In Brief
- Bipartisan Advocacy: Lawmakers are pushing for expanded tax incentives to support domestic semiconductor manufacturing.
- Proposed Changes: The STAR Act (H.R. 802) aims to extend the 25% credit for 10 more years and introduce a new 25% credit for semiconductor design expenditures in the U.S.
- Diverse Opinions: Commerce Secretary nominee Howard Lutnick supports the CHIPS Act but agrees with Trump on tariffs, while Stephen Ezell from ITIF argues that tariffs would burden U.S. consumers and emphasizes the importance of the CHIPS Act.
With President Donald Trump’s recent announcement of potential tariffs on computer chips and semiconductors, a bipartisan group of lawmakers is advocating for expanded tax incentives to bolster domestic semiconductor manufacturing.
Current Incentives and Proposed Changes
Under the existing law, Code Sec. 48D, established by the 2022 CHIPS Act, provides a 25% Advanced Manufacturing Investment Credit for qualified investments in semiconductor manufacturing facilities. This credit is available for property placed into service after January 1, 2023, or for which construction begins before 2027. Taxpayers can elect to treat the credit as a direct payment of income taxes, with partnerships and S corporations eligible to receive a payment from the IRS in lieu of the credit.
Bipartisan Legislation
Representatives Blake Moore (R-UT) and Suzan DelBene (D-WA) have reintroduced the Semiconductor Technology Advancement and Research (STAR) Act (H.R. 802). This bill aims to extend the 25% Advanced Manufacturing Investment Credit for an additional 10 years and introduce a new 25% credit for qualified semiconductor design expenditures conducted in the U.S. These efforts are intended to enhance domestic semiconductor research and development, improve economic security, and create high-paying jobs.
Diverse Opinions
Commerce Secretary nominee Howard Lutnick has shown support for the CHIPS Act, describing it as an excellent foundation for bringing semiconductor manufacturing back to America. However, he aligns with Trump on the effectiveness of tariffs, dismissing concerns about their inflationary impact.
Stephen Ezell from the Information Technology & Innovation Foundation (ITIF) disagrees, arguing that tariffs would ultimately burden U.S. consumers and are insufficient to justify relocating semiconductor manufacturing facilities to the U.S. He emphasized the importance of the CHIPS Act in addressing the cost gap of U.S.-based production.
Conclusion
As the debate continues, the proposed STAR Act represents a significant effort to strengthen the U.S. semiconductor industry through enhanced tax incentives, aiming to reduce reliance on foreign supply chains and support national security.
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