To Do: Allow U.S. Companies to Pay a Lower Corporate Tax Rate on Innovation-Based Income
Recommendation
Similar to countries with so-called “patent-box” regimes, Congress should allow U.S. companies to pay a lower corporate tax rate on income generated from innovation-based products.
Details
“Patent boxes” are among the most interesting developments in the race for global competitiveness. So named because they appear as check boxes on tax forms, they allow corporate income from the sale of patented products to be taxed at lower rates than other income. If designed to link the incentive to conducting R&D or producing innovation-based products domestically, this tax reduction would go even further in spurring innovation-based U.S. job creation. By lowering the effective corporate tax rate for knowledge-based firms located in the United States, an “innovation box” also would make it easier for them to take on competitors in other nations that provide robust innovation incentives.
Keep reading:
▪ Robert D. Atkinson and Scott M. Andes, “Patent Boxes: Innovation in Tax Policy and Tax Policy for Innovation” (ITIF, October 2011), https://itif.org/publications/2011/10/04/patent-boxes-innovation-tax-policy-and-tax-policy-innovation.
