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Tax Loopholes No Longer Patentable
Knowzy writes "A section of the America Invents Act disallows issuing a patent 'on a strategy for reducing, avoiding or postponing taxes,' according to Forbes. The article describes one such strategy in some detail. The USTPO has already issued 161 of these 'business method type' patents. 167 more were pending. The law only applies to future patent applications, leaving enforcement of existing patents an issue for the courts to decide."
Introduce a FLAT $$$ tax - not even a percentage of one's income, just a flat $$$ amount, and call it that. No different from everybody paying the same price for a bottle of coke @ the store. Or should shops start asking customers their income, and then charge them accordingly?
The fact that tax loopholes were patentable is disturbing in itself..
So does this mean that before this, the government could have patented the loophole structures, thus closing them?
Interesting example of the system getting so complicated it bites itself in the tail.
I suppose a tax loophole is nothing more then a clever application of the law, right?
So, forget about tax laws, take a simple example traffic rules.
Well, then I'm filing a patent for stopping at a red light: everyone that stops at a red light must pay me 1$.
This is exactly the same as a patent on a tax loophole: the application of laws.
You must pay the patent holder for using a specific tax loophole, which is just an application of the law.
Now I'm making you all paying for applying another law.
Patents are hilarious and disastrous.
120 chars is not enough!
> Tax Loopholes No Longer Patentable
LOL Congress. Stand near their dinner bowl and your Congressman will spring into action. Yet Submarine Patents and Patent Trolling are still legal. The USPTO continues to approve the stupid, trivial and obvious patents and those written in such ridiculous language that no one knows what they mean. The USPTO leaves it to the courts to sort out the mess for them, with $500 an hour lawyers who will argue adamantly for whoever is paying them. (They should have a rule in Patent Law suits that half-way the lawyers change sides)
But seriously: A startup hit by a Patent Troll will spend $1M to $5M to fight it off. How does bogging down startups like this help America invent? It doesn't. Congress have known about this for years but won't do lift a finger. But a tax dodging patent? Suddenly their outraged cannot be contained!
The problem with getting rid of tax loopholes is that this suddenly puts thousands of tax lawyers out of a job - and in any economy, putting a section of the workforce (no matter how despicable) is always a bad thing...
So, instead, the US government should take ownership of all the patents of tax loopholes, and license them to the lawyers for a fee...
The government still gets it's money - just has to license the loophole at 90% of whatever it saves.
The lawyers are still in work - they can tell the client "I can get you out of 10% of your tax liability"
The overly rich clients are still happy - they're still saving compared to paying the full amount of the debt
The only person who loses out is the one who had the patent in the first place...
But seriously: A startup hit by a Patent Troll will spend $1M to $5M to fight it off. How does bogging down startups like this help America invent? It doesn't.
Patents were never designed to do any such thing. It may have been post hoc rationalized as something to increase inventiveness, and honestly, I don't think there is any compelling data supporting either side.
Patents were intended to give a person an exclusive right to produce a new invention and make money off of it. Thus, patents are about greedily hording inventions and technology away from others in exchange for disclosing how they actually work, so that later (100s of years) that information would not have gone to your grave with you. (Like many kinds of stained glass that we no longer know how to make, because no one passed it on.)
It's basic purpose is to exploit greed to provide a benefit to mankind at a later date... this of course has the obvious effect of stunting the development and innovation cycle, because you can't use other people's ideas once they're actually available. I read an interesting piece about fashion, as it turns out that one cannot patent, copyright, or trademark fashion designs, and thus anyone can just steal an idea from someone else. Yet, they have a vibrant, active, and rapid development cycle. Of course it also renders old things "out of fashion" quite quickly as well, as soon everyone will have it, if it is popular enough.
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Now the world will be mine - bwahaaahaaaah
We all know that patents are an innovation booster. You don't want to stifle innovation, do you? Then just introduce a "tax loophole tax" that tax the very action of evading tax.
