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."

Comments

FLAT TAX

[unixisc]

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?

Re:FLAT TAX

[snowgirl]

Introduce a FLAT $$$ tax - not even a percentage of one's income, just a flat $$$ amount, and call it that.

Right, so the person making $12,000 a year, who needs every single penny of their paycheck can pay exactly the same amount of tax that Bill Gates pays?

And what of people who have no income? Shall we drag them into jail for not paying their taxes, because they have absolutely no way to pay for it?

On second thought, your plan succeeds extraordinarily well in making being poor illegal; in fact, way much better than any of the numerous laws (like vagrancy) that local governments pass to making being homeless illegal. And then, once all the poor people are in jail, they'll never be able to afford paying their taxes then, so we can just keep them locked up eternally... or maybe we could just kill them all, since they're never going to get out of the grave we've already dug for them anyways. Then, maybe we could just make a protein paste out of them. You are absolutely a brilliant person, you are.

Re:FLAT TAX

[jpapon]

The person making $12,000 pays a much higher percentage of their income in sales tax than a rich person does.

And what's with this class envy nonsense? Does Buffett have class envy because he thinks the rich should pay more income tax?

Those making millions make those millions due to their own hard work, sure, but they also make them thanks to the infrastructure, security, and educational system maintained by the government, the poor, and the middle class. They should have to pay their 30+%, since they benefit from the government more then anyone else. Without government to defend them and maintain order, the rich would quickly become very poor.

Re:FLAT TAX

[snowgirl]

So if that person making $12,000 a year pays $2 for a bottle of coke, Gates should pay what? $2,000? $2,000,000? Incidentally, good job with the class envy & the scare mongering.

A person making $12,000 a year is likely buying their $2 bottle of coke on foodstamps provided by the government in the first place. So, really, they're paying about $0 for a bottle of coke out of their income.

And this "class envy" that you purpose is not an imagined thing, nor an opinion. What happens to people who cannot pay taxes? Oh yeah, they rack up a bill so high that they can't pay it, and eventually either settle for something that they can pay, or end up in jail for tax evasion. So, let me ask you, if your scheme were implemented, and set at $1,000 a year, which I am entirely unable to currently pay, at what point would the government decide to just jail me for failure to pay my taxes? Or would I get a special "poor person" dispensation because I'm entirely incapable of paying the taxes because I have no income?

I mean, the $2 bottle of coke that I'm buying was bought through government funds, but I can't very well pay my $1,000 a year in foodstamps, because it's not food. Then again, if my foodstamps run out, guess what? I can't and don't buy any more coke. Of course, foodstamps also don't buy DVDs, alcohol, or new clothes... guess which items I don't buy at all? I don't hardly have the choice of not paying taxes by not using any services at all. I can't exactly exempt out of police protection in order to reduce my tax burden.

That's why the whole analogy of taxes to a contract for the purchase of physical goods fails. Physical goods can be bought in varying amounts according to affordability, while social programs are often provided to those people who can least afford to actually pay for those services. Providing social services only to those people who can best afford to pay for those services would kind of defeat the purpose of helping the poor... because only the rich would be getting the benefits.

Re:FLAT TAX

[snowgirl]

What world do you live in?

In the United States at the end of 2001, 10% of the population owned 71% of the wealth and the top 1% owned 38%. On the other hand, the bottom 40% owned less than 1% of the nation's wealth.

Re:FLAT TAX

[Daniel Dvorkin]

I'm saying that those who expect people w/ higher incomes to pay more have class envy, regardless of what they're actually earning. It's the attitude that qualifies it.

Or maybe you don't understand other people's thinking nearly as well as you think you do.

Statistically, it's been demonstrated that the top 5% of all income earners pay 50% of all taxes, while the bottom 70% pay less than 5% of all taxes. And it's not even like the top 5% has 50% of all the income/wealth, however one wants to see it - it's more like 20%.

Any time you start a statement with "Statistically ...", you'd better be ready to back up your claims with something more than a bunch of hand-wavey numbers. Speaking as a statistician, I'd like to see your sources and your methodology. If you have any.

Also, your statement that without the government defending them, the rich would quickly become poor, you're suggesting that the government is/should be an extortion racket, like the mafia.

Um, no, he's describing the way the world works. Without effective government, out-and-out extortion rackets -- with all of the government's power and ruthlessness, but without even its minimal answerability to the people -- take over. One thing that liberals and conservatives can generally agree on is that one of the main purposes of government is to keep people who want to kill you and take your stuff from doing so; and obviously, the rich have a lot more to take. Are you seriously arguing with this proposition?

Re:FLAT TAX

[snowgirl]

Right, no one could possibly live off of $1000 a year. You know, looking back on it, if you exclude foodstamps, I've earned not a single penny in income. I don't live under a bridge (because I have carrying friends and family, who wouldn't let that happen), and get food entirely through foodstamps.

