H.R.3204 - Building Advanced Semiconductors Investment Credit Act; BASIC ACT (119th Congress)
Summary
H.R.3204, the Building Advanced Semiconductors Investment Credit Act (BASIC Act), proposes amendments to the Internal Revenue Code of 1986. The bill aims to increase the advanced manufacturing investment credit from 25% to 35%. It also extends the credit period from December 31, 2026, to December 31, 2030.
The bill intends to incentivize investment in semiconductor manufacturing within the United States. This is done by making it more financially attractive for companies to build or expand semiconductor facilities.
The Act would apply to property placed in service after the enactment date, suggesting an immediate effect upon passage.
Expected Effects
The primary effect of the BASIC Act would be to increase the financial incentive for companies to invest in advanced semiconductor manufacturing in the U.S.
This could lead to increased domestic production of semiconductors, reducing reliance on foreign suppliers. The extension of the credit period provides long-term certainty for investors, encouraging larger and more sustained investments.
Ultimately, the bill could stimulate economic growth and create jobs in the semiconductor industry and related sectors.
Potential Benefits
- Increased Domestic Semiconductor Production: Encourages companies to build and expand semiconductor manufacturing facilities in the U.S.
- Job Creation: Stimulates employment in the semiconductor industry and related sectors.
- Economic Growth: Attracts investment and boosts economic activity in the manufacturing sector.
- Reduced Reliance on Foreign Suppliers: Enhances national security by decreasing dependence on foreign sources for critical technology.
- Long-Term Investment Certainty: The extended credit period encourages sustained investment in the semiconductor industry.
Potential Disadvantages
- Potential Cost to Taxpayers: Increasing the credit and extending the period could increase government spending and potentially the national debt.
- Risk of Inefficient Allocation of Resources: Subsidies may lead to investment in projects that are not economically viable without government support.
- Complexity of Tax Code: Further amendments to the tax code can increase complexity and create compliance challenges.
- Potential for Corporate Rent-Seeking: Companies may lobby for extensions or expansions of the credit, leading to inefficient resource allocation.
- Unintended Consequences: Subsidies in one sector could distort investment decisions in other sectors of the economy.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the Constitution's broad goals of promoting the general welfare (Preamble) and regulating commerce (Article I, Section 8, Clause 3). Congress has the power to lay and collect taxes, duties, imposts, and excises (Article I, Section 8, Clause 1), and to make all laws which shall be necessary and proper for carrying into execution the foregoing powers (Article I, Section 8, Clause 18).
The use of tax credits to incentivize manufacturing falls within these enumerated powers. However, the specific details of implementation and the potential for unequal application could raise concerns related to equal protection under the law (14th Amendment).
Overall, the bill's alignment with the Constitution is generally sound, contingent on its fair and equitable application.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).