On Friday, we talked about what needs to be done to prepare ahead of a new round of virus variants, potential lockdowns, and illnesses. Today, we take that same tone but on preserving a “made in America” mentality in our manufacturing industry, specifically in technology and chip production, which are increasingly being manufactured off our shores. For now, chipmaking still accounts for roughly 250,000 American jobs, but while we risk losing them here, China has ramped up its efforts to pick them up. It’s a job security issue, but also a national security one.
Back in August, Leader McCarthy wrote in the Financial Times on reshoring manufacturing jobs to the U.S., namely in the semiconductor and microchip industries, as well as in medicine and medical supplies. It highlighted some specific policies to do so, and also mentioned how, thanks to the USMCA, North America is a great place to invest and grow companies.
Treasury Secretary Janet Yellen and Defense Secretary Lloyd Austin both touched on the importance of preserving the U.S. chip industry in their confirmation hearings, per Axios, but as Leader McCarthy wrote, there are several opportunities that Congress can and should be looking at regardless.
A few examples:
- The tax code should offer incentives for domestic production, with a modernized Section 199 deduction or credit to reflect the global competition for investment.
- Full expensing should be offered not only to companies bringing production capacity home, but on a permanent basis for all investment by firms in the U.S.
- Design our tax policies in such a way as to lower the cost to firms of relocating their intellectual property, as well.
- Incentivize reinvestments in urban and rural communities left behind from decades of offshoring, particularly Opportunity Zones.
- Ensuring that R&D costs continue to be fully expensed beyond 2022, as current law dictates, and expanding R&D credits to maintain competitiveness and maximize their effectiveness, especially for pre-revenue, early-stage firms.
Now is the time to commit to such ambitious efforts across the board if we want to strengthen the country’s foundation and create an environment for the American people to thrive.