Sens. Chris Coons, D-Delaware, and Pat Roberts, R-Kansas, recently introduced the Invent and Manufacture in America Act, which provides a tax cut for companies that not only conduct research and development in the U.S. but also manufacture products resulting from this R&D in America.
Scientific and technological innovation accounts for nearly 50 percent of economic growth in the U.S. Despite this, R&D investments that drive innovation have remained relatively stagnant for more than a decade, increasing at a pace of 1.6 percent annually since 2000. During this same time, the nation's global competitors have dramatically increased R&D investments. Germany, Japan and South Korea all spend more on R&D than the U.S. as a share of GDP.
Companies are twice as productive at R&D when operations are co-located with a manufacturing facility. Yet, businesses continue to outsource manufacturing operations. Since 2000, the U.S. has lost more than five million manufacturing jobs and more than 70,000 manufacturing plants have closed or moved offshore, threatening the innovation and production ecosystem.
To address these challenges, the bill enhances the value of the R&D tax credit by up to 25 percent for companies that perform the majority of manufacturing operations in the U.S. The enhancement is graduated so that the credit rate increases as the percentage of a company's domestic manufacturing operations increases.
“To remain the world’s leading economy in the 21st century, we must continue to expand investments in research and development, which is the lifeblood of economic growth. But it’s not simply enough to invent products in the United States. Those products should also be manufactured here. A strong, growing manufacturing sector will create jobs and drive more foreign direct investment and reshoring to the United States. That’s why I’m proud to partner with Sen. Roberts to introduce bipartisan legislation that will help companies invent and make their products in America," Coons said.
“Research and development in new technologies and new products is an important source of economic growth,” Roberts said. “The new technologies, products and lower prices generated by investments in R&D create new jobs, raise wages and create new demand for goods and services. Our legislation would increase cash flow for small businesses and start-ups involved in R&D intensive activities by reducing past, current and future tax liabilities leading to permanent tax savings.”