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  • Writer's pictureMarie Ambusk

Innovation Tax - A QUIET CRISIS


We quietly go about the ‘business of research,’ pushing the limits of science and technology.

We quietly test theories and conduct experiments, always asking, “What if?” and “Why not?”

We – learn – every – day.

 

We followed the rules. We competed for government support for our high-impact, high-risk visions. And we won! We achieved >$100M in grants and contracts from Federal agencies through the SBIR/STTR programs. I could tell you the story about my 15+ year adventure to reach this critical milestone, but it’s not about me … TreesROI™ is one small part of the larger US R&D ecosystem. And WE DID NOT see this coming …

 

The Tax Cuts and Jobs Act (TCJA of 2017) introduced the IRS Section 174 Requirement of 5-year Amortization of R&E EXPENSES. This disincentive forces us to pay Income Taxes on 90% of the award when it would otherwise have been offset by the expenses incurred. We call this unfair burden the “Innovation Tax.”

 

This problem is hitting home! In our small state, 20 Vermont businesses are currently impacted. Together, their 2022 - 2023 awards represent about $23M. Additionally, entrepreneurs like me have received professional assistance through the Elevate Vermont program, a substantial investment by the Vermont Agency of Commerce and Community Development.

 

Unlike natural disasters caused by floods, fires, tornadoes, and human havoc …

-       There are no visible signs to show this crisis unfolding.

-       There’s no bloodshed or injured bodies as in a mass shooting event or war.

-       There will be no candlelight vigils, no funerals, no thoughts & prayers.

The death of innovation can’t be heard over the frenzy of all the daily chaos!

It is a QUIET CRISIS. Like the silent, calm surface of the water when someone is drowning below. Innovation in the United States will drown unless WE speak up and unless D.C. acts.

 

The 2017 TCJA is now in full force, placing thousands of small businesses and jobs, billions of dollars, and advancements in science and technology here in the US at risk.

GOOD NEWS: Legislative proposals with bipartisan support can address this problem!

   In the Senate (S.866): American Innovation and Jobs Act.

   In the House (H.R. 2673): American Innovation and R&D Competitiveness Act of 2023.

-       This QUIET CRISIS has far-reaching ripples with a tsunami level of magnitude.

-       Legislative action or inaction will define the Future of Innovation as we know it.

-       House and Senate sessions return on 01/09/2024.

 

IMAGINE THIS – a potential (albeit disastrous) alternative

Rather than let their innovations and small businesses die, the owners could negotiate funding sources with foreign countries eager to own our tech, like China. In that scenario, our groundbreaking, high-risk ideas could still benefit the world, but they would no longer be US small businesses, US products, or US intellectual property.

-     This is a critical turning point.

 

Here are some results of our grassroots efforts led by the Eva Garland Consulting firm: the letter sent to Congress signed by over 1000 small businesses representing all 50 states and a compilation of our personal stories (including our story on page 103).

 

HERE’S HOW YOU CAN HELP

-       Co-sign our Letter to Congress HERE. Your support helps our compelling case!

-       Urge your House Representatives to sign on to co-sponsor H.R. 2673.

-       Urge your Senators to sign on to co-sponsor S.866.

-       Urge House Leadership Majority Steve Scalise, and Minority Hakeem Jeffries to prioritize this and to reverse the unfair tax burden on Innovation ASAP!

-       Share our concerns widely – on social, local, state media, and national news outlets.

 

We want to quietly return to work at our labs, be immersed in our projects, and be laser-focused on the underpinning values to make our innovations come to life. Please help.

 

In either case – we will remember what Congress does – it’s in their hands.

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