National Review Op-Ed: Don't Tax Innovation: The Patent 'Wealth Tax' Is a Terrible Idea
- Jeffrey Depp
- Sep 29
- 1 min read
Updated: Oct 8
The administration must abandon this innovation-killing idea.
Op-Ed Published in National Review by CFJ Senior Counsel, Law & Policy, Jeffrey Depp:
According to a recent report in the Wall Street Journal, the Commerce Department is weighing a plan to charge patent owners a new annual “fee” of 1 to 5 percent of a patent’s value for the purpose of raising revenue. Trump administration officials suggest this patent fee system could generate tens of billions of dollars. But whatever the political appeal, the proposal is not only misguided policy; it is unconstitutional at its core.
Patents are legally codified as property. Section 261 of the Patent Act states unequivocally: “patents shall have the attributes of personal property.” That makes any valuation‐based levy functionally a federal ad valorem property tax on personal property.
Under Article I, Section 9 of the Constitution, direct taxes on property must be apportioned among the states by population. Courts have reaffirmed this principle since the early days of the republic. In Hylton v. United States (1796), the Supreme Court acknowledged that while the carriage tax at issue was not direct, taxes on real property clearly are, and thus must comply with the apportionment rule.
Subsequent legal interpretation has consistently held that capitation, real property, and personal property taxes constitute direct taxes and must be...
