Going Where Free Enterprise and Property Rights Fear to Tread

In the middle of a lot of good policies, such as tax cuts, deregulation, curbing California’s stranglehold that forces its zany extremist regulatory hell on the rest of America and demanding that European countries pay their share for their defense, some really bad policy ideas have also come forth. The latter will certainly undermine the benefits the good ideas otherwise would produce.

Commerce Secretary Howard Lutnick has floated trial balloons — one for the government to collect a share of university inventions’ patent royalties, another for a patent tax of 1% to 5% of a patent’s value. Both ideas should be deep-sixed. Either or both will damage the U.S. innovation ecosystem and cost us far more than the secretary acknowledges.

Busting Bayh-Dole’s Successful Model

Taxpayers already benefit from federally funded research, thanks to the Bayh-Dole Act. This law ensures that taxpayer-supported discoveries reach the marketplace — they didn’t before Bayh-Dole. That generates more than a trillion dollars in economic activity, millions of jobs and thousands of new companies while delivering to Americans life-changing products. And all those translate into tax revenue for the government and an expanding economy.

Congress deliberately omitted government revenue-sharing from the 1980 Bayh-Dole Act because it would discourage licensing and slow commercialization. Lawmakers understood that the public gets the greatest returns in many forms when private industry has confidence to develop and invest in turning university basic research into practical applications. They proved to be absolutely right.

Universities don’t reap unrestricted profits from patent licensing. They must cover the costs of securing and managing patents, share royalties with inventors, and reinvest the remainder into future research. Not only does this cycle fuel breakthroughs in consumer products, it also yields essential medicines and technologies that benefit American consumers for generations. Redirecting a slice of that revenue to Washington would break this cycle, undermine property rights and diminish investment in early-stage technologies. As the Bayh-Dole Coalition notes, “Altering this model would deter future breakthroughs, jeopardize America’s leadership in science and technology, and undermine our national security.”

A Tax on Innovation

Assessing a tax on the supposed value of a patent is nothing less than a tax on American innovation. This unwise proposal courts extremely great risk from complexity, disincentivizing investors and entrepreneurs in patent-centric technologies, and handing competitive advantage to our foreign competitors.

The most knowledgeable experts, such as Grover Norquist of Americans for Tax Reform and economist Steve Moore of Unleash Prosperity (see item 2), have assessed this proposal and found it wanting. For instance, the U.S. Chamber of Commerce, along with allied cosignatories, explains: “This unprecedented idea, if implemented, would undermine the foundations of America’s intellectual property (IP) system, diminish our global competitiveness, and put millions of innovation-driven jobs at risk. Moreover, this approach conflicts with the administration’s laudable goal of reshoring manufacturing to the United States, a goal which depends on a strong and reliable IP framework to attract investment and foster domestic innovation.” IPWatchdog founder Gene Quinn’s bottom line is, “Charging patent owners a percentage of the overall value of a patent is catastrophically stupid.”

Nearly 40 center-right organizations, including the leading tax reform groups, wrote Sec. Lutnick opposing his patent tax scheme, explaining how it's bad tax policy and is at odds with and counterproductive to the One Big Beautiful Bill. Notably, this coalition said the tax would “undermine the benefits of hard-fought business tax provisions of the OBBBA for America’s most innovative and competitive companies – including the Foreign-Derived Intangible Income provision that encourages companies to develop and locate intellectual property (IP) in the United States. This tax on valuable patents would simultaneously drive private venture capital away from U.S. R&D innovators while making our competitors in overseas markets more attractive as investment opportunities.”

Now is not the time to undercut the innovation system that’s delivered so much value to American taxpayers, workers and consumers.  However, that’s exactly what the proposed university patent royalty share, the tax on patent valuation or both will do. Grownups in the administration must reject this proposal. Rather than gush money to line Uncle Sam’s pockets, these tax leeches will stall innovation, jeopardize America's security and open the door for foreign rivals to surpass us in science and technology.

The United States must protect the framework that keeps us at the forefront of global innovation and progress. Official rent seeking is still rent seeking, which disincentivizes enterprise while shrinking the rewards of pursuing innovation and commercialization. Or as Steve Moore put it, “Someone needs to remind Secretary Lutnick that when you tax something you get less of it.”

IRA and MFN: Two Sides of the Same Coin

“Will Mr. Biden still be crowing when the price controls he and Sen. Joe Manchin made a cornerstone of their [2022] ‘Inflation Reduction Act’ don’t work as touted? Will he still praise government price controls on Medicare pharmaceuticals when Bidenomics meets economic reality, as this experiment in socialized medicine plays out?”

These are questions Locke’s Notebook asked in 2023. Back then, President Biden and Sen. Manchin were jubilant over having accomplished Bernie Sanders’ and Elizabeth Warren’s socialist dreams in the IRA.