Your solution sounds so great, because it is so simple, but fact is that it will not actually work. It fundamentally punishes people for being poor, which is generally beyond their power to control. And it completely discards this idea that society has called "charity". Poor people's lives suck bad enough, why do you have to drop the same burden on them as those who are rich?

And we should reward people for hording cash like dragons? You do realize that people grabbing at cash any which way they possibly can has been the cause of every bubble, depression, and recession that we have ever had, right? It's why we can't trust employers to treat their employees better than slaves, and provide a safe work environment without oversight. Really, why should we be encouraging people to be greedy heartless bastards? Rich, sure, that's fine, but it bring with it social responsibilities to the society that has rested such confidence with an individual.

Re:FLAT TAX

[mcgrew]

So if that person making $12,000 a year pays $2 for a bottle of coke, Gates should pay what? $2,000

Actually, that's how it is now. Rich people pay $5 for a cup of Starbucks coffee, the middle class $1 for McDonalds, the poor five cents for Folgers.

The rich buy a Lamborghini, middle class a Chevy, the poor get a ten year old beater (or take the bus).

I can't tell if you're trolling or just stupid.

Re:FLAT TAX

[rtfa-troll]

The rich actually spend proportionally much less. E.g. if you have your own estate, with your own servants and your own cooks, you have food cooked for you based on local produce. This makes a meal which would cost hundreds of dollars per person but, since it's all your own property, you don't buy it and so you don't pay sales tax.

If you or I go on holiday, we go to some resort where we pay for everything; every little bit of water you use ends up being taxed. When Richard Branson goes on holiday he flys in his own jet to his own island and the only sales taxable expense is his jet fuel. When his rich friends do the same they go to his island sometimes, and he comes to their islands in exchange other times. In a sense this is completely fair. I would get annoyed if you tried to tax me for having friends over for dinner rather than going to a restaurant, but the scale of the thing means that in the end, the really rich show much less income compared to the resources they use than you or I and pay even less tax.

Re:FLAT TAX

[snowgirl]

Right, no one could possibly live off of $1000 a year. You know, looking back on it, if you exclude foodstamps, I've earned not a single penny in income. I don't live under a bridge (because I have carrying friends and family, who wouldn't let that happen), and get food entirely through foodstamps...

You've never earned anything other than food stamps? Seriously? How much longer do you expect your "carrying" friends and family to continue doing so?

As noted below, there was information missing. The lack of income comment was over the previous year. I have earned money before, and I've paid more well than my fair share of taxes. (How have I pay more than my fair share? Well, I had the opportunity for a full refund, and decided instead to not file taxes as my income had not exceeded the amount that makes filing mandatory. What you read is correct, I was below the poverty line and still paid my goddamn taxes. I walk the walk, not just talk the talk.)

I think there was a system in the older times prior to currency, where people exchanged goods and services in exchange for other goods and services directly. As it turns out that living with a brother and his bachelor roommates presents plenty of opportunity for one to justify the charity provided by providing cleaning.

As also noted, I am currently applying for disability, as I am unable to work. (Yes, I've tried.) That is why I lack any income. It's kind of difficult to have an income, when one is unable to work. (But you said you're cleaning to earn your room and board; no, I said it justifies my charity, not that it is sufficient to fully offset the monetary value that I am receiving.)

It amazes me that people in America love to jump to the assumption that anyone receiving government assistance is simply inept and lazy. As if every person earns their rightful place in society of their own achievements. As if Bill Gates were born in a cave with parents who use stone tools, yet managed to claw his way to the top reinventing everything about math and computers himself to produce Microsoft DOS... what am I taking about? Even "stone tools" is an advantage that many homo sapiens may not have even had. ... or wait, maybe there's a remote possibility that Bill Gates was born into a family, where the father was a noted and well respected lawyer, and thus born with a silver spoon in his mouth. I mean, it just wouldn't be the American "conquer all" story that we so love if he were born into the top 10% of society, and clawed his way up to the pinnacle. I mean, because likely larger than 50% of the people are born into families that earn under the mean income of the society, so we obviously want to look at someone born into that disadvantaged substrate and yet managed to claw their way to the top... except, you know, they're exceedingly rare, like less than 0.01% of those born into the under 50% population, so we simply hold this dangling carrot in front of the laboring masses with sweat poisonous words of "you can get there, too! just try harder!" All the while knowledgeable that it is simply an impossibility that each person who works every day to the bone could not possibly make it into the top 10% of the population.

But then, Americans do so love that mirage in the distance... after all, we sell it like it's bottled water, and the Americans just lap it right up. "I'm going to work hard so I can be a billionaire!" Keep dreaming Jimmy... keep dreaming.

Re:FLAT TAX

[PopeRatzo]

How do you value wealth? A lot of it is very subjective.

Price-to-market accounting.

The idea of taxing wealth instead of income is very interesting.

Did you know that .5% of the population owns $46trillion in wealth? A 5% tax on wealth would pay off the debt and provide health care and a pension for every American over 10 years.

