Blaming Corporations is Not Good Policy

afearon — Mon, 20 May 2013 04:00:00 +0000

ITIF Assesses Potential Overhaul of U.S. Internet Tax Policy

afearon — Tue, 19 Mar 2013 04:00:00 +0000

WASHINGTON (March 19, 2013) - The Information Technology and Innovation Foundation (ITIF) released a report today analyzing the current state of Internet tax policy and the packages being considered to assist policymakers and the public in making better decisions on how to reform the system. A Policymaker's Guide to Internet Tax provides a comprehensive review of the proposals and their potential impacts on innovation and economic growth in the Internet sector.

"Too often Internet tax issues are confused, or even worse, lumped together by the bumper-sticker debate between 'Don't Tax the Net' and 'Level the Tax Playing Field,' but in fact these issues are distinct and deserve distinct policy responses," notes Rob Atkinson, President of ITIF and co-author of the report. "This report assesses each proposal on its own merit and provides recommendations on how policymakers can address the tax challenges we face, while protecting both consumers and future growth."

The report focuses on four pieces of federal legislation and offers recommendations on how Congress should proceed:

Extension of the Internet Tax Freedom Act, which prohibits taxing of Internet access, multiple taxes on Internet transactions, and discriminatory taxes on online transactions, and sunsets on Nov. 1, 2014. ITIF is in favor of making the moratorium permanent to prevent unnecessary and excessive taxation that could reduce the benefits of the digital economy.
The Digital Goods and Services Fairness Act would prohibit state and local governments from creating multiple or discriminatory taxes on digital goods and services. ITIF calls for passage of the bill because it will help ensure a fair, consistent, and non-discriminatory tax system.
The Wireless Tax Fairness Act imposes a five-year moratorium on all new discriminatory taxes on mobile phone services or providers. ITIF is in favor of the bill, to prevent undue taxation on the wireless economy, but argues the moratorium should be made permanent.
The Marketplace Fairness Act of 2013 authorizes states to require collection of sales and use taxes on goods sold online. ITIF calls for the passage of the bill to reduce discrimination against sales from traditional, brick-and-mortar companies, and increase overall tax fairness.

"These bills will have a significant impact on the U.S. tax framework as well as the future development of the Internet economy," Atkinson adds. "By analyzing the effect of each, we hope to improve the ultimate policies that are adopted."

View the Report.

A Policymaker’s Guide to Internet Tax

afearon — Tue, 19 Mar 2013 04:00:00 +0000

Assesses the different Congressional proposals on internet tax and provides recommendations on the tax challenges we face.

Hill Briefing: Top Industry Analysts Untangle E-Commerce, Internet Tax Proposals

afearon — Fri, 15 Mar 2013 04:00:00 +0000

WASHINGTON (March 15, 2013) - At least four different tax proposals are either in Congress or about to be introduced that would reduce tax discrimination in the e-commerce, telecom and Internet space. While the bills may sound similar, they have very different intents and outcomes, and all could have a significant effect on consumers and businesses.

In an effort to provide a better understanding of these proposals and their impact on future policy, the Information Technology and Innovation Foundation (ITIF) and the Institute for Policy Innovation (IPI) are hosting the lunch briefing "Internet Tax Policy for Beginners (And Experts)" on Tuesday, March 19 from 12:00 PM to 1:30 PM in the Rayburn House Office Building, room 2325, on Capitol Hill.

"The Internet and telecommunications are both subject to a variety of taxes at different levels of government and there have been numerous calls over the years to streamline the process and increase tax fairness, which have led to the proposals now under consideration," notes Rob Atkinson, President of ITIF. "Through this event, leading experts in the field will provide a deeper understanding of these potential reforms and the Internet tax system as a whole."

"In this environment, where both state and federal governments are greedy for new sources of revenue, it's critical that policymakers understand these proposals, as well as both their intended and possible unintended consequences," adds Bartlett Cleland, Policy Counsel for IPI.

Participants include Brian Bieron, Senior Director of Federal Affairs at eBay, Inc. and Joe Crosby, principal at MultiState Associates who will examine the Main Street Fairness Act. In addition, Jot Carpenter, Vice President of Government Affairs at CTIA, will decode the Wireless Tax Fairness Act. The briefing will also feature Annabelle Canning of Capitol Tax Partners, on the Internet tax moratorium, Maggi Lazarus of the Law Office of John T. O'Rourke, on the Business Activity Tax (BAT), and NetChoice Executive Director Steve DelBianco, on taxing digital downloads.

