Policymakers at all levels of government should avoid the pitfalls of incentives. Instead, they should focus on creating a more efficient, neutral, and structurally sound tax code to the benefit of all types of business investment.
Explore IRS clean energy tax credits, including Direct Pay, the IRA and CHIPS Act tax provisions, and Section 1603 grant program. See more.
Instead of such a complex and inefficient system, policymakers should move to full expensing as part of the effort to build.
The Senate has begun debate on the so-called Chips bill, which would provide $52 billion in grants and $24 billion in tax credits to supposedly strengthen the production of semiconductors in the U.S.
A bipartisan group of Senators introduced a bill to create a permanent 25 percent tax credit for investments in semiconductor manufacturing equipment and construction of related facilities—but their proposal would not address underlying bias against investment that exists in the tax code today.
As lawmakers evaluate how to respond to the global semiconductor shortage, they should consider allowing full cost recovery across all types of capital investment—inventories, machinery and equipment, structures, and R&D.