the full expensing of investments in new equipment, 
machinery, and technology, and also business interest deductibility.
  These provisions are tools that empower small businesses to drive 
innovation, create jobs, and make ``el Sueno Americano,'' ``the 
American Dream,'' a reality for families all across America.
  I urge my colleagues to join me.
  Mr. ESTES. Mr. Speaker, it is great that we have so many people from 
so many different districts talking about issues that are important to 
them and seeing the wide impact across the country.
  Mr. Speaker, I recognize for 2 minutes the gentleman from Texas (Mr. 
Moran), another member of the Texas delegation, and a good friend of 
mine.
  Mr. MORAN. Mr. Speaker, more jobs, better pay, and a stronger 
economy--that is the result when taxes are low.
  I rise today in support of extending the pro-growth tax provisions of 
the Tax Cuts and Jobs Act of 2017 that are critical to families and 
businesses, items like immediate R&D expensing and allowing for full 
bonus depreciation in the year in which those expenses were incurred.
  Through provisions like these, the Tax Cuts and Jobs Act of 2017 
ushered in a competitive Tax Code that encouraged companies to invest 
in American jobs, and it served as a catalyst for innovation 
nationwide. These provisions lifted more than 6 million people out of 
poverty, grew wages by 4.9 percent, and spurred American innovation to 
new heights.
  Also, these pro-business and pro-family tax provisions will play a 
vital role in advancing the American economy, boosting wages, and 
maintaining U.S. competitiveness worldwide into the future, but only if 
we make them permanent.
  Unfortunately, allowing these pro-growth tax provisions expire or 
remain expired would be devastating to our economy. They would slow the 
economy, decrease wages, halt job growth, and stifle investment and 
innovation. This is not the direction that hardworking Americans want 
us to go. This is not the direction of America.
  Mr. Speaker, I stand with American businesses and hardworking 
Americans everywhere, including in east Texas that I represent, and I 
encourage my colleagues to make these expiring tax provisions 
permanent. We must act now to make these provisions permanent and 
reduce the tax burdens on our businesses, to see our economy thrive and 
grow and to see our families benefit as a result.
  Mr. ESTES. Mr. Speaker, I appreciate the gentleman participating and 
highlighting how important it is in the Congressman's district and the 
impact on that part of the country in Texas.
  Wichita, where I am from, is known as the Air Capital of the World 
for its pioneering role in the early days in American aviation. Today, 
in south central Kansas, it is brimming with companies continuing to 
push the limits of the aerospace industry, including in general and 
commercial aviation, but also space, defense, and unmanned aircraft 
systems.
  All of these new advances in Kansas that developers, engineers, and 
manufacturers want require technology, and they require research and 
development, but these innovators tell me that the incentive just isn't 
there. Knowing that they have to amortize their R&D costs prohibits 
them from pursuing these technological advances. Let's change that by 
restoring immediate R&D expensing.
  As I mentioned earlier, R&D expensing is primarily a jobs issue, and, 
without an incentive for home-grown R&D, the U.S. loses out on creating 
new jobs. As the R&D Coalition says, for every $1 billion of U.S. R&D 
spending, 17,000 jobs earning $1.4 billion are supported in the United 
States.
  They also note that, if the R&D amortization policy is not reversed, 
the United States stands to lose 410,000 jobs, $57.5 billion in labor 
income, and $71 billion in R&D spending over the next year, and it is 
going to make America less competitive on the world stage.
  Mr. Speaker, I thank the Members who shared their experiences and 
what we have heard from districts all across the country on this very 
important issue. As we have discussed here tonight, R&D expensing 
legislation is critical for our job creators, innovators, and everyday 
Americans. The health of our economy depends on us passing this 
bipartisan, commonsense legislation.
  The legislation has broad support from Members in 43 States and both 
parties. As I said in my opening remarks and in the op-ed last month, 
the time to address R&D amortization may have been at the end of 2021, 
but with the start of the new tax-filing season a few weeks away, the 
next best time is now.
  Mr. Speaker, I yield back the balance of my time.

                          ____________________