For more information about the event and to register, visit: http://www.itif.org/events/internet-tax-policy-beginners-and-experts

Deep Dive: Tax Reform and the Technology Sector

afearon — Wed, 06 Mar 2013 05:00:00 +0000

The Politico Pro team presents an in-depth conversation with special guest Rob Atkinson, President, Information Technology and Innovation Foundation.

Taxation of Intangibles: Implications for Growth, Jobs and Competitiveness

afearon — Wed, 13 Feb 2013 05:00:00 +0000

From an economic policy perspective, the focus should not be on intangible capital vs. tangible capital.

Winning the Race 2012 Memos: Corporate Tax

afearon — Wed, 13 Feb 2013 05:00:00 +0000

As the 2012 presidential campaign moves in the final stage, ITIF is presenting general principles and specific recommendation ideas across several policy areas.

Comparing the 2012 Presidential Candidates’ Technology and Innovation Policies

afearon — Wed, 12 Sep 2012 04:00:00 +0000

Non-partisan report evaluates the candidates' positions on innovation-based policy.

Winning the Race 2012 Memos

afearon — Wed, 05 Sep 2012 04:00:00 +0000

As the 2012 presidential campaign moves in the final stage, ITIF is presenting general principles and specific recommendations across several policy areas.

We’re #27: The United States Lags Far Behind in R&D Tax Incentive Generosity

afearon — Thu, 19 Jul 2012 04:00:00 +0000

Despite its efficacy, the United States continues to fall behind other nations in the generosity of its R&D tax incentive.

U.S. Drops to 27th in ITIF Survey of Global R&D Tax Incentives

afearon — Thu, 19 Jul 2012 04:00:00 +0000

WASHINGTON - The United States is continuing to fall behind other countries in providing tax incentives for companies to undertake research and development, putting U.S. firms at a disadvantage in the global innovation race, according to a report released today by the Information Technology and Innovation Foundation.

In We're #27: The United States Lags Far Behind in R&D Tax Incentive Generosity, ITIF analyzes tax policies in 42 nations to present a compelling picture of how other countries are stepping up the use of R&D tax incentives to spur innovation and investment while the United States has grown complacent. The report finds United States ranks 27th out of 42 countries on R&D tax incentives, down from 23rd just five years ago.

"In the face of stagnant growth, it is simply amazing that we are dragging our feet on upgrading one of the most effective tools we have for economic growth," said ITIF President Rob Atkinson. "Countries seeking to be at the cutting edge of innovation-based competitiveness are learning what we seem to have forgotten."

The U.S. pioneered the use of the R&D credit in 1981. The credit expired at the end of 2011 and Congress is considering options for renewing and expanding it. In a 2010 report, ITIF concluded that increasing the rate of the Alternative Simplified Credit (ASC) from 14 to 20 percent would increase annual GDP growth by $66 billion and create at least 162,000 jobs.

The report released today takes up a rating model known as the B-index, once used by the OECD. In 2011, the OECD switched to measuring the revenue costs of tax incentives as a share of GDP, seeking to better account for tax law complexity. However, the B-Index model more narrowly and accurately measures the generosity of the R&D tax incentives.

"While U.S. firms would still conduct some R&D without incentives, they wouldn't conduct as much overall and certainly not as much in the United States," said Atkinson. "That is why Congress should make the R&D tax credit more generous and permanent."

Among the findings of ITIF's B-Index method for 2012 are the following:

The use and level of R&D tax incentives continued to intensify through 2011, particularly in emerging non-OECD economies. Of nine such countries examined, eight offer R&D tax incentives.
India leads the world in R&D tax generosity by allowing a 200 percent super deduction for R&D expenditures.
A number of countries significantly boosted their R&D tax incentives compared with the 2008-2009 period - notably Denmark, India, France, Italy, and Portugal.
For the United States to have the most generous R&D tax incentive in the world, it would need to increase the ASC from 14 percent to over 50 percent.

ITIF Applauds Efforts of BBB in Self-Regulation of Online Services

afearon — Wed, 30 May 2012 04:00:00 +0000

WASHINGTON - Today the Better Business Bureau announced the results of an inquiry into online interest-based advertising practices. Notably, in all of the cases investigated by the BBB the companies voluntarily modified their practices to bring them in line with industry best practices.

In response, ITIF Senior Analyst Daniel Castro released the following statement:

“We applaud the efforts made so far by the Better Business Bureau, the Digital Advertising Alliance, the Direct Marketing Association, and others who have led the recent advances in the self-regulatory practices for online advertising. As ITIF made clear in a recent report, self-regulation is an important and cost-effective tool for governing industry practices, protecting consumers and fostering innovation. For example, this review provided an opportunity for industry to clarify some aspects of the Self-Regulatory Principles for Online Behavioral Advertising, such as to specify that consumer opt-outs must remain valid for at least 5 years.”

