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Daily Archives: December 20, 2015

An Easy Checkoff for Global Competitiveness: The Case for a U.S. Innovation Box

An Easy Checkoff for Global Competitiveness: The Case for a U.S. Innovation BoxRobert D. Atkinson – November 30, 2015.  “Taxing corporate revenues from innovation-based activities less will not only boost U.S. global competitiveness it will help bring back IP-based corporate profits now overseas. “Within the last decade a growing number of countries have adopted some form of “patent box” or “innovation box” into their tax codes. So named because they can take the form of a check box on a corporate tax form, these policy innovations generally give companies a significantly lower tax rate on profits generated through patents, research, innovation, or other creative activity.  Because the United States competes with these countries in a global market where capital and labor are increasingly mobile, it is important that lawmakers add an innovation box to U.S. corporate tax law. Otherwise, the United States will continue to lose global economic competitiveness, especially in innovation-based industries, and the jobs and economic activities that go with that.  And with the implementation of the OECD base erosion and profit shifting (BEPS) package, other nations will likely insist on transfer of tangible economic activity from the United States in order to take advantage of their lower rates.  The drafters of an innovation box have to address a number of design issues:

  • The type of revenues or profits that qualify for the lower rate.
  • The precise level of the lower income tax rate. This can be set either by creating a new statutory rate for these profits or by allowing companies to deduct a portion of their innovation box profits from their taxable income, thereby exposing a portion of total profits to the normal statutory rate.
  • The events that trigger the lower rate. This can range from obtaining a patent to conducting research and development.

As the Information Technology and Innovation Foundation has pointed out, countries have answered these questions in different ways. For example, at the beginning of 2015, 11 member states of the European Union (EU), as well as Liechtenstein and the Swiss Canton of Nidwalden, used an innovation box system. Tax rates for eligible income in these countries vary between 0 percent (Malta) and 15 percent (France). This report provides an overview of patent or innovation box provisions in select OECD countries. It then summarizes the leading proposals under consideration in the U.S. Congress, explains why, contrary to both liberal and conservative critiques, an innovation box would greatly benefit the United States.”

IMF releases e-library of global economic data

“The IMF has released results of the Coordinated Direct Investment Survey (CDIS) on December 9, 2015, the worldwide survey of bilateral direct investment positions, with 100 economies reporting 2014 data, compared to 90 economies last year. 66 percent of the total inward direct investment position is concentrated in 10 economies.” IMF eLibrary Data Continue Reading

Kaiser – Medicare Penalizes 758 Hospitals For Safety Incidents

Kaiser Health News – “The federal government is penalizing 758 hospitals with higher rates of patient safety incidents, and more than half of those places had also been fined last year, Medicare records released late Wednesday show. Among the hospitals getting punished for the first time are some well-known institutions, including Stanford Health Care in… Continue Reading

Electricity Markets: Designing Auctions Where Suppliers Have Uncertain Costs

Holmberg, Par and Wolak, Frank, Electricity Markets: Designing Auctions Where Suppliers Have Uncertain Costs (December 17, 2015). IFN Working Paper No. 1099. Available for download at SSRN: “We analyse how the market design influences the bidding behaviour in multi-unit auctions, such as wholesale electricity markets. It is shown that competition improves for increased market… Continue Reading

New on LLRX – Solitary Confinement: Out of Sight, Out of Mind

Via – Solitary Confinement: Out of Sight, Out of Mind – Ken Strutin’s article surveys notable legal developments, new scholarship, and recent scientific research concerning the administration and effects of solitary confinement. Strutin describes solitary confinement as punishment’s punishment. He states that solitary is where the mind is worn out by pacing the same… Continue Reading

Office of Financial Research Publishes Financial Stability Report

“The Office of Financial Research (OFR) unveiled its first annual Financial Stability Report today, saying threats to the stability of the U.S. financial system have edged higher over the past year… In the Financial Stability Report, the OFR assessed vulnerabilities and resilience in the financial system, highlighting these areas of concern: Credit risks are elevated… Continue Reading

U.S. National Terrorist Financing Risk Assessment 2015

Department of the Treasury – U.S. National Terrorist Financing Risk Assessment 2015, December 15, 2015. “After the September 11, 2001 terrorist attacks, the United States adopted a preventive approach to combating all forms of terrorist activity. Efforts to combat the financing of terrorism (CFT) are a central pillar of this approach. Cutting off financial support… Continue Reading