1/28/25
Teddy Jack
The Honorable Tammy Duckworth
House of Representatives
SD-G12 Dirksen Senate Office Building
Washington, DC 20510
Dear Senator Tammy Duckworth,
I am one of your constituents who is very interested in innovation policy. As someone who has access to many of the luxuries of modern life and innovation, I have a vested interest in ensuring that those benefits of innovation continue to accrue to myself and my children. As a voter in your district who supports small businesses, I’m sure that you also care about ensuring innovation to help small businesses achieve the American dream. During the Trump tax cuts, a provision was included that led to the amortization of R&D tax credits over 5 years instead of allowing them to be immediately deducted. Due to inflation, this was effectively a 20% cut to the value of the R&D tax credit. I’m sure that you would not support a 20% cut to the R&D tax credit, so you should also not support amortization.
In addition to this decrease in the value of the tax credit, which decreased U.S. innovation by more than 11%, it also had a special impact on small startups. By delaying their payment over five years, it would increase the early need of startups for credit. This would allow them to be exploited by lenders, who charge high interest rates because startups are likely to fail. By forcing startups into the capital market early, they increase the failure rate of those startups and therefore make it harder for every other startup to succeed. To me, the fact that you can create a small, innovative business in America is the essence of opportunity. The current rules around amortization of the R&D tax credit deny people access to the American dream.
Only the United States Congress has the ability to reverse this harmful provision of the Tax Cuts and Jobs Act. Therefore, Tammy Duckworth, I hope that you as my senator will support the American Innovation and R&D Competitiveness Act of 2023. This bill would stop the amortization requirement for R&D tax credits. This would promote innovation and help small businesses and startups. At a time where you have already voted for other, large spending on innovation, such as the IRA or the CHIPS Act, supporting the tax credit carries a large amount of innovation bang for buck. In addition to supporting this legislation, I hope that you push for this legislation in both the Senate and House, including not attaching any rider provisions that may kill the bill. I also request you work with Dick Durbin, my other senator, in this regard. Your actions may be key to the American Dream.
Sincerely,
Teddy Jack
For a more in depth look at R&D Tax Credits, take a look at my position paper here.