“We encourage policymakers to continue to look to the private sector to lead in the development of best practices for online privacy. Working together, the government and the private sector can continue to build on the successes of this self-regulatory program.”

April Fool: U.S. to Have Highest Statutory Corporate Tax Rate

afearon — Fri, 30 Mar 2012 04:00:00 +0000

To remain competitive, the U.S. needs to cut its corporate tax rate as many nations have already done.

Senate Hearing on Tax Reform Options: Incentives for Capital Investment and Manufacturing

afearon — Tue, 06 Mar 2012 05:00:00 +0000

The tax code should reduce ineffective exemptions and incentives while expanding effective ones focused on innovation.

FRB-Atlanta Meeting on Market Conditions for Small Business Growth

afearon — Mon, 05 Mar 2012 05:00:00 +0000

Senior Analyst Stephen Ezell will participate in a round table for FRB-Atlanta on market conditions for small business growth and access to risk capital.

ITIF Urges More Emphasis on Competitiveness in Corporate Tax Reform

afearon — Wed, 22 Feb 2012 05:00:00 +0000

(WASHINGTON) - In response to President Obama's corporate tax reform framework announced today, ITIF president Rob Atkinson made the following comment:

"It is a no-brainer that we need to overhaul corporate taxes. It is unfathomable that the United States has the second highest statutory and among the highest effective corporate tax rate in the world (even if the administration data suggest that our effective tax rate is on par with other nations). So the Obama Administration deserves credit for taking this on.

However, the Administration's proposal has too much of "robbing Peter to pay Paul" and holds back on real reform in the name of fiscal austerity. "Not adding a dime to the deficit" might win votes but it won't fix a fundamentally uncompetitive U.S. corporate tax code. In fact, we need to add more than a dime to the deficit if we truly want to lower the tax burden on the companies, especially those creating the products and jobs of the future and competing in international markets.

For example, while expanding and making permanent the R&D tax credit is critical for innovation-based competitiveness, the Administration needs go further and propose raising the credit to 20 percent, not 17 percent. The Administration would do well to also follow the lead of many of our competitors and introduce a "patent box" that taxes income from innovation at a lower rate.

The Administration touts the benefits of simplicity and a tax code that does not "distort" investment decisions. But not all distortions are anti-growth, many, such as the R&D credit and accelerated depreciation, are growth enhancing. And so is the domestic production deduction, which the administration proposes expanding, even though it distorts "choices such as where to produce [and], what to invest in."

This is why it is so troubling that the Administration is considering ending accelerated depreciation. We want companies to invest in machine equipment and software. Ending this will result in less investment and productivity. And compensating for it by providing small companies immediate expensing is really distorting the tax code. Likewise, the Administration's promise to cut taxes on small business while being revenue neutral can only mean one thing, that mid-sized and large companies will pay higher taxes. There is no reason for the Administration to propose that any changes to get more parity between large corporations and non-corporate counterparts "should not affect small businesses." There is absolutely no reason for tax code to favor companies on the basis of size. Large companies are just as important to the health of the U.S. economy as small ones, if not more since they pay higher wages, invest more in R&D and export more - all goals the Administration wants to rightly push for.

There are definite reasons for the tax code to favor particular activities (like R&D and investment in machines) over other activities (like investment in buildings). The payoffs to the economy of the former are much higher than the latter. So when the administration says, "by allocating capital inefficiently, this system lowers living standards now and could also impede technological innovation" it is making a statement that is not based on fact, but rather the prevailing ideological views of the tax economists in the Treasury.

We must be sure the election-year drumbeat for tax simplification does not deafen us to the reality that the countries that are gaining on us economically are using their tax codes to spur innovation-based competitiveness. Why would we go in the opposite direction? The Administration complains that some industries pay less than others. They do and they should. But right now, it's in the wrong direction. Electric utilities, which are not competing in global markets, pay a lower effective rate than manufacturers, which are. In this sense the Administration's proposal to expand and reform the domestic production deduction so that manufacturers pay a much lower rate should be applauded.

However, the proposals to pay for this and other incentives are problematic. Ending deferral of foreign-sourced income would mean U.S.-headquartered multinational companies would face much higher tax rates than their competitors when operating in other countries and make them less competitive. If the Administration is truly concerned about this, they should, as they propose, go after income shifting, but not eliminate deferral.

