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Tax Change Aims to Lure Intellectual Property Back to the US (wsj.com) 186

Posted by msmash from the interesting-moves dept.
U.S. companies rich in intellectual property are looking at a new tax-friendly regime: the U.S (Editor's note: the link may be paywalled; alternative source). From a report: A provision in the newly revised U.S. tax code slashes the income tax companies pay on royalties from the overseas use of intellectual property or so-called intangible assets, such as licenses and patents. The new tax break, for what is dubbed foreign-derived intangible income, effectively reduces tax on foreign income from goods and services produced in the U.S. using patents and other intellectual property to 13.125% until the end of 2025, after which the rate rises to 16.4%. Previously, royalties paid to a unit in the U.S. would have been taxed similarly to other U.S. income, for which the top corporate tax rate was 35%. The new headline corporate rate is 21%. The deduction is meant to induce companies with large U.S. operations and significant foreign income from patent royalties to base more of those assets in the U.S. Such companies, especially in technology and pharmaceutical sectors, often hold foreign rights for their IP in a company based in a low-tax country.
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Tax Change Aims to Lure Intellectual Property Back to the US More

Tax Change Aims to Lure Intellectual Property Back to the US

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  • A good first step. (Score:2, Insightful)

    by Anonymous Coward
    Another great example of Trump common sense. Now make inversions illegal and make work requirements for Medicaid mandatory. #MAGA

    • Re: (Score:3, Insightful)

      by Hal_Porter ( 817932 )

      The tax policy stuff isn't really Trump though. It's people like Paul Ryan. Trump is the Steve Jobs of the party - nasty but charismatic. Paul Ryan is more like the Wozniak - geeky but politically not that astute.

      In a odd sort of way the fundamentally corrupt nature of American politics works well for tax reform. If you have a bunch of lobbyists complaining all the time you can gain quite a bit of information from that. So if you know Apple and co have tonnes of money overseas, you can figure out what it wo

    • Re: A good first step. (Score:2, Insightful)

      by Anonymous Coward

      Something is better than nothing. Nothing is what we currently receive when US companies move offshore for tax purposes. It's not a hard concept.

      • Re: (Score:2)

        by rtb61 ( 674572 )

        Make them pay the full amount. Set up treaties with other countries and smarten u, those taxes were cheated from other countries why the fuck should the US get them greed because the US military will kill you otherwise, what are you saying.

        They earn money in the US make them pay taxes in the US. They earn money in other countries, why the fuck should the US get any of those fucking taxes, WTF?

        Ireland wants to steak US social services, killing Americans to run a tax scam, to pay for their social services,

    • Only a fool would think that this was any good.
      Want to bring back jobs to America? Simple
      1) drop ALL deductions, exemptions, and breaks.
      2) now, for any business that is 80% American-made, American-sold, American-service and will pay their gains in America, they pay ZERO corporate tax.
      Start this at 40% and then raise by 5% each year until hitting 80%.
      3) for all others, charge 25% corporate tax. 4) Charge a 20% VAT like most other nations.

      This is how you MAGA. Trump is killing us with his BS, and

  • I can see the CNN headline now (Score:2, Funny)

    by Anonymous Coward

    The Tax Change Introduced by Trump that Aims to Lure Intellectual Property Back to the US Is Actually A Bad Thing. Here's Why.

    • Re: (Score:1, Troll)

      by king neckbeard ( 1801738 )
      It is a bad thing, because it's just another tax break for companies that are already evading taxes, and it won't actually bring anything back into the US.

      • You are so full of shit (Score:2, Insightful)

        by Anonymous Coward

        It is a bad thing, because it's just another tax break for companies that are already evading taxes, and it won't actually bring anything back into the US.

        Apple, Returning Overseas Cash, to Pay $38 Billion Tax Bill [bloomberg.com]

        • So, temporal tax evasion, then.

          • Exactly, and companies will keep playing this game until the loopholes allowing them to stash cash overseas in the first place are closed. They can wait out governments for decades, no problem. Stashing the cash doesn't even really inconvenience them.

        • Re: (Score:3, Insightful)

          by Anonymous Coward

          Whoa, there, tiger. Lets stick to TFA here. We aren't talking about repatriated profits. we are talking about how taxes are calculated when a company licenses IP to a foreign subsidiary. Choosing what international branch licenses IP to what international branch doesn't actually move anything anywhere, its just numbers on paper. So while its true that this change could make those internal deals taxable in the US, that isn't really the point of this new tax loophole.

