Innovation boxes, international tax reform, and infrastructure spending
The pillars of this fall’s tax legislative debate
There is continuing speculation in Washington that Congress will take up international tax reform legislation this year to help finance a long-term highway construction bill. That speculation reached a new high in late July when House Ways and Means Committee members Charles Boustany, R-La., and Richard Neal, D-Mass., released a discussion draft proposal for a so-called 'innovation box' that would provide a preferential tax rate for income generated by certain intellectual property. An innovation box is expected to be one of the key features of a broader international tax reform plan that may be released in the coming weeks by Ways and Means Committee Chairman Paul Ryan, R-Wis. Ryan’s plan is also expected to include a deemed repatriation provision that would impose a levy on previously untaxed foreign-source income of US multinationals. (Presumably, some of the revenue that would be generated by international tax reform provisions would be used to fund infrastructure spending.)
Innovation boxes, international tax reform, and infrastructure spending: The pillars of this fall’s tax legislative debate examines the general concept of an innovation box and the specifics of the Boustany-Neal discussion draft and provides a high-level overview of how that proposal compares to innovation box regimes currently in place in other selected countries. It also looks at the link between international tax reform and highway funding legislation and considers the policy and political issues that could influence the prospects for congressional action in the near term.