You dawg..
Colorless green Cthulhu waits dreaming furiously.
You can still patent all manner of ridiculous and stupid shit, but don't dare try to patent something that affects the US government's bottom line.
not remotely surprised, this is one of the more obvious ironic fails.
the us Gov has an endless store of examples of ffundemental failure.
war on drugs - orrganized crime gets rich, common man goes to jail.
no child left behind - educations standards lowered.
reduced tax's on rich to stimulate jobs - common man cant consume,
therefore no effect in america.
on and on. It is abundantly clear you guys in the states do not actually
have a democracy.
"Tax Loopholes No Longer Patentable"
OMG.
no, I don't have a sig
It wasn't hundreds of years, the time span was originally pretty short and got extended (20 years in the US now I believe). The issue in the IT sector is that after such a long time span, the inventions are irrelevant. Nobody cares about patents that are only applicable to 5MHz supercomputers nowadays.
Patents were never designed to do any such thing. It may have been post hoc rationalized as something to increase inventiveness
In the US, at least, this just isn't true, since the legal justification for patents (and copryights, and trademarks) is spelled out in the Constitution: "To promote the Progress of Science and useful Arts ..." It's true, of course, that any rational person can now see that the arcane, jerry-rigged, and corrupt body of IP law doesn't actually work to that end, but the intention was clear enough. And in fact, I'd argue that patents on physical inventions do serve the stated purpose. It's when we allow patents on things like software, accounting tricks, and DNA sequences that we run into trouble, and go far beyond what the people who wrote those words ever intended.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
Surely since the poor are more likely to use social services they should be taxed more than the rich. Why should Bill Gates pay his $13,000 flat rate when he is unlikely to use madicare, medicaid or the state school system?
It wasn't hundreds of years, the time span was originally pretty short and got extended (20 years in the US now I believe). The issue in the IT sector is that after such a long time span, the inventions are irrelevant. Nobody cares about patents that are only applicable to 5MHz supercomputers nowadays.
Yes, I was exaggerating, and you're absolutely right that the obsolescence rate of patents in electronics is increasing far faster than the expiration rate of patents, so when thy finally expire, they're essentially worthless. (N.B. there are a lot of people who are eager to build NES and SNES systems as soon as the patents expire. But this is far more of a "niche" interest than actual interest in advancing technology, and innovation.)
I remember in my history of engineering class, they talked about how the self-contained pistol cartridge was a huge deal, and put the developer ahead in sales enormously for a long time until the patent expired. However, of course, the self-contained pistol cartridge wasn't worthless when its patent expired, and so it became ubiquitous once the patent expired. God, how often do we hear of a patent in computers expiring and every is in a rush to reproduce it generically.... :(
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OMG, I wish there was a patent on making lame jokes (of the form: I wish there was a patent on XXX). Then assholes (like me) who make these pathetic attempts at humour would get sued into bankruptcy. I know there's no shortage of prior art (see any /. thread mentioning patents for last 10 years), but that never stopped anyone.
http://rareformnewmedia.com/
So, patents never existed prior to the US Constitution, so thereby, when declared in the US Constitution it declares clearly the purpose and design of patents ab initio?
Or could it be that the post hoc rationalization of the purpose of the patent (as a meme) already existed, and was widely already propagated by the time the US Constitution was written, and that in a vein attempt to convince themselves of the purpose of a tool, they declare it loudly and explicitly without regard to the original design?
You know, because Family Matters and a number of organizations opposing gay marriage seem intent on declaring that the original purpose of marriage was to sanctify the union of a single man, and single woman, even though quite clearly we understand that marriage developed fluidly and dynamically out of cultures, and was more about assurance of parentage and legitimacy of children, as well as political partnerships, etc... hell, this "one man and one woman because of love" idea is quite a new "redefinition of marriage" itself.
