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ICYMI: Biden Tax Hike Could Lead to Billions in Cuts for American R&D

April 08, 2021

President Biden’s tax hikes not only push Americans’ jobs overseas but jeopardize American R&D—the very thing he claims needs more investment, despite rejecting Republican proposals to do just that.

President Biden has said: “You know, decades ago, the United States government used to spend 2 percent of its GDP — its gross domestic product — on research and development. Today, we spend less than 1 percent.  I think it’s seven-tenths of 1 percent.”

As job creators and businesses brace for Biden’s $2 trillion tax increase, some companies, including Raytheon, are signaling that they’ll have to cut billions in R&D – which poses a huge risk to American jobs, wages, and our competitiveness. Under Republican tax reform, America saw an R&D boom. Raytheon’s CEO said it himself:

“It means I have to reduce my investment budget by about 20%… I’m not sure that’s exactly what the president wants to have us do.”

“It’s a pretty simple discussion … If you want U.S. companies to invest in technology and innovation, you have to have incentives to do that here in the United States.”

Key Takeaways:

  • China spends more public dollars on R&D than America because it is a Communist country. America’s R&D sector thrives exactly because it isn’t controlled by the government.
  • One company notes that the higher tax bill would threaten $5 billion in annual spending on capital and research and development
  • Republican tax reform led to record R&D investment, 25 percent higher than in the years prior to enactment.
  • Republicans want to do more, by doubling the R&D tax credit and expanding innovation and good-paying jobs in America.
  • Instead of repealing key pieces of the Republican R&D boom, Biden should work with Republicans to improve our low #24 ranking on global R&D incentives.