Walorski Bill Would Provide Tax Relief to Medical Device Startups, Other Tech Innovators
U.S. Rep. Jackie Walorski (R-Ind.) recently introduced bipartisan legislation to build on the CARES Act to provide tax relief to high-tech manufacturers and innovators.
The IGNITE American Innovation Act would provide liquidity to small and mid-size businesses that were unable to utilize tax provisions under the CARES Act by allowing them to monetize up to $25 million in accumulated tax assets. The bill would also provide a bonus in tax assets generated by research and development of products to prevent, diagnose, and treat COVID-19. Walorski introduced the bill alongside U.S. Rep. Dean Phillips (D-Minn.).
"America's recovery from this unprecedented health and economic crisis will be driven by our innovative and entrepreneurial spirit," Congresswoman Walorski said. "High-tech innovators and medical device manufacturers -- including many in northern Indiana -- will play a vital role in improving health care, discovering treatments and cures, rebuilding our economy, and creating good jobs. The IGNITE American Innovation Act will give startups greater opportunity to continue growing, innovating, and developing life-saving technologies at a time when we need them more than ever."
H.R. 7917, the IGNITE American Innovation Act, would:
Allow growth companies to monetize up to $100 million worth of accumulated net operating losses (NOLs) which were generated within the previous five years at the 21 percent corporate rate
Double the value for NOLs generated by products to prevent, diagnose, or treat COVID-19.
Allow growth companies to monetize R&D credits
Double the value of R&D credits generated by research into products to prevent, diagnose, or treat COVID-19.
The legislation is supported by a coalition of advocates for tech startups, including the Medical Device Manufacturers Association (MDMA), the National Venture Capital Association (NVCA), Biotechnology Innovation Organization (BIO), TechNet, the Advanced Medical Technology Association (AdvaMed), Center for American Entrepreneurship (CAE), Angel Capital Association, and Technology Councils of North America.
"MDMA applauds Congressman Phillips and Congresswoman Walorski for their bipartisan leadership to provide support and resources for medical technology innovators who are passionately working to develop the cures and therapies of tomorrow," said MDMA President and CEO Mark Leahey. "The COVID-19 pandemic continues to cause severe disruptions for countless innovators who are simply trying to keep their doors open and retain their workforce, and this legislation would provide some of the liquidity that is needed to help the medtech ecosystem. While we appreciate Congress' unprecedented efforts to stabilize the economy, the existing liquidity programs are inaccessible for many emerging, fast growing companies. The top priorities in the United States today are to save lives, and to save jobs, and the "IGNITE American Innovation Act' would go a long way towards accomplishing these critical goals."
"American medtech innovation is driven by small companies and start-ups on the cutting edge of improving patient care," said AdvaMed Executive Director Ashley Wittorf. "In the best of times, these heavily R&D-focused firms struggle to find the financing and resources they need to navigate tough regulatory and reimbursement pathways in order to bring a new device or diagnostic to market, and that challenge has been magnified by the pandemic. The legislation introduced by Reps. Dean Phillips (D-MN) and Jackie Walorski (R-IN) will serve as vital lifeline to these small, entrepreneurial companies, allowing them to weather the current COVID-related economic downturn and continue developing the next-generation treatments and cures patients are waiting for."
"On behalf of the Biotechnology Innovation Organization (BIO) and its 1,000 member companies, we are proud to support the IGNITE American Innovation Act which will support start-ups through the economic crisis created by COVID-19," said BIO CEO Dr. Michelle McMurry-Heath. "This legislation is crucial in allowing the monetization of tax assets generated through a focus on research and technologies to provide much-needed liquidity for small biotechs to continue their critical mission to heal, fuel and feed the world."
"CAE applauds introduction of the IGNITE American Innovation Act and thanks Reps. Dean Phillips (D-MN) and Jackie Walorski (R-IN) for their leadership on this critical issue," said CAE President John Dearie. "Research has consistently demonstrated that startups are disproportionately responsible for the innovations that drive economic growth and job creation. And, yet, the Covid19 emergency has imperiled an entire generation of young businesses, potentially crippling the post-crisis economic recovery. By helping to get badly needed capital to struggling startups, the IAIA makes a vital investment in America's most innovative and promising young companies and, in turn, the U.S. economy's capacity to sustain and recover from the Covid emergency."
"On behalf of startups, their 2.27 million workers, and investors, we are thrilled to endorse the IGNITE American Innovation Act, the most significant pro-startup proposal under consideration during economic recovery negotiations," said NVCA President Bobby Franklin. "This bill will create jobs and sustain critical economic activity immediately, activity that will pay long-term dividends to American workers and the U.S. economy through greater innovation and market competition, and more cutting-edge U.S. companies."