Chris Berry is the president and CEO of OhioX, a statewide technology and innovation nonprofit association.
Eddie Pauline is the president and CEO of Ohio Life Sciences, the industry association representing the interests of Ohio’s nearly 5,000 life sciences establishments.
American-made innovation has always fueled our country’s prosperity and global leadership.
From the first flight by Dayton’s Wright brothers to developing life-saving rare disease treatments, Ohio is a place where discovery leads to life-changing societal impact. Our progress has been built on bold ideas — and the will to make them real right here at home.
That legacy is now at risk.
And the implications are especially urgent for Ohio, a state fast emerging as a national hub for critically important industries such as advanced manufacturing, life sciences and data centers that make innovation possible.
Startups are launching. Innovation hubs are growing.
The life sciences sector alone has grown nearly 13% over the last five years. There’s an excitement and momentum among Ohio innovators that our state has not seen for quite some time. These aren’t just economic bright spots — they’re the foundation of a generational opportunity for Ohio. But that momentum could be derailed unless Congress reverses a quiet tax policy change that’s already doing damage.
For nearly 70 years, U.S. businesses could deduct 100% of their research and development (R&D) expenses in the year they occurred — a policy that powered scientific breakthroughs, spurred investment and made America the world’s innovation leader. It also strengthened our national security and made America the innovation capital of the world.
For example, a small biotech company here in Columbus could realize a $5,000 deduction in the year they spent it and use that tax savings to help make payroll, cover rent or reinvest in more research and development.
That changed in 2022. Under new rules, businesses must now spread — or amortize — R&D deductions over five years, turning that $5,000 into only $1,000. While this may sound like a minor accounting shift, the impact has been severe, especially for startups and small businesses with limited income, cash flow, and high R&D costs.
The harm is real and growing.
Early-stage companies are being forced to choose between paying higher taxes or scaling back the very work that could lead to the next big breakthrough. Some are freezing hiring. Others are laying off staff or scrapping new ideas altogether. Every dollar paid in taxes because of this rule is a dollar not spent on developing life-changing or even life-saving technologies.
Since the amortization provision took effect in 2022, we’ve seen a chilling decline of R&D spending.
In the five years prior, American R&D spending grew at an average annual rate of 6.6%. But in the 12 months ending March 2024, growth fell to less than 1% — a sharp downward trend that underscores the policy’s chilling effect.
And it’s not just about economics.
The national security implications are profound. While American innovators are being penalized, our global competitors — especially China — are doubling down. Seventeen countries now offer more generous R&D deductions than the U.S., often exceeding 100% of eligible expenses. China, for example, allows companies to deduct $200 in the first year for every $100 spent — 20 times the benefit now available to U.S. firms.
In a world where technological leadership equals economic strength and geopolitical influence, ceding ground in innovation to China is a risk we cannot afford.
The solution is straightforward: contact your member of Congress and encourage them to pass HR 1990, which restores full, immediate expensing of R&D.
Doing so would return us to a proven, pro-growth policy that encourages risk-taking, supports entrepreneurs, and helps the U.S. remain a global leader. It’s what worked for nearly 70 years and led to decades of innovation and growth.
Ohio has too much at stake to stay silent. Our state is home to innovative companies — large and small — across a diverse set of sectors developing the tools, therapies and technologies that will shape the future. If we want to keep that engine running, federal policy must stop putting sand in the gears.
As Washington debates its economic priorities, one thing should be clear: American innovation must remain a national imperative.
And Ohio, with its legacy of invention and leadership in key industries, is ready to lead.
Chris Berry is the president and CEO of OhioX, a statewide technology and innovation nonprofit association. Its members include startups, tech small businesses, universities, Fortune 500 companies and more.
Eddie Pauline is the president and CEO of Ohio Life Sciences, the industry association representing the interests of Ohio’s nearly 5,000 life sciences establishments. OLS’s mission is to grow the life sciences market.
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