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Cartier: Congress needs to repeal harmful R&D tax mandate


A recent change in our tax code has left Arizona small businesses grappling with debilitating tax burdens, jeopardizing their ability to innovate and serve their clients effectively.

I should know. My business, CivTech Inc., is an engineering firm based in Scottsdale that has been operating for over 21 years and employs roughly 30 people across Arizona, as well as Texas and Washington state.

Since the 1950s, the tax code allowed businesses to deduct research and development (R&D) expenses in the same year they were incurred. This provision encouraged and incentivized innovation. But, starting last year, the tables turned for the worse – particularly for small engineering firms like my own.

To put it simply, having to amortize R&D expenses over five years (rather than the usual one) has forced my company into a position where I now need to pay out hundreds of thousands of dollars before I can recoup my expenses.

Small companies like mine already operate on tight margins and, thanks to this unresolved tax code change, we have been thrust into a new, financially unforgiving reality that is keeping me from hiring new staff. In the worst-case scenario, our ability to stay in business is threatened.

That’s why we need lawmakers to take action. I urge congress to follow the lead of Arizona’s senators and most of our representatives in supporting bipartisan legislation to repeal this harmful tax mandate. Doing so safeguards – rather than punishes – the future of innovation here in Arizona and the rest of U.S.

Dawn Cartier is president and CEO of CivTech Inc, an engineering firm based in Scottsdale.

Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.