U.S. Rep. Vern Buchanan (R-FL) introduced legislation in the House that would provide tax incentives to spur innovation for start-ups.
Buchanan’s American Innovation Act (H.R. 7503) would raise the amount of start-up costs small business owners can deduct from their federal income taxes from $5,000 to $20,000. Additionally, the bill increases the threshold for deductions from $50,000 to $120,000 for start-up expenditures like advertising, employees’ salaries and benefits, rent, and utilities for their new office space.
“As we work to recover from a devastating global pandemic and an overstimulated economy, American businesses are met with runaway inflation and a volatile job market,” Buchanan said. “In this environment, Congress needs to focus on making it easier for businesses to do what they do best – creating jobs, innovating, and investing capital back into our communities.”
The bill has the support of several organizations, including the National Venture Capital Association (NVCA), TechNet, and the Center for American Entrepreneurship (CAE).
“By making long-term investment in innovation more attractive, this package of proposals will pay enormous dividends for our economy and improve America’s long-term competitiveness. We thank Representatives Brady, Buchanan, Kelly, and Wenstrup for their leadership and look forward to continuing to work with policymakers to pass these solutions into law,” officials from the three organizations said in a joint statement.
Buchanan also introduced two other bills – the Start-Ups for Cures Act and the More Cures Act, which seek to encourage the development of new medical therapies and cures. The Start-ups for Cures Act creates a refundable tax credit for a portion of research and development (R&D) costs that are incurred by small businesses engaging in medical research. The More Cures Act would create a 14 percent bonus R&D tax credit for companies engaged in drug development research.
“From the early days of the COVID pandemic, it became clear how dangerously reliant we are on China and the global supply chain for critical lifesaving treatments and cures,” Buchanan said. “The Start-ups for Cures Act and the More Cures Act will help spur American innovation and place our country back at the top of the global leaderboard for developing new cures.”