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Hmm the GIF patents expiring were a pretty big deal (but not due to the technological superiority, just because everyone had a lot of those files) and Apple's expired font hinting patents are still relevant as well, but those are the only ones I can remember, which is a pretty bad ratio for the number of software patents expiring all of the time.
The government doesn't need patent law to enforce its ideas - it just says "no" and the thing is illegal in itself. Plus, patents would only work if the government was first to publish it, they'd be useless for closing existing holes.
I mod down anyone who says "I will be modded down for this", regardless of the rest of their comment
In Sweden we have outlawed tax loop holes (or almost all of them), simple as that.
Any transactions that don't have any other purpose then avoiding taxes can simply be ignored by the Swedish Tax Agency. There are only one law needed to plug such tax loop holes, that a set of business transactions must have an explainable purpose (other then avoiding taxes).
Occasionally (but very rarely), the Swedish Tax Agency make a misjudgement and ignore tax reductions from "real", legitimate transactions. Then the tax payer simply have to explain the practical purpose of the transactions, a five minute telephone call is usually enough. If the tax payer is still denied the tax reductions, then he/she/it can make a written complaint to the Tax Agency and if that is denied, take it to court.
There is of course transactions that give large, sometimes unfair, tax reductions, but also have other practical benefits. If they are (by politicians and tax experts) considered as tax loop holes, they have to be explicitly plugged by laws and regulations (Sweden (and other Nordic countries) don't normally have case laws, if a law or regulation is unclear or have unforeseen ill consequences, it gets rewritten almost immediately, case law only apply until the new, hopefully improved, law or regulation is set into place). Until a law or regulation is put into place to plug such a tax loop hole, the tax payers can use them without any consequences, but such grey zone transactions have proved to be very rare (almost always, a set of transactions are either only made to avoid taxes, or is part of "real" productive business) and as Sweden (as well as other Nordic countries) lack case law, it has instead developed fast, safe and fair procedures to make changes in laws and regulations, so even such tax loop holes get plugged fast.
Hmm the GIF patents expiring were a pretty big deal (but not due to the technological superiority, just because everyone had a lot of those files) and Apple's expired font hinting patents are still relevant as well, but those are the only ones I can remember, which is a pretty bad ratio for the number of software patents expiring all of the time.
True, I will say that the things that truly deserve to be patentable will be relevant once the patent expires. Perhaps that would be a better test for patentability? "Will this invention still be relevant once the patent expires?"
Of course, much like making the perfect task scheduler for a computer requires it to be prescient, I doubt such a question would actually be workable...
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While it's nice that they have banned this the fact that certain financial/legal strategies are still patentable in America is ridiculos.
A patent examiner I know told me that they get patent applications for devices that do things like this all of the time ;)
Tax loophole patents are great!
The problem isn't the patents, it's the fact that loopholes exist at all.
At least patenting the loopholes makes sure the tax office knows what tricks are used, making it easier the close them.
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If a tax loophole is patented, isn't it the duty of the government to make it illegal, thus making the patent worthless?
Contrary to the popular belief, there indeed is no God.
Since tax evasion is considered dishonesty, I don't see why is should be un-patentable. Patent all you like, but at the end of the day, if you use the method, it does not make it legal. Since it is illegal to do so, how do you track people or organizations who violate the patent and then enforce it?
If you ask me, I think it is a bit like patenting a method to crack a safe. You can patent it all you like, but there are very few situations when you can actually use it legally. Not only do you get on the wrong side of the law if you use it, but if someone does use it, it can carry a second charge for the patent breech as well.
On the one hand, if you encourage people to patent their ideas, the IRS would be able to use that knowledge to look for similar patterns when they suspect that an entity is defrauding the government. If on the other hand, you refuse to issue patents for this, there's going to be a need for investigators to reinvent the wheel, so to speak.
Geekism is your _only_ God!
Yet Submarine Patents..... are still legal.
