Comments on 'Taxation of Intellectual Capital:' Better than Consumption-Tax Treatment?

Abstract

In Taxation of Intellectual Capital, Professor Lily Kahng argues that U.S. tax law is fundamentally flawed because it allows businesses to “expense” investments in self-created intangibles. The article draws on research in related areas (knowledge management, financial accounting, and national accounting) that seeks to identify and measure “intellectual capital,” “a central driver of economic productivity and growth.” Within the framework of a normative income tax, Professor Kahng argues that businesses should be required to capitalize and amortize investments in a broad array of intangibles, including research and development, advertising, and employee-training expenses.