The US may be No.
2 on the Global Innovation Index, but it's not because of its intellectual property (IP) policies.
Instead, it's because of what's known as an " innovation box" or "patent box," a type of corporate tax incentive designed to encourage corporations to invest in countries that offer them a reduced tax rate for IP-related income.
"One example is the innovation box, named after the box on corporate tax returns where companies list IP-related earnings," writes Shannon Chen of the University of Arizona in a post at MIT Technology Review.
"As of 2022, 21 countries had reduced rates for income resulting from IP, such as patents, copyrights, and trademarks."
Chen's research, co-written with Shannon Chen of the University of Arizona, Michelle Hanlon of the Massachusetts Institute of Technology, and Rebecca Lester of Stanford University, found that employees in countries with an innovation box earned at least $50,000 more after the tax policy change than workers in countries without such a policy in place.
What's more, those with an innovation box saw 2.6% higher levels of capital expenditures than workers in similar countries.
What's more, there's mixed evidence that the increased patent activity represents high-skilled patents, and some companies
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Ganesh Natarajan is the Founder and Chairman of 5FWorld, a new platform for funding and developing start-ups, social enterprises and the skills eco-system in India. In the past two decades, he has built two of India’s high-growth software services companies – Aptech and Zensar – almost from scratch to global success.