To the ACEC Community,
In 1965, Gordon Moore – the cofounder of Intel – made an observation that would become known as Moore’s Law. Moore’s Law states that we can expect the speed and capacity of our computers to increase every two years, but that at the same time we will pay less for them. It goes on to state that this growth will be exponential.
Moore’s Law has been a driving force behind R&D – and behind the technological and societal advances spurred by that innovation – for more than half a century. For even longer, our nation’s tax policy was structured to incentivize innovation by allowing businesses to deduct R&D expenses in the year those costs were incurred. That changed starting in the 2022 tax year, where businesses are now required to spread their R&D deductions over five years. ACEC engaged with business community allies before the change kicked in to reverse this flawed policy, and it remains our number one legislative priority. It’s hurting the ability of firms to invest in talent and technology, but the ramifications go well beyond that.
The engineering industry is in the innovation business. R&D is at our core, and until recently our tax policy empowered businesses to pursue progress. The device on which you are reading this letter, the car you drove to the office this morning, the coffee you stopped for at Starbucks on the way, and the cool-touch thermal mug that kept it from burning your hands are all products of R&D. Extend those examples to bigger items like the bridges we cross, the roads we drive on, and the clean water we depend on, and the importance of R&D to our industry and the quality of life of every American comes into true focus. R&D enables society to advance because a firm had an idea of how to make something better, safer, faster, or more efficient and spent the money to make it a reality.
The R&D amortization mandate undercuts our ability to deliver on the promise of the historic investments in the bipartisan infrastructure law, the energy provisions in the Inflation Reduction Act, and the manufacturing facilities funded by the CHIPS and Science Act. It punishes the innovators who are so critical to the success of these landmark initiatives.
We’re communicating with you a lot on this issue because we know how critical this is to our industry and we want to give you every assurance that we are working assiduously to get this policy reversed. We’re embarking on an aggressive media strategy campaign in support of our advocacy efforts to repeal or delay the R&D mandate. The ACEC Board of Directors will meet this week in a special session to approve the budget necessary for our industry to be heard on this critical issue.
This is a fight for the future of our industry, but it is also without exaggeration a fight for the future of our country. Every success story in history has at its beginning someone who judged it too difficult, too dangerous, too far, too high, too something. But that’s why what engineers do is so important. We are geared up for this fight, and we are prepared to do what’s necessary to win. Stay tuned.
Linda Bauer Darr
President & CEO
American Council of Engineering Companies | ACEC