Warren Asks Defense Contractors to Explain Lobbying for Tax Breaks in “Big, Beautiful Bill” at Expense of American Families
Massively profitable contractors are pushing for retroactive tax break for investments already made as Congressional Republicans slash health care and food assistance for working families
Text of Letter to Northrop Grumman (PDF) | Text of Letter to Lockheed Martin (PDF)
Text of Letter to RTX Corporation (PDF) | Text of Letter to General Dynamics (PDF)
Washington, D.C. — U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Finance and Senate Armed Services Committees, wrote to Northrop Grumman, Lockheed Martin, RTX Corporation, and General Dynamics, pressing them to explain their lobbying for retroactive tax breaks in Trump’s “big, beautiful bill” at the expense of working families—while already raking in huge profits.
In President Trump’s 2017 Tax Cuts and Jobs Act (TCJA), Congressional Republicans changed the Research and Experimentation (R&E) deduction so that companies could no longer deduct the full cost of R&E expenses the year they are made. Instead, starting in 2022, companies had to write off these expenses over five or fifteen years.
Now, these wealthy companies are lobbying to bring full expensing back into the tax code, and Congressional Republicans are delivering. Alongside deep cuts to Medicaid and the Affordable Care Act that will cause 16 million Americans to lose their health care coverage, the Republican tax bill passed by the House of Representatives last month includes a return to same-year R&E expensing. The Senate’s proposed text of the “Big, Beautiful Bill” goes even further and includes allows R&E expensing all the way back to 2022.
“These retroactive benefits cannot incentivize investments that have already been made – they are simply a handout to corporations for past investments. This outrageous [handout] is an insult to the millions of Americans facing threats of losing their healthcare coverage to fund tax giveaways to wealthy corporations in the Republican tax bill,” Senator Warren continued.
Big corporations claim that the current deduction schedule “significantly limits businesses’ ability” to invest in R&E. However, tax experts have relieved that “[t]here is no evidence that spreading out the cost of (R&E) deductions have any effect on corporations’ decision to invest in research.”
In fact, Lockheed Martin's 2021 assessment of the expiration of R&E expensing determined that the financial impact on the company would "be immaterial by 2027."
“[G]iant, wealthy corporations do not need even larger tax breaks, especially if they come at the expense of middle-class families,” wrote Senator Warren.
If R&E expensing is restored, these defense contractors are set to be gifted billions in deductions (nearly $1 billion for Northrop Grumman and $500 million for Lockheed Martin) for past years’ R&E investments, all at the expense of Americans’ health care, education, food assistance, and more.
Senator Warren asked the companies to provide clarity on how much they would save on their taxes in 2025 if this tax break is approved and how it would affect their outlook for stock buybacks and executive compensation by July 6, 2025.
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