A New Kind of Patent

August 13, 2010 | 1 Comment

This writer was asked in an email a couple days ago about what the non-committed, seemingly idealism free, and generally pro commerce view is here about incentives for energy and fuel production.

It is an arena fraught with special interests of every stripe including the environment itself to the consumers ranging from wealthy to dirt poor.  The principle is here and always will be to get the most abundant supplies at the lowest possible cost.  Competitive Capitalism, not just capitalism that’s in bed with government doing the business on the sly, but out in the open, everyone gets the same deal from government – competition.

Which leads back to the principle of patents.  Now admittedly the law as dictated by special interests has diluted the value of a patent unless your situation matches well with the special interests that have hooked the law to their advantage, but the concept of exclusivity has a parallel for incentives.

So here is this writer’s take on incentives.  For new products, not services please note and mind carefully on this point; just products get a period, such as with a patent’s exclusivity that would be tax-free.  Consumers might even get an income tax deduction for buying such stuff. Put progress in high gear with high power.

Say two decades, or twenty years for no income tax, employee matching FICA, excise or other taxes for the new product’s business.  For everything, energy, widgets, you name it.  New products in new companies get two decades of freedom from taxation.  It’s time for a “tax patent policy”.

Ready to fight, got a better idea, or want to poke holes in the concept?  That’s what comments are for.  Change, modify, reject, everyone except spammers gets to have their say.  No cussin’ or you’ll get deleted.  No personal affronts either. Be nice.

Some will notice straight off that some products like software have product lives of just a few years.  That’s OK.  Just cut the averaged tax in half for say 10 year, or 25% for 5-year product life cycles.  So long as everyone gets the prize for the risk.  That’s the whole point – put an incentive on taking risk.

What has everything on slow or stop isn’t the quality of ideas.  It’s the potential between the loss of the time and money against the payoff from a risk.  Take out 35%  tax of profiting and the payoff picture looks very different indeed.

Moreover, wanting to get or losing an earned tax-free product puts intense focus on new better and cheaper products – a boon to research. Humans tend to want to be safe, but put an economy on safe with growth and better products plus lower costs and the need for innovation will explode.  It supports the emotional side of the mind as well.  New, better, faster, cheaper, has great appeal – the intellect needs stimulation to do better – not crawl into a hole and pull over a rock with a weapon poking out to fight off anyone with an advantage.

Maybe you’re thinking ‘that writer is a perverse bugger’ and maybe so, we’re talking incentives here, trying to get people to do things they would otherwise postpone or pass over.  What matters is to get human energy moving and making contributions.  That ‘Hu’ thing noticeable in some TV ads doesn’t have legs to travel.  But a product with a twenty-year tax-free status, maybe reaching to the employees, management and consumers surely will.

Lastly, one might kick in a special deal for everyone instead of a special interest set.  Let’s say your product at the tenth year costs half as much – give that product an extra ten years!  Better faster cheaper, right.

That’s enough, past 600 words.  A seed is set; ‘tax patent policy’ is out now.  This writer’s snowball has just been pitched into hell.  Lets see what the devils can do with it.


1 Comment so far

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