          The real point is to pay less tax in

      • Re: (Score:3, Insightful)

        by iggymanz ( 596061 )

        false, you made that up.

        The majority of large companies *legally* do things to avoid taxes; now there is reason to do business here.

        • Re: (Score:2, Troll)

          by king neckbeard ( 1801738 )

          They are evading taxes. That they've bought off our politicians to do it legally doesn't change that.

          We don't need to suck off corporations in order to get companies to do business here.

          • Re: (Score:1)

            by Anonymous Coward

            They are evading taxes. That they've bought off our politicians to do it legally doesn't change that.

            We don't need to suck off corporations in order to get companies to do business here.

            Note that this is the same GP poster who posted

            It is a bad thing, because it's just another tax break for companies that are already evading taxes, and it won't actually bring anything back into the US.

            It took about three minutes to post proof he's completely WRONG.

            Note how he's now using phrases such as "suck off corporations". He probably believes he's smart, too.

          • They are evading taxes.

            Wrong my friend.

            Tax evasion is illegal and they are prosecuted for that.

            Tax avoidance is perfectly legal, in that it is perfectly legal to use ANY LEGAL method as put for the by the tax code, to save/deduct or otherwise pay as little in taxes as possible.

            Are you saying you willingly forego any and all tax deductions that are available to you, and willingly pay more in taxes that you really legally have to?

            If not...why should any other individual or company have to pay a single $

          • >We don't need to suck off corporations in order to get companies to do business here.

            So what you would do to encourage companies to do business here? Assume you left the corporate tax rate at 35% - what else would you do to encourage businesses to come back to the US?

            • Invest in infrastructure, education, a less ass-backwards healthcare system. Maybe look into a UBI, so more people have the ability to start their own businesses.

              The "race to the bottom" niche is already saturated, and automation will eventually eat dirt cheap labor anyway.

              • Didn't we try that for the last 8 years, and we ended up with 3% growth (well below historic averages) as a result?

                • Not to a real extent. By "not ass-backwards" I mean single-payer, not Nixoncare. Also, regarding growth (a pretty stupid metric in the first place), there was that whole "global economy crashing" thing. Plus, we expanded the stupid wars that we should have gotten out of.

                  In other countries, Obama would be considered center-right to right. I'm talking about actually being on the left.

                  • So then, perhaps you can explain how companies are now repatriating massive amounts of capital, and then re-investing in new buildings, factories, and employees here in the US? All happening after our corporate tax rates were cut down to a point to be competitive with the EU and OECD (you do know that our statutory, effective, and average corporate tax rates were at or very near the top, didn't you?). Why did business wait until then to explode in the US. Why is growth a bad thing?

                    • I didn't say growth was a bad thing, I said it was a poor metric. A lower GINI coefficient, or wage increases that roughly match productivity increases are better indicators of overall economic health, although even those really need broader context, but context doesn't make for good memes.

                      As for the "why now," there are two main factors.
                      1) They were planning on doing these things at roughly the same levels at roughly the same timeframe, and announced it as a way of encouraging more handouts.
                      2) The re

                    • We are talking corporate taxes, and for those we're right at or very near the top [taxfoundation.org]. Well ahead of most of Europe in terms of statutory, average, and effective corporate tax rates. Why do companies do things like relocate to Ireland, the Netherlands, and other places in the EU? Because it was cheaper than the US.
                    • Corporate tax rates for the US [taxfoundation.org] were near the highest in the world. Not just statutory, but effective tax rates. Companies are now bringing back cash and operations because it's financially viable now. Or should corporations just pay and pay and pay? You take every deduction you can - why shouldn't someone else?

                    • You take every deduction you can - why shouldn't someone else?

                      I take a standard deduction, actually.

                    • The numbers I used come from the CBO and are based on actual US Tax returns. The typical company in the US actually does pay a higher income tax rate than most of the other members of the OECD.
                    • On a corporate tax rate basis - what we're discussing here - the US was heavily taxed. Fourth place in the OECD for effective tax rate, third place for average tax rate. When a business is looking to keep its profits (or, actually, not act as a tax collector for the local Government as taxes are passed through to customers) the effective tax rate is quite important. And it's why countries like Ireland and others set a low tax rate, or allow things like "double Dutch" and other plans to lower tax rates.
                    • You do realize you can have a higher tax - EFFECTIVE, meaning what is actually paid - tax rate, even though the share of GDP is lower. Your own link shows this to be the case. Do you have data otherwise?
                    • Your own link confirms my claim that we had an incredibly high marginal, average, and effective tax rate. Thank you for proving my point - and proving you're just a troll...

