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May 4, 2009

Feeling Taxed

The same companies that crusade to evade paying any "patent tax" to inventors are now crusading to evade corporate income tax. On Monday, President Obama outlined proposals for cracking down on overseas tax havens, and eliminating tax breaks for U.S. corporations that do business overseas. Computer tech companies soiled their diapers in protest. "This is a $60 billion hit on American employers that their foreign competitors won't feel," wailed the Silicon Valley Leadership Group, representing such esteemed companies as HP, Cisco, and Oracle. Duh.

Foreign companies pay U.S. taxes on business done in this country. Reciprocally, U.S. multinationals pay local taxes. Under current law, U.S. taxes are deferred until foreign-earned money is repatriated. This incentive fosters offshore tax havens while limiting capital inflow back to the U.S. President Obama seeks to rescind what he calls "corporate loopholes."

Obama, upon noting that U.S. multinationals paid $16 billion in taxes on $700 billion of foreign earnings in 2004:

The way we make our businesses competitive is not to reward American companies operating overseas with a roughly 2 percent tax rate on foreign profits, a rate that costs taxpayers tens of billions of dollars a year.

One of Obama's proposals is to extend the current tax credit for companies that perform research in the U.S., another corporate loophole set to expire this year. Individual inventors get no such tax credit for inventive research.

Posted by Patent Hawk at May 4, 2009 9:14 PM | Patents In Business

Comments

"a rate that costs taxpayers tens of billions of dollars a year."

Now how does that logic work again? Are you using mirrors again, Barack? I thought I was being taxed by our government (that will spend $1,800 billion more than it will take in this year).

As to the tax shelters that our non-representing representatives have put on the books, let's not vilify the villainous CPF companies for using these just yet.

Learned Hand:

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands: Taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."

Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935).

Posted by: niRPa at May 4, 2009 10:07 PM

niPRa,

Thanks for the comment.

Over the past 40+ years, the tax burden has shifted dramatically from corporations to individuals. In 1960, corporate taxes accounted for about one-third of the tax base. Today it's less then one-fifth.

Posted by: Patent Hawk at May 4, 2009 10:29 PM

"Over the past 40+ years, the tax burden has shifted dramatically from corporations to individuals. In 1960, corporate taxes accounted for about one-third of the tax base. Today it's less then one-fifth."

Yes, but we need to look at the benefits of gov recieved by the people and the corps respectively. Although, even if we do we might not see a different picture.

In any event, I'm on your side on this one, sort of. I'm for less spending in the first place, and then less taxes. Our gov. is too big, O needs to sort that sht out n start ending gov. programs/depts. Even a bit out of the military wouldn't kill us.

btw, Ron Paul btches.

Posted by: 6000 at May 4, 2009 11:34 PM

6000,

You have an amazing habit of changing the topic each time it's heading in a direction not to your liking (or to your sponsor's liking?).

The topic was members of the Coalition for "Fairness" who don't pay their fair share of taxes on profits that they make overseas.

Posted by: step back at May 5, 2009 1:50 AM

Very interesting article Hawk. This type of proposal may hit small entities that are used to protect personal assets.

One question: did the Obama adminstration ask you for your opinion? Apparently, despite copious boot licking, the Obama administration did not ask Dennis Crouch for his opinion on the new Director.

Posted by: Just sayin' at May 5, 2009 2:02 AM

just sayin' is just funny, boot licking and all. And I didn't even ask for his opinion.

Let's indulge 6 for a moment, who boldly proclaims "Our gov. is too big, O needs to sort that sht out n start ending gov. programs/depts."

Let's start with that recalcitrant examiner department over at the patent office who refuse to live up to the government assembly line needs and continue to embarrass the top honchos by letting the backlog grow so large, even in the free-fall reject-reject-reject mode. Let's trim the staff down to 20%, put in "non-substantive", applicant-supplied search and analysis requirements (to the existing MPEP standards) and even have the applicants pay for the work. The remaining 20% can connect the dots, the federal government gets smaller, incoming funds increase and the head honchos get to proclaim victory. This solves sooo many of the Office's problems. That pesky patent bar may make some noise, but will quiet down when they see that getting their clients to do more work means another revenue stream. Hmmm, how can we get big tech to buy in?

Posted by: Noise above Law at May 5, 2009 2:36 AM

"(or to your sponsor's liking?)."

Hey man, if you want to sponsor me I'm totally down with that, but I don't have any yet :(

"You have an amazing habit of changing the topic each time it's heading in a direction not to your liking "

I'm the man at that, it's true. I do it at work to. And in life in general. Misdirection ftw.

Posted by: 6000 at May 5, 2009 8:22 AM

Thanks Noise, yes I am disappointed to say that the Obama administration did not ask for my opinion on who the new Director should be. Then again, I did not lick his boots, or even vote for him.

Posted by: Just sayin' at May 5, 2009 5:48 PM

Its interesting to note that Mooney made a reference to Patent Hawk. Of course, it was a snarky little piece about how the folks over here are invested in his imagined "patent bubble." Not sure when he will wake up and realize that, aside from the business method fiasco, there has never really been a patent bubble.

And if you imagine that it might be Dennis behind the Mooney character, it is truly sad.

Posted by: Just sayin' at May 5, 2009 5:53 PM