America’s Broken Tax System Is Punishing R&D
New rules have kicked in because Congress never got around to changing them.
How about giving innovation a break?
Photographer: Samuel Corum/Bloomberg
America’s dedication to fiscal gimmickry is once again imposing unintended costs on the economy. This time, growth, innovation and competitiveness are under threat from a pernicious reform to the corporate tax code — one that nobody ever intended to take effect.
Last year, five years after former President Donald Trump signed the Tax Cuts and Jobs Act into law, one of its many delayed provisions kicked in. Companies would no longer have the option of deducting their R&D expenses in the year they’re incurred. Instead, the costs would have to be amortized over five or 15 years, depending on whether they’re domestic or foreign.