Tax credits that promote medical manufacturing and innovative research are part of a new agenda for economic growth announced by House Republicans.
GOP lawmakers on the House Ways and Means Committee released seven proposals July 23, three of them centered on creating or expanding tax credits for businesses.
“We have an agenda for a healthy American economy, and it starts with bringing manufacturing back to the United States — particularly on the very medical supplies and drugs we need today,” Ways and Means Committee ranking member Kevin Brady, R-Texas, said in a release.
One bill, proposed by Rep. Brad R. Wenstrup, R-Ohio, would provide a 30 percent advanced medical manufacturing equipment credit for the domestic production of drugs, medical devices, and biological products.
The credit would phase down to 20 percent in 2028 and 10 percent in 2029, and it would phase out in 2030.
A second Wenstrup proposal for a domestic medical and drug manufacturing tax credit would give pharmaceutical firms a 10.5 percent credit on their net income from the sale of eligible domestically manufactured drugs — effectively cutting in half the 21 percent corporate tax rate for those profits.
Another bill, introduced by Rep. Jackie Walorski, R-Ind., would double the research credit.
The bill package comes as Senate Republicans finish drafting their proposals for the next coronavirus pandemic relief package, with negotiations between the GOP and Democrats likely to begin next week.
Driving Innovation
Among the seven bills are other tax proposals unrelated to credits, including one introduced by Rep. Darin LaHood, R-Ill., that would allow U.S. companies to avoid immediate taxes if they bring back their intellectual property developed offshore.
Companies would still have to pay taxes if they sold the IP in the future.
“COVID-19 has illuminated the significant dangers of losing domestic supply chains to countries around the globe, particularly China,” LaHood said in a release, adding that offering incentives to return IP to the United States would help drive innovation.
The Republicans also highlighted the Accelerate Long-Term Investment Growth Now Act (H.R. 6802), introduced May 13 by Rep. Jodey C. Arrington, R-Texas, which would make permanent the temporary full expensing provision in the Tax Cuts and Jobs Act.
Businesses would be able to expense research and development costs immediately under the GOP agenda as part of the American Innovation and Competitiveness Act (H.R. 4549), introduced by Ron Estes, R-Kan. Beginning in 2022, the costs will have to be amortized over a five-year period, as established by the TCJA.