Lawmakers Embrace Patent Tax Breaks: U.S. considering ‘patent box’ approach similar to U.K. in piecemeal approach to reform. John D. McKinnon. May 5, 2015.
Leading congressional tax writers in both parties are getting behind a major new tax break for corporate innovation as part of their continuing quest to identify ways to make the U.S. business-friendlier.
In its basic form, a patent box imposes a special and ultralow tax rate on business income that is derived from intellectual property. The U.K.’s recently-adopted patent box, for example, has a 10% rate for patent-related profits, roughly half the country’s overall corporate rate.
Techdirt on the UK version in 2012. I’ve not noticed coverage of the recent US push from digital rights venues.
This reform is almost perfectly counter to WIFO’s theory of change: increasing the profits of and thus constituency for freedom infringing industries, abetting a bad future.
Although special tax treatment is a losing game overall, this post would be incomplete if it did not point out the possibility of using tax policy to favor commons-based production. A New York State Senate bill would do this in a very minor way.
Naked Capitalism has a 2014 critique as a vehicle for tax gamesmanship; their embedded evaluation of IP is of interest here:
While the social and economic utility narrative is weaker for some forms of intellectual property (trademarks, for example, or copyright), it is stronger in the case of patents, which are associated – at least in the minds of policy-makers and the public – with technology-driven economic growth and advancements in medical science.
For those worried about tax competition, weak states, and resulting increased inequality, the end game seems obvious: abolish IP, tax land. The sustainable way toward the former is through commons-based production and commons-favoring policy. The latter is for other sites.