Policy - Tax Reform

Supporting policy to drive innovation

March 23, 2015

As a global company at the forefront of cutting-edge science, medicine, and technology, we must compete in the global market for capital, jobs, and investment. In making decisions about the allocation of corporate assets around the world, one factor we consider is the tax code. As United States (U.S.) policy makers contemplate corporate tax reform, we believe focus should be on creating a globally competitive tax system to support and reward domestic investment. 

The U.S. has one of the highest corporate tax rates in the world, which puts American companies at a significant disadvantage in the global economy. Recently, uncompetitive U.S. tax policies have resulted in tax inversion deals specifically designed to take advantage of lower tax rates in foreign countries. To help the U.S. attract and retain innovative companies, as well as the jobs and societal benefits that go with them, we must build a corporate tax system that provides incentives for companies to invest in research, development, and manufacturing in the U.S. 

One reform that could spur domestic job and economic growth in key innovation sectors is the creation of an appropriately designed “innovation box,” which would incentivize U.S. and foreign companies to locate their intellectual property (IP) and corresponding economic activities, including manufacturing, in the U.S. Key components of the innovation box proposal include:

  • IP-Specific Tax Rate. Income from IP would be taxed at a rate that is comparable to the rate imposed under similar regimes in other countries — no higher than 10 percent.
  • Domestic Research and Manufacturing Incentive. Companies would be required to invest in substantial research or manufacturing activities in the U.S. to qualify for the lower rate, which in turn would drive job creation in critical innovative sectors.
  • Foreign Investment Incentive. To incentivize foreign direct investment, foreign-held IP that is owned by a non-U.S. parent company (or affiliate) could be transferred to a U.S. affiliate at any time following enactment, making the U.S. an attractive destination for investment by foreign companies.

The adoption of an “innovation box” in the U.S. could help develop a favorable business environment that promotes innovation and helps make American companies more competitive globally. 

The U.S. economy and American workforce have a great deal at stake in the corporate tax debate. Corporate tax reform provides the potential for significant upside for the U.S. economy, domestic job creation, and innovation. Biogen is proud to be a leader in advancing public policy solutions that will support innovative industries like ours and benefit the U.S. economy as a whole.

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