The sweeping tax bill passed by Congress will strengthen the U.S. Semiconductor industry's global competitiveness.
With the holidays fast approaching, Congress this week passed sweeping tax reform legislation that is expected to be signed into law by President Trump in the coming days. The corporate tax reforms included in the bill are a long-overdue and hard-fought win for the U.S. semiconductor industry, and will make it easier for chip companies to continue to grow and innovate here in the United States.
America’s economic strength and global technology leadership depend heavily on corporate tax policies that promote growth and encourage innovation. Over the last 30 years, as the semiconductor industry has launched countless technological advances, America’s tax system has stagnated. This has placed U.S. businesses at a disadvantage to overseas competitors and made the United States a less competitive location for semiconductor research, design and manufacturing.
The new tax bill helps level the playing field, setting forth several provisions the U.S. semiconductor industry has long supported. These include lowering the corporate rate to a globally competitive level of 21 percent, modernizing our international tax structure, and preserving the R&D tax credit. Repeal of the corporate Alternative Minimum Tax (AMT) in the final bill was an important measure to protect the utility of the R&D credit, a critical tool used by semiconductor companies to stay at the tip of the technology leadership spear.
We are particularly pleased with the inclusion of the balanced, “carrot-and-stick” approach of the legislation’s international provisions. While the bill imposes a new global intangible income minimum tax on foreign subsidiaries, that “stick” is complemented with a “carrot” – a tax at an equal rate to the global minimum tax, lower than the 21-percent rate, on foreign-derived intangible income of U.S. parent corporations. This will make U.S. semiconductor manufacturing more competitive, and enable our industry to retain its position as one of America’s top exporters.
Semiconductors are at the heart of U.S. economic strength, national security and technology leadership. Our industry has been a committed, public supporter of corporate tax reform to build on this success and to promote America’s global competitiveness. Last month, we backed the corporate reforms in legislation reported out of the Senate Finance Committee. In March, we supported the corporate elements of the House “Better Way” blueprint. And we’re pleased to have worked with policymakers to help push the final bill across the finish line.
The tax reform legislation passed this week will help modernize America’s corporate tax code and boost U.S. leadership of semiconductor technology. We applaud Congress for passing this much-needed legislation and look forward to the President signing it into law in the coming days.
— John Neuffer is president and CEO of the Semiconductor Industry Association.