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

BREAKING NEWS – January 31, 2024 – THE HOUSE APPROVES The Tax Relief for American Families and Workers Act that retroactively repeals the Innovation Tax by a vote of 357-70!

The Senate will be a much bigger challenge, but TOGETHER we can do this!! CALL your Senator today to let them know how critical this bill is for your business!

1) CALL your Senators on Capitol Hill: 202-225-3121

2) Email your Senators using this convenient form, provided by the Clean Energy Business Network!

“It’s the most un-American thing I’ve ever heard of, to tax innovation”

– Melissa DeRosier, CEO, 3C Institute and 3C Family Services

Click here to read dozens of heartbreaking stories about how the Innovation Tax has impacted many of the most innovative businesses in our nation.

LATEST UPDATES

January 23, 2024: OpEd “R&D Firms to Congress: Don’t Hang Us Out to Dry With Apocalyptic Taxes!” in Real Clear Energy

January 19, 2024: A bipartisan bill has been introduced called the Tax Relief for American Families and Workers Act of 2024 that would repeal the Innovation Tax through 2025! NOW is the time to reach out to Congress to urge their support of this bill that is critical for the future of US Innovation!

January 17, 2023: Charlotte Business Alliance sends letter to Senator Tillis, urging his support for the “Tax Relief for American Families and Workers Act of 2024“. The letter states, “Being able to expense R&D expenditures in the year they are incurred under Section 174 of the Internal Revenue Code is critical to many businesses’ continued viability.”

January 16, 2023: Senate Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.) announce a bipartisan deal to defer the Innovation Tax on US R&D, retroactive to the 2022 tax year!

See Politico and Wall Street Journal articles for additional detail.

December 11, 2023: News & Observer publishes an article on the impact of the Innovation Tax. The article quotes 2 Congressional Leaders (a Republican and a Democrat), who express bipartisan support for repealing the tax:

A spokesperson for Republican Senator Thom Tillis stated, “restoring full expensing under Section 174 is one of Senator Tillis’ top priorities.”

A spokesperson for Democratic Rep. Valerie Foushee said “local businesses and innovators who have earned and receive support through government funding and federally funded research grants should not be subjected to crippling tax bills that are based on the grants awarded to them.”

December 4, 2023: Over 1,000 small business leaders representing all 50 states have sent a letter to Congress urging immediate deferment of the Innovation Tax.

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.”

November 29, 2023: Congressman Yakim leads nearly 150 Republicans in sending a letter to House Speaker Mike Johnson encouraging immediate reversal of 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. CALL your Members of Congress

URGENT ACTION: Call your Reps directly at 202-225-3121. Find your Senators here and your House Rep here (enter your zip code top right then click to their website and click “Contact”)

2. Sign Letter to Congress to Repeal Innovation Tax

Update: As of December 4, 2023, we have reached 1000+ co-signers from all 50 States and have sent the letter to Congress!!!

More co-signers are welcome!! Each additional co-signer makes our case even more compelling! SIGN HERE!

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

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