The United States continues to lead the world through entrepreneurship and innovation, and I am proud to be part of that leadership as the CEO of a second-generation, family-owned manufacturing company based in Salt Lake City.
Kaddas Enterprises Inc. makes thermoformed plastic parts — components critical for energy resiliency projects here in America and around the world. We have long relied on familiar, pro-growth provisions in the tax code that promote business investment in research and experimentation to develop new products and technologies.
For nearly 70 consecutive years, businesses have been able to immediately deduct 100% of their research and development (R&D) expenses. As of January 2022, however, businesses are required to amortize their R&D investments over a period of five years or, in some cases, 15 years.
The harsh impact of this tax law change cannot be overstated for small businesses like mine. Approximately 18% of our total wages support R&D investments, and our inability to fully deduct these wages on this year’s tax return has increased our tax burden by 35%. This increased tax bill limits our ability to make future capital purchases, grow our workforce, and invest in additional innovation.
Last month, U.S. Sens. Maggie Hassan, D-New Hampshire, and Todd Young, R-Indiana, introduced bipartisan legislation that would restore manufacturers’ ability to immediately deduct their R&D expenses from the income on which they are taxed. The American Innovation and Jobs Act would allow businesses like mine to invest back into our communities, hire additional employees, increase capital purchases and continue to innovate.
As chair of the U.S. Chamber of Commerce’s Small Business Council, I proudly support the Chamber’s push for passage of the American Innovation and Jobs Act in Congress. I have communicated that to my congressman and both Senators, and I urge all other small and midsize business owners to do the same.
Congress needs to do its job and restore businesses’ ability to immediately deduct their R&D investments and send the right message to free enterprise in America — that our country wants, needs and prioritizes domestic innovation to keep our economic edge.
Natalie Kaddas serves on the Salt Lake Chamber of Commerce’s Board of Governors and on the U.S. Chamber of Commerce Board of Directors, where she chairs the Small Business Council. Kaddas Enterprises is a second-generation family-owned thermoplastic manufacturing business that has operated in Utah for 50-years.