The IP Box

What is an IP Box policy?

An IP Box policy provides a lower rate of taxation, typically between 5 to 15 percent, on income derived from a company’s intellectual property. An IP Box recognizes that IP and the income it generates are highly mobile.

Why should the U.S. adopt an IP Box?

The Problem: The American tax code is fundamentally broken. Bucking international trends, the U.S. has held onto its worldwide tax system and refused to reduce corporate tax rates in line with global competitors. This has left American companies highly vulnerable to boardroom pressures for lower tax rates through inversions and foreign takeovers. These pressures are now being compounded by new global tax recommendations that threaten to entrap more American IP abroad. To date, 15 mostly European countries have adopted an IP Box in an effort to boost their domestic IP sectors and capture valuable U.S. R&D, jobs, earnings and tax revenue. Read More

The Consequences: Without changes to the U.S. tax code, the rise in corporate inversions and the relocation of valuable IP and R&D jobs will continue to grow, weakening our economy and shifting more American earnings abroad. The more foreign governments capture U.S. earnings for their own taxation, the less revenue our government can collect from American companies. This will make enacting comprehensive tax reform more difficult. Read More.

The Solution: Congress needs to address tax reform, and enacting an IP Box would be an essential component to encouraging the growth of American research and innovation, and keeping critical jobs and earnings in the U.S. Read More.