Washington, January 26 — The TIE Coalition, a diverse group of U.S. companies and trade associations, released a report warning that some tax reform proposals threaten job growth, and if enacted, would result in less innovation at a time when the U.S. can least afford it.
The report, Why Tax Reform Should Support Intangible Property in the U.S. Economy, written by Matthew Slaughter, the incoming dean of the Tuck School of Business at Dartmouth College, highlights how intangible property has long played a central role in boosting U.S. growth, jobs and incomes. Discovering and developing ideas with value boosts output in existing companies and industries while also creating entire new industries.
“Maintaining IP’s many contributions to the U.S. economy will require smarter public policy now and in the future, however, given the breadth of indicators that American’s innovation strength is waning,” Slaughter wrote. “In particular, policymakers must understand the value of a tax system that does not discriminate against the IP performed by American companies.”
Increased focus on innovation has led to more new jobs and higher standards of living for American workers.
- Intellectual Property (IP)-intensive industries directly result in 27.1 million jobs, reflective of 18.8 percent of all U.S. jobs.
- IP-intensive industries support an additional 12.9 million jobs indirectly through their supply chains, bringing the total jobs supported by IP to 40 million, or 27.7 percent of the national total.
- IP-intensive industries contributed to 34.8 percent of all U.S. output – nearly $5.1 trillion.
Additionally, the jobs created come with higher paying salaries. In fact, parent companies of U.S.-headquartered global companies pay an average salary of $76,538, which is more than 25 percent higher than the rest of the private sector.
The report specifically examines the tax reform proposal of former House Committee on Ways and Means Chairman Camp (the Tax Reform Act of 2014) and finds if enacted, the proposal would discourage U.S.-headquartered multinational companies from investing in IP. According to the results of the report, such a proposal would perversely encourage these companies to invest in non-IP assets with many of those investments outside the U.S. at a time when the country can least afford it.
“Intangible property is the key to economic growth and innovation in the U.S.,” said Mark Nebergall a TIE Coalition member and president of the Software Finance and Tax Executives Council. “As tax reform progresses, we need to ensure proper support for intangible property as a way to producing large number of and high paying jobs in the U.S.”
About the TIE Coalition:
The Tax Innovation Equity Coalition is a diverse group of U.S. companies and trade associations that support comprehensive tax reform that modernizes the U.S. tax system to allow American businesses to compete in global markets in a manner that does not discriminate against any particular industry or type of income – including income from intangible property. To protect these vital economic drivers, we need to make sure the U.S. tax code treats all kinds of income equally and does not disadvantage revenue from intangible property. The TIE Coalition encourages Congress to: implement a competitive territorial tax system which does not double-tax income earned by U.S. multinational corporations overseas and lower the U.S. corporate tax rate so it is competitive with those of other developed nations. For more information, visit www.tiecoalition.com.
For further information:
Bill McQuillen at email@example.com
Gina des Cognets at Gina.C.des.Cognets@tuck.dartmouth.edu