Americans for Tax Reform (ATR) President Grover Norquist sent a letter to Commerce Secretary Howard Lutnick on Friday opposing a patent tax reportedly being floated by Lutnick’s department.
Some anonymous sources told the Wall Street Journal (WSJ) in a piece published July 28 that the Commerce Department has been considering charging patent holders 1% to 5% of their overall patent value in an attempt to increase revenue, which could lead to a significant uptick in fees. Norquist claimed in his letter to Lutnick that the move would “directly contradict the pro-growth, pro-innovation wins” of President Donald Trump’s One Big Beautiful Bill Act, in particular “full expensing for research and development costs.”
Patent holders typically pay the government up to about $10,000, in flat-fee payments which are made periodically over the course of several years, the WSJ reported. The new fee would be a much steeper cost for some patent holders that would essentially function like a property tax, according to the outlet.
“I write to express Americans for Tax Reform’s opposition to the US Department of Commerce’s reported consideration of a proposal to introduce an annual, value-based tax on patents,” Norquist wrote in the letter. “According to reporting from the Wall Street Journal, Commerce Department officials are discussing charging patent holders 1% to 5% of their overall patent value, a proposal that could raise taxes on American businesses by ‘tens of billions of dollars’ per year.”
“It would also necessitate an expansion of IRS enforcement, weaken intellectual property rights, and discourage U.S. innovation,” Norquist wrote further.
“It would also necessitate an expansion of IRS enforcement, weaken intellectual property rights, and discourage U.S. innovation,” Norquist wrote further.
“Under our current patent system, patent holders pay fixed maintenance fees at 3.5, 7.5, and 11.5 years after patent issuance for the purposes of the U.S. Patent and Trademark Office’s (USPTO) ‘self-funding’ model,” Norquist wrote. “Currently, the USPTO collects roughly $4.5 billion in fee revenue annually, and is one of the few ‘self-funded’ federal agencies. A value-based tax on patent seeking would radically depart from the longstanding principal [principle] that the USPTO collects revenue only for the purposes of maintaining our patent system.”
Norquist also claimed that the implementation of a value-based patent tax “would create an unworkable system in which the patent office would have to track every patent through its entire life, collecting the 1–5% every time it is licensed, embedded in a new product, or even sold,” adding that this would require “an expansion” of [Internal Revenue Service (IRS)] “authority and enforcement personnel to put a government-set price tag on the value of a patent and then facilitate collection of the tax.”
Trump removed IRS Commissioner Billy Long on August 8, with Treasury Secretary Scott Bessent now serving as Long’s temporary replacement. On Friday, Bessent made his first visit to the IRS since he was appointed acting commissioner, The Hill reported.
“If adopted, the proposed value-based maintenance tax would represent a fundamental shift in U.S. patent policy, significantly increasing costs for patent holders that would be passed on to consumers in the form of higher prices while reducing the attractiveness of the U.S. patent system for innovators,” Norquist wrote.
ATR describes itself as an organization that “believes in a system in which taxes are simpler, flatter, more visible, and lower than they are today.”
Additionally, Norquist wrote that ATR is “ready to work with” Lutnick on policy that promotes Trump’s “pro-growth policies that increase American competitiveness and innovation.”
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