          • Your childish point of view makes no sense, no corporation is going to pay taxes it doesn't have to. It is not evasion when they legally don't have to pay, quit making up definitions for words outside the dictionary.

            • It's a legal distinction without a practical difference. Lobbying is legalized bribery. Enhanced interrogation is legalized torture. Tax avoidance is legalized tax evasion. All should be referred to as their criminal form instead of the euphemism, because euphemisms get in the way of actually addressing problems. I'm calling a spade a spade, and not mincing words just because of legal loopholes. Do I need to pull up a George Carlin routine to explain to you how euphemisms are used to conceal abuse?

              • We have rule of law and your mere opinions on legal things being a "euphemism" are irrelevant. If you get your viewpoints from a stand up comedian don't expect to be taken seriously.

                • I'd be far more concerned about someone who can't evaluate systems outside of the current rule of law. Many of the worst atrocities in human history were legal under rule of law.

                  • as I recall our system helped to put down those systems

                    • Our system helped put down the Nazis, but the Russians did most of the work. Even during that time, though, we put the Japanese in interment camps, which is still on the side of very awful things.
                      Our system included slavery, and de facto segregation was upheld as law for decades afterwards.
                      Our system still includes Gitmo.

                      If you buy into not being concerned with law because we are the "good guys," which appears to roughly approximate your position, then you're even worse than someone who merely supports

                    • Yes the Russians did the most work. Our system found the internment of our Japanese citizens to be wrong and compensation and apologies were made. Our system found slavery and racism to be wrong. See, our system is self-improving, we're not the good guys but the guys with a system that can fix itself.

                      Gitmo is for enemy combatants and terrorists, your *opinion* of it is may not be held be all.

                    • See, our system is self-improving, we're not the good guys but the guys with a system that can fix itself.

                      Self-repair requires criticism. If there is no criticism, there is no self-repair, which is why fixing things often takes so long.

                      Gitmo is for enemy combatants and terrorists, your *opinion* of it is may not be held be all.

                      Gitmo is full of people we asked other governments to round up. We asked for terrorists, but they just gave us people they didn't like, which doesn't correlate all that strongly t

                    • At least 30% of the people released went back to terrorism, I'd call that strong correlation with gitmo actually housing dirtbags. And there might be good reason those detainees weren't liked by other governments, perhaps they were violent terrorists and their supporters.

                      Defend it? I'd just say it's a good place to keep lowlife.

                    • At least 30% of the people released went back to terrorism, I'd call that strong correlation with gitmo actually housing dirtbags.

                      You'd probably become a terrorist too if you were anally raped and tortured. Also, the principles of justice are not based on "correlation," and certainly not a correlation where 70% are innocent. I'm done. You're too damn stupid to talk with, and I have a lot of patience.

      • Re:I can see the CNN headline now (Score:5, Insightful)

        by zifn4b ( 1040588 ) on Wednesday January 24, 2018 @02:04PM (#55994537)

        It is a bad thing, because it's just another tax break for companies that are already evading taxes

        Ok let's try your logic out here. By using Turbo Tax to comprehensively evaluate the tax code to get you the biggest tax refund aren't you also evading taxes by your definition? Corporations are basically using a more sophisticated version of "Turbo Tax" to lower their effective tax rate. Isn't that what you and everyone else is doing too? So much in fact that Turbo Tax, Tax Act, etc. all created profitable software businesses around it...

        • TurboTax mostly exists because our Intuit and similar companies fought against having it be simple to file your personal taxes [propublica.org]. There is a corollary here, in that the tax system for corporations is similarly the result of bribery.

          • Re: (Score:2)

            by zifn4b ( 1040588 )

            There is a corollary here, in that the tax system for corporations is similarly the result of bribery.

            Define "tax system for corporations". Let me introduce you to logical syllogism that you seem to be unaware of. First of all, you have two conceptual ideas. You assert there exists a "tax system for corporations" and you assert that corporations used bribery in some manner to influence the nature of this so-called "tax system for corporations". In order to take your claim seriously which sounds like it was all invented in your mind and probably sounded good before you posted it to slashdot, you must do

            • 1) Define "tax system for corporations". What is it? Where is it defined? How can I read up on it? Can you provide any citations for it?

              Primarily, I'm talking about the US tax code [cornell.edu], as it pertains to corporations, basically just excluding Subtitle A, Chapter 1, Subchapter A [cornell.edu], although state codes are also relevant, along with the tax codes of other nations, when considering loopholes such as the "double Irish."