How are (new) submarine patents possible? AFAIU, a few years ago the USPTO came in to line with the rest (or at least most) of the world in that a patent application automatically becomes public 18 months after filing. Prior to that, (again AFAIU), it only became public when granted, and hence submariners would keep tweaking their application so it stayed in the exam process until a time that suited them.
In the business of government, complexity is profit. The more complex the tax system, the more it costs to run it. But remember that government doesn't spend its own money -- they spend yours and mine. So those costs benefit the business of government, quite unlike any other business.
The more it costs to run the system, the bigger their budgets. The bigger their budgets, the better positioned they are to leverage that cash flow for personal gain.
Oops, did I just spill the true reason for the most complicated tax code in the world? You're damn right I did.
I see the opposite here. This makes tax loopholes available to all. So it seems to me that more companies will be able to use them not less.
First, all productive assets are wealth. Factories, land, etc. (We can then discuses if gold, big homes, fancy cars, and artwork is a productive asset, but that is for another time). So, you are taxing productive assets - which reduces their value. People will be less interested in investing in long term projects because it will be worth less.
If you do the math, because you are paying taxes every year, anything involving capital because much more expensive. It's very hard to invest in that climate. A wealth tax discourages investments and thus future growth.
Look at France that has one. Everybody who is looking at long term stuff moves it out of France.
What it means is that they were added to the constitution with that in mind. Without being in the constitution it would be less likely that patents would exist in the US.
Or are you just making a post hoc rationalization for why the original post was correct by changing the parameters and hoping that nobody notices?
So when someone invents a cunning method to combine existing applications, that he may patent. But when someone else does exactly that and it is against the interest of the lawmakers, then the law gets quickly patched, but of course only to favour lawmakers.
I sense a teeny weeny bit of opportunism at work here.
I hadn't the slightest objection to his spending his time planning massacres for the bourgeoisie... (P.G. Wodehouse)
Sort of. What it means is that instead of folks filing for patents on loopholes, thus making it difficult for others to copy that method (and thus at least partially closing them), Congress has gone and made is so that anyone can use any new tax loophole method (keeping them wide open).
The world is made by those who show up for the job.
(Like many kinds of stained glass that we no longer know how to make, because no one passed it on.)
(...)
this of course has the obvious effect of stunting the development and innovation cycle, because you can't use other people's ideas once they're actually available
So how exactly could you use that stained glass technique? Oh right, it was never made available. If it had been patented, it must have been disclosed immediately, it'd be a monopoly on them for 20 years but people could understand what you did and start thinking of improvements or variations that wouldn't be covered.
And there is really the biggest reason I don't think patents have much value anymore, who actually reads patents to learn something? Nobody, just lawyers and patent trolls. If there's no trade secret gained, if it's just a free monopoly given then the public hasn't gained any knowledge. Then it's purely an economic incentive like lowering the tax rate or something like that.
Live today, because you never know what tomorrow brings
Politicians are against patenting tax loopholes, because fewer corporations will then be able to use the loopholes; this effectively will raise the overall corporate tax burden, even if it lowers the tax burden on individual companies.
monopoly systems != patents! they've existed far longer.
This opens up possibilities for going after criminal enterprises. Just patent ponzi schemes, extortion, smuggling, drug manufacturing, etc. Don't stop at filing criminal charges. Also sue them for patent infringement!
For any competent government to have made this impossible many years ago, especially in face of the fact that so many corporations are depleting economies without any liability to the countries for which they operate. WTF?
I haven't heard of it rising by 50% in two years despite a recession.
The net worth of the Top 400, basically all of our billionaires, is $1.27 trillion. If you confiscate all of their wealth you don't even pay off the deficit for the last year, much less any of the debt.
We do have 10 million millionaires, but as you go towards the bottom it more and more includes wealth due to homes, retirement accounts and personal business assets.
Introduce a FLAT $$$ tax - not even a percentage of one's income, just a flat $$$ amount, and call it that. No different from everybody paying the same price for a bottle of coke @ the store. Or should shops start asking customers their income, and then charge them accordingly?