Total US wealth went from about $25Trillion in 1999 to $54 Trillion in 2009 and currently over $70 Trillion.

How much has your wealth increased since 2009?

Re:FLAT TAX

[GameboyRMH]

Yeah nobody's forcing you to buy food or shelter, or any of the things practically required to be employed (like communications or transportation), or any of that basic stuff that eats up almost all of your income if you're poor. Nobody's forcing you to live, you can just curl up in a gutter and die. See, no force!

Pure capitalism is the most horrific of all economic systems, because it allows for any of the horrors of any other system, as long as it's done by leaving it as your only feasible option rather than forcing. What other systems do with jackboots, an angry frown and open hostility, capitalism does with a business suit, a pearly-white smile and a liberal application of the just world fallacy.

This is why capitalism should be well-regulated. You don't want to be anywhere near pure capitalism. It's like nuclear energy: A powerful force can be good for us with oversight and moderation, or can fuck up our shit worse than anything else if we are so much as negligent.

Re:FLAT TAX

[Anonymous Coward]

Your logic applies to the 40-50% of Americans that pay NO federal income tax, not just the rich. How many of us know people that have a relatively new car costing around $30k+ and they qualify to pay no federal income tax and get EIC making money when they file federal taxes. I know quite a few. I am driving a 13 year old used car I got from Craigslist and paying full price out of pocket (in state tuition though) for two kids to go to college because I make "too much money" according to the government. Why should I bust my ass to get a higher education and then bust my ass in time and effort to get ahead in this country and in my job working 60+ hours a week when I could just about sit at home or work a non stressful part time job in retail and let others pay for things for me. Does everyone have a natural right to have a smart phone, a 42in or larger TV in their house, and a car newer than 2 years old? Take a survey of those that qualify for EIC and I bet almost all of them have at least two of those things and those that do not qualify for EIC are paying for them.

Re:FLAT TAX

[silentcoder]

It is legal, and done. Usually it's done in the name of charity in fact. KFC here in my country has a promo on at the moment where if you buy a meal over a certain amount they donate a meal to charity. Effectively - they are charging me full price, and giving the same product to somebody else for free (based on income) - not only do they do so legally, they do it as a marketing tool. The idea being that when I choose where to get take-out I may say "I would rather go to KFC and feed somebody else who is hungry as well as myself tonight".

It's not quite the same product with two prices at the counter but the effect is identical - it's merely a matter of execution. Having the same product differently priced at the counter would be a massive overhead of enforcement and calculation and could open them to complaints of discrimination. Donating the product to charity while charging me full price (or offering some charitable discount to some people) is not only legal but quite common.

Nobody has every complained when you discriminate IN FAVOR of the needy. That's what charity MEANS.

Re:FLAT TAX

[mcgrew]

A few years ago they were advertising a book he wrote about how to get rich. What would anyone born into wealth know about getting rich?

What was that line from the last election, "born on third base and thinks he hit a triple"?

Re:FLAT TAX

[Attila Dimedici]

I disagree completely. The current problem is a result of people NOT saving enough. The savings rate in the U.S. was much higher in the 50s and 60s than it is today. If people were not so badly overleveraged, the financial crisis would never have happened. People should not need to borrow money to buy a car, they should have sufficient savings to do so out of thier savings. While there may be occassions where the financially prudent thing to do when buying a car is to finance it, ideally one should not be in a position of needing to finance it.

The fact that tax loopholes were patentable

[mehrotra.akash]

The fact that tax loopholes were patentable is disturbing in itself..

Re:The fact that tax loopholes were patentable

[Plunky]

In fact the government should take a tip from open source and offer bounties for tax loopholes.. pay the discoverer a set fee (or percentage of estimated revenue!) then close it.

Well, there goes a way to get rid of tax loopholes

[LordNacho]

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.

let's exapand this to all law...

[vkt-tje]

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.

Don't stand between a congressman and your taxes

[CuteSteveJobs]

> 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!

Re:Don't stand between a congressman and your taxe

[snowgirl]

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.

Humorous.

[RightSaidFred99]

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.

omg

[X10]

"Tax Loopholes No Longer Patentable"

OMG.

Re:Don't stand between a congressman and your taxe

[Daniel Dvorkin]

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.

Re:Don't stand between a congressman and your taxe

[snowgirl]

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.

This is a bad thing!

[mlush]

• a patent limits the number of people able to use the loophole to those who buy a licence.
• a patent gives the full details on how the loophole works making it much easer to write legislation to plug it.

Re:I think you're too moderate

[cbope]

I'll counter: Why should the poor pay a significantly larger *percentage* of their income for healthcare than the rich?

Answer: They shouldn't. In order for healthcare to be affordable for all, the costs MUST be distributed across the whole of the population. The rich contribute more (in terms of dollars, not percentage) because they make more. It's certainly not hurting the rich, as they seem to be able to continue getting richer. The problem is the poor not being able to afford healthcare. The percentage of people living below the poverty line in the US is shocking given that it's supposed to be a rich nation.