              2) Define "corporate bribery" as it relates to somehow influencing this so-called "tax system for

          • Comment removed based on user account deletion
            • Intuit specifically fought it at the state level. You are correct about the reason for the complexity for our whole tax code (although I'd argue that congress isn't the direct engineer, just the paid lackey of other powerful interests), but I'm talking about simple filing for the masses. TurboTax might still exist, but no individuals would use it, and pretty much everyone would have saved money.

        • Re: (Score:2)

          by Pascoea ( 968200 )

          Huh, I just checked Turbo Tax. I didn't see the "open a shell company in Northern Ireland via another shell company based in Delaware, and transfer all my assets to Northern Ireland to avoid taxes" checkbox. But maybe I just didn't look hard enough.

          I've also tried to "comprehensively evaluate the tax code" (via turbo tax) to get my net taxes to a percentage rivaling some corporations, but I came to the conclusion that I'd have to donate 75% of my gross salary to a charity in order to do so.

        • working for me to make changes to tax codes _globally_ to allow me to hide my money from the government. Even if I wanted to since all of my money comes from wages earned (as opposed to 'passive' income, e.g. money obtained just by owning shit) it's damn hard to hide that.

          You couldn't have come up with a better false dichotomy if you tried.
    • They do realize that a lot of that so called intellectual property doesn't really exist? That it was largely made up to create tax dodges in the first place? Billions for use of the name Starbucks, insane fees paid by Google Inc for the use of patents held by Google Ltd or Google BV. That sort of thing.

      This change is good for the US in the sense that it may bring back some taxes now collected by other tax havens. But it's bad (or rather: shortshighted) in the sense that it allows these tax dodges to

      • Setting up your own tax heaven costs about $5000 in founding and them about $2000 per year to finance it.
        It is not just for big business. Every free lancer or self employed can do it.

  • so now more IP / patent trolls in the usa! (Score:4, Insightful)

    by Joe_Dragon ( 2206452 ) on Wednesday January 24, 2018 @01:27PM (#55994197)

    so now more IP / patent trolls in the usa!

  • Comment removed based on user account deletion

  • Oh noes! More tax cut "fail"!!! (Score:1, Interesting)

    by Anonymous Coward

    Tax cuts never work! They never result in higher wages!

    Starbucks to boost worker pay and benefits after US lowers corporate taxes [cnbc.com]

    Disney giving 125,000 employees $1,000 cash bonuses [cnbc.com]

    JP Morgan Chase to build 400 new branches, raise wages because of the tax cut [cnbc.com]

    Verizon Using Some Tax Savings to Give Each Employee 50 Shares [bloomberg.com]

    What does it take for "progressives" to examine their economic beliefs?

    As if 8 years of failed "recovery" under Obama wasn't enough. The ONLY President in US history to never see 3% growth in

    • The ONLY President in US history to never see 3% growth in the US economy in any year of his term..

      If you're pulling out simplistic numbers, then clearly the answer is raising taxes. [utexas.edu]

      • Re: (Score:2)

        by Anonymous Coward

        The ONLY President in US history to never see 3% growth in the US economy in any year of his term..

        If you're pulling out simplistic numbers, then clearly the answer is raising taxes. [utexas.edu]

        What's "pulled out" about the fact that the US never saw 3% annual growth under Obama - the only President that never had that? Even Jimmy Fucking Carter managed to get over that bar - it's not that hard.

        Obama spent his entire Presidency talking about "remaking the US economy" - meaning along "progressive"/redistributionist lines. He waged a "war on coal" and threw every effort he could to stop fracking. He lived in a pie-in-the-sky world powered by solar, wind, and unicorn farts. It's no surprise emplo

        • Which would be a lot more relevant if he was actually a progressive/redistributionist in anything other than campaign rhetoric. His crowning achievement was passing Nixon's healthcare plan.

        • The evonomic effects of changes in laws are usually (that means the US) seen about ten years later.
          E.g. Clintons laws taking effect during the Bushs ruling, and the Bushs laws taking effect during Obamas ruling.
          Get a clue man, it ain't that hard.

    • Yes, yes, relish your little prize, worker bee, and keep on voting for those massive tax breaks for the 1%, maybe you'll get another!

      This is all by design. The bonuses and time-limited tax breaks for the middle and lower classes, designed to keep your taxes from going up while Trump still needs your votes, are a one-time thing, but the wealth transfer to the rich is forever.

