The president of Americans for Tax Reform, Grover Norquist, sent a letter to Commerce Secretary Howard Lutnick on Friday, discussing proposed changes coming from Lutnick’s division.
According to some anonymous sources mentioned by the Wall Street Journal, the Department of Commerce is weighing the possibility of implementing a fee between 1% to 5% on the value of patents to boost revenue. Norquist argued in his letter that this move directly contradicts the principles of President Donald Trump’s significant tax reform, especially regarding the full costs of research and development.
The WSJ reported that patent holders typically pay up to $10,000 in fees to the government, which are spread out over several years. The proposed new charges could potentially hit some patent owners quite hard, resembling property taxes. It’s a significant shift.
Norquist expressed his opposition by stating that the Department of Commerce’s initiatives could complicate tax reform efforts. He mentioned, “This would mean expanded IRS enforcement, undermining intellectual property rights, and disincentivizing innovation in the U.S.” If these new fees are implemented, it could provoke backlash from both domestic and international businesses.
He emphasized that under the current system, patent owners make fixed maintenance payments at various intervals, roughly 3.5, 7.5, and 11.5 years after the patent is granted, which funds the U.S. Patent and Trademark Office. Currently, this office generates about $4.5 billion annually, functioning as a self-sustaining federal agency reliant on its own fee revenue.
Norquist also mentioned the potential chaos that value-based patent taxes could unleash, explaining that it would require the Patent Office to monitor all patents across their lifespan and establish a system to continually assess and collect fees based on their value.
In recent developments, former IRS Commissioner Billy Long was removed from his position, with Treasury Secretary Scott Bescent now serving as the temporary replacement. His recent visit to the IRS marks the beginning of his tenure in that role.
Norquist declared that if this tax is adopted, it would represent a major shift in U.S. patent policy. The resulting costs would likely be passed down to consumers as higher prices, which could deter innovators from utilizing the U.S. patent system.
Americans for Tax Reform supports a simpler, more transparent, and lower tax system. Furthermore, Norquist mentioned that the organization is keen to collaborate on policies that align with Trump’s pro-growth agenda to enhance America’s competitiveness and innovation.
