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Administration pans ‘IP box' proposals

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Tax Hot Topics: Administration pans IP box proposalsThe Obama administration launched a pre-emptive attack last week on a potential international tax reform plan from House Republicans that would include a reduced rate for income derived from U.S. intellectual property (IP).

Jason Furman, the chair of the White House’s Council of Economic Advisers, dedicated nearly an entire speech on March 11 to arguing that an “IP box” with reduced rates for domestic IP is difficult to administer and less efficient than the research credit. Mark Mazur, Treasury Assistant Secretary of Tax Policy, followed up with a blog post the very same day calling an IP box a “bad innovation,” saying it would generate legal disputes, apply benefits inequitably and do little to encourage domestic investment in research.

The administration’s arguments appear to be aimed directly at the Republicans on the House Ways and Means Committee, who are working on an international tax reform draft. The effort is partially spearheaded by Ways and Means Committee Member Charles W. Boustany Jr., R-La., who last year released an “IP box” discussion draft that would have provided a deduction for C corporations on income derived from using domestic IP.

Committee Chair Kevin Brady, R-Texas, recently said the committee had not made any decision on how to integrate an IP box as part of broader international reform and that he had no formal timetable for when a new bill would be unveiled.

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