What is the Tax Innovation Equality Coalition?
The Tax Innovation Equality Coalition is comprised of U.S. trade associations and global companies that drive economic growth through the development of the innovative technologies and processes of the 21st Century. For America to remain a global leader, we must ensure that the U.S. tax code does not discriminate against any particular industry or type of income – including income from intangible property.
What is intangible property?
Intangible property is made up of ideas that create new products or processes that help improve our lives. Also known as knowledge-based capital, intangible property covers a variety of assets that can’t be seen or touched, but have inherent value. These include ideas, copyrights and patents, manufacturing processes and more. Some of the most important inventions of the last century have come from intangibles including biologic medicines that treat serious diseases, software and devices that have transformed how we work, communicate, and play and hi-tech manufacturing processes to develop high-quality products, among others.
What is the economic impact of intangible property in the U.S.?
As of 2010, intangible property-intensive industries in America, those that created a high number of copyrights, patents and trademarks, employed about 27.1 million Americans – accounting for 18.8 percent of U.S. jobs – and supported another 12.9 million U.S. jobs through their supply chains. They also represented 34.8 percent of U.S. gross domestic product (GDP). The average compensation in these industries was 42 percent higher than in the rest of the private sector, an income premium that nearly doubled from just 22 percent in 1990.
These IP-intensive industries represent all types of businesses – from pharmaceutical and biologic medicines, software and other high tech industries to chemicals and textiles. Intangibles can truly be found across all sectors of our economy. Learn more
What regulatory and legislative bodies oversee U.S. tax policy?
In Congress, the House Ways and Means Committee and Senate Finance Committee are responsible for writing tax legislation. The Joint Committee on Taxation, an independent nonpartisan committee, assists the Congressional tax-writing committees and Members of Congress with the development and analysis of legislative proposals and prepares official revenue estimates of all tax legislation considered by the Congress.
The U.S. Treasury is the executive agency responsible for formulating and recommending economic, financial, tax and fiscal policies.
The Internal Revenue Service (IRS) is the regulatory body responsible for collecting taxes and enforcing of the Internal Revenue Code.
How are intangibles taxed under the current U.S. system?
The U.S. currently operates a worldwide tax system, where active foreign income is taxed in the nation where it is earned, and then taxed again when it is brought back, or repatriated, to the United States.
How could taxing intangible income differently than tangible income hurt the U.S. economy?
American companies are global leaders when it comes to creating powerful ideas that create good jobs. While the ideas themselves may be intangible, they have an enormous impact on America’s ability to remain a global business leader. By treating intangible income differently, the U.S. tax code would create an unfair advantage for companies who don’t derive their income from intangible property. Not only would this put the industries that help power our economy at a competitive disadvantage, but it would also affect America’s ability to remain a global economic leader.