S.1639 - American Innovation and Jobs Act (119th Congress)
Summary
The American Innovation and Jobs Act (S.1639) aims to enhance tax benefits for research activities by amending the Internal Revenue Code of 1986. The bill restores immediate expensing for research and development investments, allowing taxpayers to deduct these expenses immediately rather than amortizing them over a period of years. It also expands the refundable research credit for new and small businesses, increasing the cap and extending eligibility.
Expected Effects
If enacted, this bill would likely incentivize increased investment in research and development, particularly among small businesses and startups. This could lead to greater innovation, job creation, and economic growth. The changes to tax deductions and credits would affect how businesses account for research expenses, potentially simplifying the process and reducing their tax burden.
Potential Benefits
- Increased investment in research and development due to more favorable tax treatment.
- Enhanced innovation and technological advancement, leading to new products and services.
- Job creation, particularly in high-tech sectors and startups.
- Simplified tax accounting for research expenses, reducing administrative burdens for businesses.
- Greater competitiveness for American businesses in the global market.
Potential Disadvantages
- Potential for increased budget deficits due to expanded tax credits and deductions.
- Possible complexity in implementing the new tax rules and ensuring compliance.
- Risk that some businesses may misclassify expenses to take advantage of the tax benefits.
- The benefits may disproportionately favor larger companies with established R&D programs.
- Delayed positive impact, as the changes apply to taxable years beginning after December 31, 2021, meaning the effects will be seen in subsequent years.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the Constitution's broad mandate to "promote the general Welfare" (Preamble) by fostering economic growth and innovation. Article I, Section 8, Clause 1 grants Congress the power to lay and collect taxes, duties, imposts, and excises, providing the constitutional basis for enacting tax laws that incentivize certain activities, such as research and development. The specific provisions of the bill, such as amending the Internal Revenue Code, fall within Congress's enumerated powers related to taxation and spending.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).