Equity and Efficiency in Intellectual Property Taxation

63 Pages Posted: 24 Feb 2011 Last revised: 28 Jul 2011

See all articles by Jeffrey A. Maine

Jeffrey A. Maine

University of Maine School of Law

Xuan-Thao Nguyen

Indiana University Robert H. McKinney School of Law, Center for Intellectual Property & Innovation

Date Written: December 31, 2010

Abstract

This article examines the federal income tax regime governing intellectual property using normative criteria in evaluating taxes: equity and efficiency. The article first evaluates the current intellectual property tax scheme in terms of horizontal equity, identifying differences in tax treatment of what appear to be similar intellectual property activities. It argues that disparate tax treatments between seemingly similar intellectual property owners signal that flaws may exist in the tax system. The article then assesses the efficiency of the intellectual property tax system, examining numerous tax subsidies for intellectual property and their effectiveness in promoting economic growth. It argues that many of these tax expenditures are circumscribed in ways that mitigate their effectiveness. The article concludes that many of the inequities and inefficiencies identified exist because tax rules governing intellectual property evolved in the absence of an appropriate legal framework for the intersection of the intellectual property and taxation schemes.

Keywords: equity, fairness, efficiency, policy, tax, taxation, intellectual property, patents, trade secrets, copyrights, trademarks, trade names, computer software, software, inequities, inefficiencies, innovation, society, technology, economic growth, bundling, integration

Suggested Citation

Maine, Jeffrey A. and Nguyen, Xuan-Thao, Equity and Efficiency in Intellectual Property Taxation (December 31, 2010). Brooklyn Law Review, Vol. 76, No. 1, 2010. Available at SSRN: https://ssrn.com/abstract=1768037

Jeffrey A. Maine (Contact Author)

University of Maine School of Law ( email )

246 Deering Avenue
Portland, ME 04102
United States

Xuan-Thao Nguyen

Indiana University Robert H. McKinney School of Law, Center for Intellectual Property & Innovation ( email )

530 West New York Street
Indianapolis, IN 46202
United States
317-274-8146 (Phone)

HOME PAGE: http://mckinneylaw.iu.edu/faculty-staff/profile.cfm?Id=582

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