Dear Chairman Smith and Ranking Member Neal,
On behalf of the Developers Alliance, the leading advocate for developers, the companies they lead, and the industries that depend on them, we urge the House Ways and Means Committee to reinstate research and development (R&D) tax deductions under their One, Big, Beautiful Bill.
There are millions of companies that create and release apps across multiple platforms (“publishers”) including nearly one million just on mobile platforms like Android and iOS. These innovators are on the cutting edge of the next big breakthroughs in health, business, education, transportation, and other vital sectors. They invest in R&D to drive new innovations, create jobs, and keep our nation at the forefront of technological advancements. In 2021 alone, the US reported spending $340.5 billion on R&D, and every $1 billion spent on R&D creates 17,000 jobs.
Publishers are often small companies born out of an idea, and they require as few barriers as possible to bring their ideas to market. Since R&D represents the bulk of their precious dollars—from 20 to 40 percent of their revenue—deducting those expenses from their federal taxes gives publishers the ability to launch their apps quickly and inexpensively.
Changes to the tax law made in 2017 require businesses to amortize R&D costs over five years for domestic costs and fifteen years for overseas costs. App publishers have seen their tax bills increase significantly, making it harder to innovate, compete, and create jobs. And with China expected to surpass the U.S. in R&D spending in the next few years, we risk falling behind our biggest tech adversary in a critical sector.
We have heard directly from publishers who are negatively impacted by amortization. Congress must reinstate domestic R&D tax deductions so America’s app publishers remain the most innovative and competitive in the world. We urge the Ways and Means Committee to reinstate immediate R&D expensing in Sect. 111002 of The One, Big, Beautiful Bill, and as part of the final budget reconciliation this year.
Sincerely,
Jake Ward
Chair, Developers Alliance