So then if your income is less than that flat amount, you give the government all your money and starve to death? That sounds like a great plan.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
Like many things in the real world, context is the critical factor. "avoiding taxes" is totally legal as the parent is using it; however, anybody with common sense can recognize somebody playing a childish word game and exploiting those tricks to unethically evade taxes while still remaining technically legal; therefore making the use "avoiding taxes" technically correct and then defending their actions using the classic trick of confusing ethics and legality.
These fake headquarters off shore to avoid paying taxes are obvious to anybody as a scam and it only takes a judge willing to THINK to stop it; instead we try to reduce everything down so some idiotic A.I. mainframe could understand it-- as if we are preparing for handing the legal system over to the machines. Its not difficult to point out that their headquarters is a fraud and reposition it at the actual location-- unless you purposely make the laws this way (and we do.) I think this would be a good sci-fi idea-- where the laws are written by machines which expand them out to massive sets of literal rules and where big computers are required merely to question the law because it expanded so much (this happens on a simple scale when they "codify" a law today) it could provide a way to illustrate problems today by extending it to the ridiculous using computer tools.
Programmers should understand this problem and reject this attempt by people to lower them down to machine-like "thinking". Zero tolerance is another one which sounds good politically (and when programming in some rule/policy) but in the real world it doesn't map to the complexities of reality. So then we add overrides or revise things so that it works better in actual use. My local university system doesn't enforce pre-req requirements for registration because of the problems it causes-- the system was too rigid with it turned on and created more work than it was saving.
I don't think it would make much difference in terms of people buying houses. I mean, the owner is going to have to pay the wealth tax no matter what. It might be the owner / occupier or it may be the owner / landlord. If it is a landlord then they will just pass the wealth tax onto the renter in the form of higher rents. They may not be able to pass the whole thing, but they will pass on most of it.
I recently patented the process by which you disallow the patenting of tax loopholes.
Pretty sure the government owes me some money on this one.
The ultra-rich don't make their money via Salary, but by Capital Gains. It is the Capital Gains tax, not income tax, which really affects what billionaires earn.
You could raise the income tax on billionaires to 99.9%, and they'll barely feel it come tax time.
As for your shops metaphor, everyone pays a % of tax, not an $$$ amount, as you call it. Flat tax is actually a % idea, but you didn't even get that part right.
I8-D
How can one know the strategies used in preparing tax returns (balance sheet ledger) after the fact? There's no one-to-one correspondence between the end result and the methodology used to obtain that result.
I already patented outlawing patenting loopholes! SUCKERS!
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
Glad to see our government understands how methods of avoiding taxes should be free and open source for all!
Both should be abolished.
What it means is that they were added to the constitution with that in mind. Without being in the constitution it would be less likely that patents would exist in the US.
Or are you just making a post hoc rationalization for why the original post was correct by changing the parameters and hoping that nobody notices?
I think I was referring to patents in general, and not to their stated intent in US law. Did the US Constitution establish and erect the original precedent for patents all over the world? I'm kind of doubting such a position.
You know, poll taxes were given a fairly innocuous intent, as were many other Jim Crow laws, and other discriminatory legislation. Many of the marriage amendments banning same-sex marriages are drafted with the stated intent to "protect the sanctity of traditional marriage", while in truth, they're a reactionary knee-jerk response to ensure that state courts cannot legalize same-sex marriages within that state.
See, there's this subtle thing called "lying about intent", or probably more accurately, "deluding oneself as to intent". You know, telling yourself that all other peoples being counted as 3/5ths of a person is part of creating a more perfect union where all men are considered equal.
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monopoly systems != patents! they've existed far longer.
True, however, patent == exclusive right, which I believe is the phrasing that I used.
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The tax office should patent any method
and collect a fee.
If they do it correctly the fees they
collect should close the gap
on the national debt.
Some say the tax code is Greek to
them so there is hope that they
will also obtain some relief.
Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't. Mark Twain.