Research and development, R&D, is the generation of new knowledge. It is the oxygen of a growing and dynamic economy. In plain language, companies invest in R&D in order to increase productivity. Increased productivity is central to an ever-wealthier nation. Wealthier nations have more resources for necessary spending, including spending on national security.

Companies invest in R&D with the expectation of higher returns. But R&D spending is risky. Higher risk requires higher returns. That is a fundamental law of economics. Increasing the cost of R&D spending is counterproductive. Higher costs result in less spending and in lower long-run productivity. A tax change that was part of the Republican Tax Cuts and Jobs Act of 2017 will discourage investment in R&D in the future. Beginning in 2022, companies that invest in R&D will no longer be able to deduct their R&D expenses immediately. Rather, they will be required to amortize their costs over five years. For costs attributable to research conducted outside the United States, such costs must be amortized over 15 years. This will be the first time since 1954 that companies will have to amortize their R&D costs rather than immediately deduct those expenses.