Changes to international tax law could threaten American innovation according to a report released by Hamilton Place Strategies.
Regulations imposed by the Organization for Economic Cooperation and Development (OECD) will require businesses to locate research and development activities where intellectual property income is taxed. This will incentivize American businesses to relocate abroad, which would move jobs and investment overseas.
"The U.S. hosts many of the world’s largest and most innovative firms, but the new OECD regulations—which go in effect in 2016—combined with relatively high U.S. rates, incentivize U.S. firms to relocate innovative activities abroad, placing hundreds of billions of dollars in U.S. investment and thousands of high-skilled American jobs at risk," the report states.
This problem, combined with the America’s high corporate tax rate, creates an uncompetitive landscape.
"For the U.S. economy, this is a lose-lose situation unless Congress acts to adopt rules—that many of our economic competitors have already put in place—to keep innovative companies and jobs," the report explains.