Scientific and technological innovation accounts for nearly 50% of economic growth in the United States. Despite this, research & development investments that drive innovation have remained relatively stagnant for more than a decade, increasing at a pace of only 1.6% annually since 2000. During this time, the United States’ 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 over 5 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, U.S. Senators Chris Coons (D-DE) and Pat Roberts (R-KS) have introduced the Invent and Manufacture in America Act, which provides a tax cut for companies that not only conduct research & development in the U.S. but also manufacture products resulting from that R&D in America.
The bipartisan bill enhances the value of the R&D tax credit by up to 25% 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,” said Senator Coons. “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 Senator Roberts to introduce bipartisan legislation that will help companies invent and make their products in America.”
“Research and development in new technologies and new products is an important source of economic growth,” said Senator Roberts. “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.”
The Invent and Manufacture in America Act has been endorsed by the American Society of Mechanical Engineers (ASME), Information Technology and Innovation Foundation (ITIF), American Small Manufacturers Coalition (ASMC), and National Council for Advanced Manufacturing.
“The ‘Invent and Manufacture in America Act’ amplifies the success of the R&D tax credit by expanding its benefits to more fully serve the American worker,” said Keith Roe, President, ASME. “When American innovations are manufactured abroad, we surrender our competitive advantage. This bill will strengthen innovation at home and make the United States more competitive globally by encouraging more domestic R&D and manufacturing. When goods and technologies are manufactured where they are invented, it promotes further advances and allows the entire innovation pipeline to reinvigorate itself more quickly.”