Lutnick Wants a Tax That Would Kill Innovation

All of us benefit when universities earn royalties on inventions resulting from subsidized research

By Joseph P. Allen.  He is executive director of the Bayh-Dole Coalition. He was a staffer to Sen. Birch Bayh, 1977-81. Excerpts:

"until recent decades, if that research resulted in an invention, Washington seized all patent rights."

"As a result, few of those lab discoveries ever turned into commercial products. Universities and private companies lacked the incentives to find partnerships and invest the huge sums needed to turn these initial discoveries into useful products."

"The Bayh-Dole Act of 1980 allows academic institutions and small companies to own the patents on discoveries made with federal support so they can be turned into useful products. The Economist Technology Quarterly in 2002 called the law “possibly the most inspired piece of legislation to be enacted in America over the past half-century” and credited with helping “reverse America’s precipitous slide into industrial irrelevance.”"

"Academic institutions can keep any royalties from licensing their patents"

"Mr. Lutnick’s idea would cost the government more revenue than it would generate."

"Academic patent licensing income totaled about $2.7 billion in 2024. Assuming Mr. Lutnick snags 50%, as he calls for, the government gets $1.35 billion. While no one has calculated precisely what the government receives through taxes created from products and companies stemming from the Bayh-Dole Act, the figure clearly is more than $1.35 billion. Academic patent licensing contributed $1 trillion to the U.S. gross domestic product between 1996 and 2020—$40 billion a year. Additionally, the law supported 6.5 million jobs."

"a new study by the Association of University Research Parks estimated that university research parks and other innovators created $33 billion in annual federal tax revenue."