HR-9921-119
Referred to the House Committee on Ways and Means.
Sponsored by Nathaniel Moran (R-TX)
What it does
This bill would create a new federal investment tax credit equal to 25% (or 35% in designated economically distressed "opportunity zone" areas) of qualifying investment in facilities that build, repair, or supply components/equipment for commercial or military vessels. It allows the credit to be claimed as a direct cash payment or transferred/sold to other taxpayers, similar to mechanisms used for clean energy credits, and the credit would expire for property placed in service after December 31, 2033.
Who benefits
Shipbuilding companies, shipyard owners and operators, component and equipment manufacturers serving the maritime and naval sectors, and investors/developers in qualifying opportunity zones who would receive the higher 35% rate. Shipyard workers and surrounding local economies could see indirect gains from increased construction activity, and the Navy and commercial shipping industry could benefit from expanded domestic production capacity.
Who is hurt
Federal taxpayers generally bear the cost through reduced revenue collection over the credit's roughly eight-year life. Industries and facility types not covered by the credit (e.g., non-maritime manufacturing) face a relative competitive disadvantage in attracting capital investment. Foreign shipyards and shipbuilders competing for the same commercial contracts could see reduced competitiveness of their bids against U.S.-subsidized facilities.
Supporters argue
Supporters argue the U.S. shipbuilding industry has declined sharply relative to countries like China and South Korea, threatening both national security and commercial maritime capacity, and that a targeted 25-35% investment credit would attract capital needed to modernize aging shipyards. They contend the elective-payment and transfer provisions, modeled on similar clean energy credit mechanisms, would make the credit accessible even to companies without large tax liabilities, maximizing its effect on new shipyard construction.
Opponents argue
Opponents argue the credit is a narrow subsidy for a specific industry that shifts tax burden or foregone revenue onto the general taxpayer base without guaranteed results, since eligibility for elective payment could allow companies with little federal tax liability to receive direct cash payments from the Treasury. They contend that similar sector-specific tax credits have had mixed track records in reversing industrial decline, and that the eight-year sunset makes long-term investment planning uncertain while still costing significant federal revenue.
Constitutional context
As a bill amending the Internal Revenue Code, this measure falls under Congress's Taxing and Spending power (Art. I, §8, cl. 1) and, having originated in the House, satisfies the Origination Clause (Art. I, §7, cl. 1). It raises no unresolved constitutional question comparable to the realization issue in Moore v. United States (2024), since it creates a credit rather than a new tax base.
Checks and balances
Congress defines and enacts the credit, while the Treasury Secretary is granted authority to issue implementing regulations and determine which components are "critical" to vessel operation, with courts available to review agency interpretations under ordinary administrative law standards.
Historical precedent
This credit closely mirrors the structure of the Advanced Manufacturing Investment Credit (Section 48D) for semiconductor facilities enacted in the CHIPS Act of 2022, including its elective-payment and transfer mechanisms.