As Amazon publicly embraced President Joe Biden’s plan to raise the corporate tax rate across the board, it has also lobbied Congress to preserve a prized tax break that’s helped it lower its corporate tax bill
The R&D deduction and the related R&D tax credit are designed to incentivize companies to shell out on research and development by providing tax breaks for spending on research. The credit was first established in 1981, according to the Tax Foundation, and has broad bipartisan support.
“It’s very likely they’re getting hundreds of millions of dollars a year in R&D tax credits,” said Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, who’s studied the tax habits of Amazon and other big companies.The tax breaks themselves aren’t at risk, but the deduction could become less valuable next year if Congress doesn’t act, which may explain why Amazon chose to ramp up its lobbying campaign around it.
The change was included as a way to pay for the legislation, and experts believe it was never meant to become permanent. The Tax Foundation estimates repealing the changes would cost about $131 billion over a decade. It also estimated that it would boost GDP by 0.1 percent and create nearly 20,000 jobs.