The Administration feels it is forced to do this in order to find revenues to pay for other cuts and incentives. But in the end, it's not about being revenue-neutral from a budget scoring point of view. It's about empowering the U.S. economy through a smart tax code that boosts the broad and sustained U.S. economic growth that will generate sufficient tax income. The only way that will truly happen is for the Administration and Congress to bite the bullet and acknowledge that corporate tax reform cannot and should not be revenue neutral. It has to be about lowering the effective rate on U.S. industry. If they need "pay-fors" the place to look is on the individual side, for example ending the mortgage interest deduction or higher capital gains and dividend taxes."

Create a Fair and Simple Tax for E-Commerce

afearon — Tue, 21 Feb 2012 05:00:00 +0000

Fairness, simplicity and parity should guide federal legislation for internet sales tax.

ITIF Testimony Before California Assembly Committee on Tax Policy and the High-tech Sector

afearon — Mon, 05 Dec 2011 05:00:00 +0000

California should revise and expand its R&D credit and consider implementing a patent box.

AGREE Act Aptly Named but More Bipartisan Accord Needed on Innovation

afearon — Mon, 28 Nov 2011 05:00:00 +0000

The AGREE Act provides practical bipartisan actions to encourage innovation.

Patent Boxes: Innovation in Tax Policy and Tax Policy for Innovation

afearon — Tue, 04 Oct 2011 04:00:00 +0000

To create jobs, this report proposes driving down the value of dollar to boost exports and having firms bid for the right to repatriate foreign earnings.

U.S. Corporate Tax Reform: Groupthink or Rational Debate?

lstewart — Tue, 19 Jul 2011 04:00:00 +0000

Reform of the corporate tax code must transform it into a more effective tool to support private sector efforts to innovate and be more productive.

Corporate Tax Reform Report Takes on Simplification Consensus

lstewart — Tue, 19 Jul 2011 04:00:00 +0000

WASHINGTON – A simpler corporate tax code could be an anti-competitive, slower-growth tax code, warns a report released today by the Information Technology and Innovation Foundation.

With the Obama Administration and Congressional leaders possibly looking to eliminate a variety of corporate tax breaks as part of an eventual debt and deficit reduction plan, the report, “U.S. Corporate Tax Reform: Groupthink or Rational Debate,” warns this approach could undermine U.S. competitiveness and long-term economic growth.

“The tax simplification orthodoxy that pervades Washington’s thinking is misguided,” said ITIF President Robert D. Atkinson, the report’s author. “The record is clear. Tax incentives that increase investment in workers, equipment, IT, and innovation help boost productivity and economic vitality. Competing countries looking to take the lead in emerging industries are adopting these tools with enthusiasm. We jettison them at that our peril.”

The report dismantles the argument long made from across the political spectrum that so-called “distortions” in the tax code are costly and ineffective. It explains that merely broadening the corporate tax base and lowering tax rates will undermine U.S. companies competing internationally in vital industrial sectors. The report also dismisses the near-universal belief in revenue-neutrality, pointing out it would leave already high corporate tax burdens largely unchanged.

While recognizing that there are provisions in the tax code that merit scrutiny, the report calls on policymakers to adopt the following principles as they undertake corporate tax reform:

Provide direct incentives for U.S.-based enterprises to invest in the building blocks of innovation, productivity and competitiveness: research and development and innovation commercialization, workforce training, and machinery and equipment (including computers and software).
Tax firms in internationally-traded industries, such as autos and electronics, at a lower rate than firms in non-traded industries, such as grocery stores.
Lower the average effective corporate tax rate from its current levels.

“The U.S. has one of the highest corporate tax rates in the world and we have allowed proven tools, such as the R&D tax credit, to atrophy relative to other nations. So it clear we need to rethink corporate taxes,” said Atkinson. “However, complexity in the tax code, wisely designed, is good policy. We must not let ideology and groupthink purge the tax code of good policy.”

Import Money – Export Goods

lstewart — Thu, 07 Jul 2011 04:00:00 +0000

Job growth could be created with a tax holiday to bring back overseas profits, a manufacturing strategy, and overcoming false hope in the strong dollar.

Creating a Collaborative R&D Tax Credit

Thu, 09 Jun 2011 04:00:00 +0000

If Congress wants to support innovation and U.S. competitiveness, it should expand tax credits to reflect the growing importance of collaborative R&D.

Testimony on Digital Goods and Services Tax Fairness Act

Mon, 23 May 2011 04:00:00 +0000

Rob Atkinson urges tax fairness for digital goods in Congressional testimony.