UK Looks To Lower Taxes On Patents; Encouraging More Patents But Less Actual Innovation
from the does-anyone-think-these-things-through? dept
Jamie Love points us to the news that the UK is working to lower taxes on patent income in an effort to encourage greater patenting. Well, they claim it's to encourage more innovation:Darling said in his speech that the UK "has a remarkable record of ideas and innovation. We’ve won more Nobel prizes than any country of our size. We need to do more to support this ingenuity and ensure this creativity is harnessed in this country. I want to encourage research and development in the pharmaceuticals and biotech industries. So, following consultation with business, I will introduce a 10% corporation tax rate on income which stems from patents in the UK."But all such things really do is encourage more patenting, but less actual innovation. That's because the tax rate on actual innovation -- actually bringing these products to market successfully -- remains significantly higher. So, if you do any research at all, you have every incentive in the world to try to just gain income from the patents directly (such as by threatening any company that actually does any innovation and demanding licensing fees) rather than doing the work of actually implementing the product yourself. After all, that's exactly what the government is telling you to do. It's saying that if you actually produce an innovative product, we'll tax you at a very high rate. If all you do is patent it and then squeeze money out of others, we'll tax you at a much lower rate. I don't see how that encourages innovation at all. It seems like it would do the opposite.
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Filed Under: innovation, patents, taxes, uk
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Er?
Okay, the idiocy of granting a corporate-only tax cut in a recession aside, isn't this an extremely ambigious statement? I'm assuming that somewhere there is more properly laid out what constitutes income stemming from patents. I'd be very interested in seeing that language.
On the other hand:
"Jamie Love points us to...Darling said in his speech..."
What, didn't Sexual Chocolate or Seymour Butts have anything to say on the matter?
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Re: Er?
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I kind of agree, in that this is sensible if and only if you ALSO incorporate personal income tax cuts with them and make the corporate cuts dependent upon actual hiring metrics. Blanket corporate tax cuts with no incentive to hire is...well...silly.
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The biggest problem with our economy right now is that there is so much uncertainty regarding future tax increases (and we were already in a pretty hostile business environment) that nobody wants to take a risk or make an investment. Large legacy businesses are standing pat and buying lobbyists, and small businesses aren't even trying. If you take the pressure off small businesses they will invest and grow, which is the exact mechanism by which jobs are created regardless of whether other taxes are included.
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Hmm, as opposed to simply encouraging them to take the money and pocket it as extra profit? My way certainly ain't perfect, but with proper oversight I believe it's the lesser of the two evils....
"The biggest problem with our economy right now is that there is so much uncertainty regarding future tax increases"
God, NO! Future speculation on tax cuts is a problem, but nearly as large a one as the collusion that exists on the international banking circuit. You've got a bunch of no-nationality having bankers lobbying seperate nations for laws that benefit them while then playing those countries against each other in the form of either trade wars or military wars. They then sit on corporate boards because they hold lending interests over them and then use that SAME lobbying power to corrupt governments into benefiting only them.
This is real easy. Take international banking out of the equation, limit the legal power or the corporate board, and you have back your economy....
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The California Government today discovered people with Bachelors Degrees make more money than those without. In an effort to increase incomes they have begun to give out Bachelors Degrees to every California resident who does not have one.
; P
[a wink to Heinlein & illustrating a point about gov.]
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Lower taxes on actual products...
First off, the tax is on "income which stems from patents in the UK". A patent that is doing nothing (the thing you dread the most) makes no income. Thus, the tax rate would be immaterial for them anyway.
Second, it would appear that a 10% tax rate is signficantly lower than the normal corporate tax rate (more than 20%, if I remember correctly in the UK). That would create a very biug benefit financially for any company that actually brings a product to market (your version of innovation). Thus, a lower tax rate on income from patents would mean more of your style of innovation.
Third, by giving the companies a tax break on what is produced as a result of the patents they have, they are encouraging companies to invest in actual innovation (new ideas that are patentable, in other words new), and to move them into commercial use, to do the cycle again.
It would even appear to encourage your "paint color" innovation, as changing the color of something and re-releasing it into the market might quality under the scheme.
Seems to me that lower taxes is a pretty good encouragement.
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Re: Lower taxes on actual products...
- I think you misunderstand (intentionally)
TAM -> "Seems to me that lower taxes is a pretty good encouragement."
- Encouragement for what - A bigger bonus ?
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Re: Lower taxes on actual products...
No, you have misread what is being proposed. You don't get the 10% tax rate on products that are patented, but on *licensing* revenue from licensing the patent.
My point stands.
Second, it would appear that a 10% tax rate is signficantly lower than the normal corporate tax rate (more than 20%, if I remember correctly in the UK). That would create a very biug benefit financially for any company that actually brings a product to market (your version of innovation). Thus, a lower tax rate on income from patents would mean more of your style of innovation.
No, you would get the 20% tax rate on actual products but the 10% on just sitting back and licensing the patent.
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Only Labour win the 2010 General Election
http://www.tax-news.com/asp/story/UK_Patent_Box_Announcement_Welcomed_xxxx40652.html
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Re: Lower taxes on actual products...
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