Help Repeal the Innovation Tax (Section 174)! - Eva Garland Consulting

BREAKING NEWS (November 30, 2023): North Carolina’s Secretary of Commerce, Machelle Sanders, Urges Congress to Defer Innovation Tax. According to Secretary Sanders, “Section 174 could dramatically reduce the ability of North Carolina entrepreneurs to develop novel products and processes that create new jobs.” Read full letter here.

The Innovation Tax is devastating many of our nation’s businesses. Over 1,000 companies have co-signed a Letter to Congress to repeal the tax and many have shared their heartbreaking stories about how the Innovation Tax has impacted them. Please join our efforts to repeal this tax!

Co-sign letter to Congress to repeal the Innovation Tax

Background

The “Innovation Tax” is a result of the 2017 Tax Cuts and Jobs Act (TCJA) and requires amortization of Research and Experimentation (similar to R&D) expenses, starting with tax year 2022. For R&D conducted in the US, only 10% of the costs can be expensed in the year in which they are incurred (year 1), followed by 20% for each of the next 4 years (years 2-5), and then the final 10% in year 6. While this is a burden for all companies who conduct R&D, it is especially devastating for early stage, pre-revenue companies, who may have to pay the Innovation Tax before they have any profit, or any means with which to pay the tax. According to a 2019 report by Ernst & Young, the Innovation Tax will result in approximately $4 Billion per year in decreased R&D spending, starting in 2022 – for perspective, this is the size of the entire SBIR/STTR program! Unfortunately, early stage businesses typically do not have funds to engage in expensive lobbying efforts. Our objective is to provide a central resource for businesses impacted by the Innovation Tax, so that we can collectively tell our story to Congress, and benefit from our strength in numbers.

How you can Help

1. Sign Letter to Congress to Repeal Innovation Tax

Update: As of November 28, 2023, we have reached 1000+ co-signers!!! We have representation from 49 states (missing only North Dakota). We encourage more impacted organizations to join our list of co-signers as we continue to add strength to our numbers!! We are targeting the week of Dec. 4 to disseminate the letter to Congress, to time the release with the start of year-end legislative discussions.

2. Share your Story of how the Innovation Tax has impacted your company with outreach@evagarland.com We will be distributing these stories to Congress and media to portray the dire impact of the Innovation Tax on individual companies throughout the US.

3. Talk to your Members of Congress

Find your Senators here and your House Rep here (enter your zip code top right then click to their website and click “Contact”) and send your message on how the Innovation Tax is hurting your business (economic, jobs, investment in R&D, personal impact, etc.)
Call your Rep and Senators to urge them to repeal the Innovation Tax.
Meet your Rep/Senator/their staff in person in local office or via video call with their DC tax staffer to explain why they must repeal the Innovation Tax in 2023.

4. Engage the Media

Contact TV/radio/print media to share your story.
Post your story on social media and tag Ways & Means and Senate Finance Committees and their Chairs and Ranking Members:
- - R: @WaysandMeansGOP | @SenFinance | @RepJasonSmith | @MikeCrapo
  - D: @WaysMeansCmte | @SenateFinance | @RepRichardNeal | @RonWyden

5. Send Your Story to SBIR/STTR Agencies