Actual evidence of economic harm in practice
Software patents as a
vehicle for tax
evasion/avoidance:
Suggested topic 2:
Are software
patents helping or hurting US innovation
and
hence the economy?
Transfer
Pricing - Comparing the rewards of
'Innovation' from:
Financial
Engineering vs Technological Engineering
The abuse and leveraging of
software patents via
unreasonable
valuations, unnecessary
transfer of (IP)
ownership across national boundaries and
"extortionate" licensing (possibly
differentially applied?)
back to the originating company is
for no other
reason(?) than to deprive States and
Nations of
the
taxes that would
otherwise be due. This produces distorted
and inflated views within the Company
of the economic
importance and
intrinsic value and relevance of software
patents. The result is anti-competitive (and restrictive in
technological
potential) to those companies that
behave ethically or are
too small to
achieve similar 'efficiencies' from these tax
evading/avoiding
methods.
Examples:
Apple tax avoidance: Apple is sheltering
billions
in profits offshore - Baltimore Sun
Here's how these
tax avoidance strategies work:
Apple conducts the bulk of its product and
research
development in the United States. This work is done largely
by
engineers educated in U.S. schools, often using basic
research that was funded
by U.S. taxpayers. Apple then takes
the patents earned by its U.S. labs and
registers them
offshore in tax haven nations that impose little or no taxes
on
income on royalties from patents and other intellectual
property. When Apple
sells an iPod or Mac, it charges a lot
for the use of the patents, telling the
IRS that without
this intellectual property, the product would be virtually
worthless. By doing this, Apple transfers much of the profit
from each sale to
the tax haven, while retaining the costs
of research, advertising and
management in the United
States.
The NY Times famously exposed
some of this:
Apple’s Tax
Strategy Aims at Low-
Tax States and Nations - NYTimes.com
and
especially here:
‘Double Irish With a Dutch Sandwich’ -
Graphic
- NYTimes.com shows how transferring the ownership of
patents to
an Irish subsidiary allows transfer of funds from
the US via licensing and then
further cross-border transfers
to minimise taxes due in the US (and markets
worldwide).
How to End Apple's Offshore
Tax Shenanigans | CTJReports says
that through these and
related methods:
Since then, we have spent
quite a bit more time
studying Apple’s annual reports. As our letter to the New
York Times above notes, at the end of Apple’s 2011 fiscal
year, it had
accumulated $54 billion in cash offshore,
almost all of it in tax havens,
and almost all untaxed by
any government. Since Apple’s profits stem mainly
from its
U.S.-created technology, most, if not all, of these untaxed
profits
are almost certainly United States profits that
Apple has artificially shifted
offshore.
Transparency in financial accounts on matters
of how the
transfer of
software patents were accounted for and the scale of
'internal
transfer payments' on licensing and valuations
would help reveal why
Brands
are so intent on seizing ownership and inflating the
value and worth of what
used to be the output and province
of everyday programming for a general
purpose computer
system.
Related question: Have any of these
"internally"
internationally transferred patents
ever
been asserted for
infringement in any court of law?
What
difference would their actual
use as vehicles for tax
avoidance (that might in future become
evasion) using
transfer payments make to their valuations in legal
considerations? [ Reply to This | Parent | # ]
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