      • Re: (Score:1)

        by bwd777 ( 696769 )
        Letting people keep more of their own money is not a transfer.

        • Well the wealth will be moving from the middle and lower classes when those temporary breaks run out, to the rich where it has already begun flowing. Looks like a transfer to me. Your argument is a transparent word game intended to support arbitrary ratcheting-down of taxes.

  • Why can't we just have it simple. You get taxed where you make the money... period. This includes intellectual property. Time to set right the tax laws and base everything on the location of the consumer.

    Every country can decide what their tax rules will be. For instance I am partial to one tax rate for income and another for taking money out of a country.

    • Why can't we just have it simple. You get taxed where you make the money... period. This includes intellectual property. Time to set right the tax laws and base everything on the location of the consumer.

      Every country can decide what their tax rules will be. For instance I am partial to one tax rate for income and another for taking money out of a country.

      That is exactly what 99% of all countries do. Even down to the personal level. You pay taxes where you earn your income, end of story. The US, however, wants a share of ALL your worldwide income, regardless of where you made it - or even if you are in the US at all. So you get the proliferation of overseas subsidiaries as legally separate entities as a maneuver to avoid double-taxation (yes, the US gives you credit for overseas taxes paid, but only up to a point - and then you get to pay overseas AND US

    • Re: (Score:2)

      by k6mfw ( 1182893 )
      One example is a building contractor makes ***lots*** of money. He or she also has ***lots*** of expenses (tools, people, materials) so deductions are allowed. Of course the whole tax thing becomes political as elected officials make laws so they and their friends don't pay taxes but yet get benefits of govt spending. i.e. area of town where mayor, governor, congressman lives has the best roads and infrastructure. Others also game the system. Many self employed that have a nice standard of living (exclusive
      • For two reasons. First, they're regressive. e.g. they punish the poor and reward the wealthy. I've heard various schemes to 'fix' this that always end with a system just as complex and full of holes as progressive taxation.

        But second, progressive taxes, when properly applied, serve as a check on out of control wealth inequality. Remember, past a certain point money is power, not wealth. That point is around where you can no longer spend it on any conceivable luxury. Where the only thing left to spend yo

        • Re: (Score:2)

          by k6mfw ( 1182893 )
          Excellent summary, I'm saving this. I also saved your "There is No Left" essay that I post in forums that bitch about "radical leftists" like Clinton.
  • Is there anything is can do? No, that's not a typo.

  • Let's be clear (Score:3)

    by zifn4b ( 1040588 ) on Wednesday January 24, 2018 @02:00PM (#55994493)
    Intellectual property aka the knowledge about how to build something that you may or may not have a patent on is not technically transferable. What is transferable are the patents, copyrights, trademarks and any other rights to use the intellectual property. This article is really mincing words. No matter how you spin it, we are talking about repatriating money (assets of monetary value is you prefer) that is held abroad in foreign countries. We've been talking about it for years now. Whether it has something to do with intellectual property, subscriptions, licenses, patents, etc. is of no real interest. That's just partitioning the pile of money into categories. I don't care about that. What I care about are large sums of money sitting in a foreign country and there being no compelling reason for the holder of said funds to repatriate it to the United States to be used for the benefit of our country. We all know the primary reason that money isn't more frequently repatriated and that's because of prohibitive taxes on the money when it is transferred. No matter what your principles are or how much of a bunch greedy sacks of crap the 86% that holds 1% of the wealth is, lowering corporate taxes and tax holidays DO IN FACT make it more worth their consideration to repatriate the taxes. But we already know this and it's already be discussed ad nauseum on slashdot, why are we talking about it AGAIN?

    • This is amnesty and one thing we have learnt is that Amnesty never solves a problem. It just encourages more people to do the same in the hope of the next Amnesty. Whether that is tax evasion by hiding profits in foreign subsidiaries or illegal immigration- an amnesty does not solve the issue.

    • When CEOs were polled on what they're going to do with those tax cuts they had to answer honestly, since their words could impact investor's. All but a few said the same thing: Mergers & Acquisitions. And what always follows Mergers & Acquisitions? Layoffs. Lots of layoffs as redundant staff is fired and/or outsourced (gotta make back the cost of the acquisition somehow, and got to do it _immediately_ or else the shareholders get mad).

      These tax cuts are going to hurt. Aside from the fact that Pa

  • Intellectual monopoly is an affront to human dignity and a millstone around the neck of the economy. It must be abolished.

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