SIGN-ON: Protect R&D, Pro-Growth Interest Deductibility Standard and Full Expensing

Join manufacturers and others in urging Congress to protect businesses’ ability to continue to immediately deduct research and development expenses, finance job-creating investments through a pro-growth interest deductibility standard and fully deduct capital equipment purchases. Interested industry associations, state and local chambers, allied organizations and companies are eligible to sign onto this letter by October 30, 2023.

Thank You for your support.

SIGN-ON: Protect R&D, Pro-Growth Interest Deductibility Standard and Full Expensing

October XX, 2023

The Honorable Chuck Schumer
Majority Leader
U.S. Senate
Washington, DC 20510

The Honorable Mitch McConnell
Minority Leader
U.S. Senate
Washington, DC 20510

The Honorable Mike Johnson
U.S. House of Representatives
Washington, DC 20515

The Honorable Hakeem Jeffries
Minority Leader
U.S. House of Representatives
Washington, DC 20515

Dear Speaker Johnson, Majority Leader Schumer, Minority Leader McConnell and Minority Leader Jeffries,

We, the undersigned businesses and trade associations, collectively employ millions of Americans in all sectors of the U.S. economy. As tax policy plays a critical role in the ability of businesses to thrive, create jobs in the U.S., and effectively compete in today’s global economy, we write to urge Congress to take immediate action to seamlessly extend three tax policies vital to workers and America’s future: immediate R&D expensing, a pro-growth interest deductibility standard and full expensing. 

While legislation has been introduced in both chambers in support of these policies, Congress must act immediately to extend these competitive tax policies. Failing to do so will put hundreds of thousands of family-supporting jobs, cutting-edge innovation and pro-growth investments in America at risk. 

1.    Ensure the tax code supports innovation.

Innovation is one of America’s greatest strengths and a significant contributor to job creation, economic growth, competitiveness and national security. The private sector accounts for more than 75% of total research and development spending,  with small businesses alone accounting for approximately $90 billion of all private-sector R&D investments.  With wages and salaries comprising approximately 75% of R&D spending, the R&D amortization requirement is first and foremost a jobs issue, with R&D jobs paying an average wage of more than $155,000.  Moreover, for every $1 billion in R&D spending, 17,000 jobs are supported. 

For nearly 70 years, the tax code recognized the importance of R&D by allowing businesses to fully deduct their R&D expenses in the same year they were incurred. Unfortunately, starting in 2022, the tax code has required businesses to amortize (or deduct over a period of years) their R&D expenses, making R&D more costly to conduct in the U.S. This harmful tax change has resulted in significant cash flow impacts on businesses, particularly for start-ups and small businesses, with some having to forego hiring, delay investments and take out loans in order to pay the higher tax bills. In fact, recent data shows that tens of thousands of jobs are at risk if the harmful R&D amortization requirement remains in place. 

As a result of this change, the U.S. is now one of two developed countries requiring the amortization of R&D expenses. While America’s tax code makes R&D more costly, China recently expanded and made permanent a super deduction for R&D expenses, allowing companies to deduct an extra 100% of eligible R&D expenses in addition to actual R&D expenses. In fact, 17 countries, including 10 OECD countries, provide for the recovery of more than 100% of eligible R&D expenses. 

The amortization requirement also poses a serious threat to our national security. As the National Science and Technology Council has noted, R&D investments “are essential to ensure that the U.S. remains able to secure and protect the American people in the face” of other countries’ increasing support for R&D. 

At a time of increasingly fierce global competition for research dollars, Congress must act immediately to ensure the next R&D dollar is spent in the U.S. Restoring immediate R&D expensing will secure America’s global leadership in innovation and our nation’s economic and national security future.

2.    Enable businesses to finance growth.

Debt financing plays an important role in supporting growth. Many businesses need to borrow funds to finance long-term investments in equipment and facilities, which in turn help create jobs and enable them to compete effectively. At the beginning of 2022, a stricter limitation on the deductibility of interest payments on business loans went into effect, increasing the cost of financing critical investments. 

Prior to January 1, 2022, businesses’ interest expense deductions were limited by section 163(j) to 30% of their earnings before interest, tax, depreciation and amortization (EBITDA). Interest deductions are now limited to 30% of earnings before interest and tax (EBIT). By excluding depreciation and amortization, the stricter EBIT standard acts as a tax on investment by making it more expensive for capital-intensive companies throughout the supply chain to finance job-creating growth. 

Under an EBIT standard, capital-intensive companies face higher taxes and increased financing costs. This reduces their flexibility and liquidity when financing needed investments, ultimately making it more difficult for these job creators to raise capital, hire new workers and grow— especially at a time of soaring interest rates. In fact, a recent EY study found that failing to reverse the shift from EBITDA to EBIT will cost the U.S. economy 467,000 jobs, $23.4 billion in lost wages and $43.8 billion in GDP. The industries most impacted by the change from EBITDA to EBIT are vital to the U.S. economy, with the same study finding that 81% of interest expense disallowed under the new standard would come from the manufacturing, information, transportation and mining sectors.

Additionally, limiting business interest deductions harms U.S. competitiveness by making the U.S. an outlier compared to our peers in the OECD. Of the more than 30 OECD countries with an earnings-based interest limitation, the U.S. is the only one that employs an EBIT standard. 

Congress must take urgent action to restore a pro-growth interest deductibility standard. Enabling businesses to efficiently finance growth at a time of rising interest rates will protect the U.S. economy, and particularly small and medium-sized businesses, from damaging job losses that will be felt across the country.

3.    Make permanent a key incentive for capital equipment purchases. 

Over the past several decades, the tax code has provided businesses with varying degrees of first-year expensing (i.e., accelerated depreciation). A 100% deduction for the purchase of equipment and machinery in the tax year purchased was in place from 2017 through 2022. Congress enacted full expensing to spur investments and ensure that the U.S. is well-positioned to attract capital in a competitive global marketplace. However, full expensing began to phase out at the beginning of 2023 and will be eliminated completely by 2027.

Given that full expensing reduces the after-tax cost of capital equipment purchases, this pro-growth incentive can be vital—especially for smaller businesses with tighter margins, as it frees up much-needed capital. According to the non-partisan Joint Committee on Taxation, accelerated depreciation policies lead to stronger investment effects, especially in small businesses. JCT also found that sectors with the largest workforces, such as manufacturing, agriculture, communications and wholesale and retail trade, were the most able to utilize accelerated depreciation to reinvest in their companies. 

Congress must act swiftly to restore full expensing, as failing to do so will make it costlier for businesses to undertake job-creating investments in the U.S. Supporting businesses’ ability to invest in capital equipment will strengthen domestic supply chains and ensure that the U.S. can compete effectively on a global scale.


On behalf of the millions of American workers whose jobs depend on a competitive U.S. economy, we urge all members of Congress to work together by year’s end to seamlessly reinstate immediate R&D expensing, restore a pro-growth interest deductibility standard and extend full expensing. Doing so will secure the U.S. as a global leader in innovation, incentivize job-creating investments and reinforce America’s competitiveness on the world stage.

For any questions, please contact David Eiselsberg at


cc:  The Honorable Ron Wyden
       The Honorable Mike Crapo
       The Honorable Jason Smith
       The Honorable Richard Neal