Abstract

http://ssrn.com/abstract=2446259
 


 



Intellectual Property Law Solutions to Tax Avoidance


Andrew Blair-Stanek


University of Maryland Francis King Carey School of Law

June 4, 2014

UCLA Law Review, Forthcoming

Abstract:     
Multinational corporations use intellectual property (IP) to avoid taxes on a massive scale, by transferring their IP offshore for artificially low prices. Economists estimate that this abuse costs the U.S. Treasury as much as $90 billion each year. Yet tax policymakers and scholars have been unable to devise feasible tax-law solutions to this problem.

This Article introduces an entirely new solution: change IP law rather than tax law. Multinationals’ tax-avoidance strategies rely on undervaluing their IP. This Article proposes extending existing IP law so that these low valuations make it harder for multinationals subsequently to litigate or to license the IP. For example, transferring a patent for a low price to a tax-haven subsidiary should make it harder for the multinational to demonstrate the patent’s validity, a competitor’s infringement, or entitlement to any injunctions. The low transfer price should also weigh toward lower patent damages and potentially even a finding of patent misuse. Extending IP law in such ways would deter multinationals from using IP to avoid taxes. Both case law and IP’s theoretical justifications support this approach, which also has the counterintuitive benefit of encouraging the flourishing of creative professionals such as inventors and authors.

Number of Pages in PDF File: 53

Keywords: tax, transfer pricing, transfer-pricing, intellectual property, IP, patent, copyright, trademark, section 482

JEL Classification: K34

Accepted Paper Series


Download This Paper

Date posted: June 6, 2014  

Suggested Citation

Blair-Stanek, Andrew, Intellectual Property Law Solutions to Tax Avoidance (June 4, 2014). UCLA Law Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2446259

Contact Information

Andrew Ralph Blair-Stanek (Contact Author)
University of Maryland Francis King Carey School of Law ( email )
500 West Baltimore Street
Baltimore, MD 21201-1786
United States
Feedback to SSRN


Paper statistics
Abstract Views: 659
Downloads: 167
Download Rank: 104,293
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.250 seconds