Fast-forward to the present, and neither of those architects of U.S. socialized medicine remains on the political stage. Their IRA has now borne fruit that’s proving our clear foresight and their blindness by their political ambitions.

Word is that health insurers' 2026 premiums for ACA health plans have come in at a significant increase over 2025—driving up Americans' health care costs. The median rate hike is 15%, with some plans charging in excess of 20%--even 25%--more. Every beneficiary pays the premium, whether he or she needs a lot or very little medical care.

Medicare Advantage plans had been stable before the IRA, explaining enrollment in the MA program’s private insurance options now exceeding half of all Medicare beneficiaries. But the IRA is forcing unwelcome changes.

The IRA incentivizes Medicare Part D and Advantage-participating health plans to raise Medicare beneficiaries’ costs. A recent study by the University of Southern California’s Schaeffer Institute finds that Medicare health “plans have substantially increased beneficiary cost-sharing exposure” thanks to the IRA. The IRA has caused these health insurers to raise deductibles and replace copays with coinsurance (where a patient is liable for a percentage of the overall cost, in the case of prescriptions, based on the list price), the Schaeffer Institute reports.

Prior authorization has also become a barrier for more Medicare patients to receiving care promptly and efficiently. Fewer Part D plans are now available, posing access challenges to Medicare beneficiaries who live in rural areas.

Those who hold property rights, economic freedom and free enterprise dear should cry out for IRA repeal. Demand the bolstering of Medicare’s dynamic pre-IRA private-sector options.

Further, we all must insist on stopping the dangerous, unprincipled trend pushing government intervention in the free market. In particular, this includes opposing government price controls, such as “most favored nation” foreign reference pricing. Conservatives for Property Rights has cautioned about price controls’ dangers here, here, here and here, for example.

Reference pricing such as "most favored nation" price controls, just like IRA's Medicare drug price controls already, would further diminish drug sector R&D funds, reduce the number of viable biopharma projects, slow the rate of innovation and lower the number of new generic drugs available to patients.

CPR, a member of the Coalition Against Socialized Medicine, has consistently opposed price controls, regardless of the party in power. That’s because self-imposed price controls do nothing to end foreign freeloading by socialized medicine countries that set artificially low drug prices. Rather, such price controls only harm patients, dehumanize medical practitioners who must carry out inhumane consequences like rationing care and forcing un-QALY-fied patients to die, and ensure that medical innovation doesn’t happen in that country.

In short, adopting the very policies that have led to terrible consequences in other nations should not be an option in the United States of America. Rather, we must return to our principles and lean on our strengths. We’ll be a better nation for it.

Base Hit or Double?

The recently enacted “One Big Beautiful Bill Act” is, like much legislation, a mixed bag. Some of its provisions are highly beneficial and important, while other provisions leave much to be desired.

But it’s about what you could expect from a Senate and House with such tight partisan margins—which leave leadership very little wiggle room to obtain a deal. Recall that old saying about the legislative process’s similarity to watching sausage being made. And President Trump’s shadow fell across the already difficult legislative environment, which didn’t necessarily improve prospects for the reconciliation process or product.

Among the disappointments, the overly generous quadrupling of the state and local tax (SALT) deduction from $10,000 to $40,000 rewards liberal havens for their outrageously high taxation and extremely heavy regulatory hand. Those states can continue their antiproperty rights, anti-economic freedom governance. The SALT bailout also subtracts from reducing the federal deficit, i.e., it adds to the spending side of the balance sheet.

The bill also allows Medicaid to continue growing. The fact is, those “cuts” to Medicaid liberals are whining about aren’t actual reductions in spending—you know, when a dollar line item in this year’s budget is 95 cents next year. They’re actually a modestly slower pace of growth. H.R. 1 hardly reduces Medicaid, which ballooned under Obama and Biden. About 11% (38 million) of the U.S. population meets the government’s definition of poverty. Around two and a half times that are enrolled in Medicaid. This piece of the safety net is welfare for well beyond the needy.

That said, several property-rights wins reside in this budget reconciliation package. The bulk of the 2017 Tax Cuts and Jobs Act tax measures were made permanent—protecting the wallets of Americans across income levels and stages of life, and giving certainty to businesses, including those organized as LLCs, S-Corps, etc. Immediate, 100% expensing and a combination of profamily tax provisions ease the tax burden for many Americans.

Also, “Inflation Reduction Act” green energy giveaways, like those designed to further electric vehicle mandates and remove consumer choice of internal combustion-powered vehicles, are reduced or repealed.

Health Savings Accounts, which enhance consumerism in health care, get a significant boost. The Death Tax isn’t repealed, but is less punitive and is indexed to inflation; the estate tax exemption for 2026 rises to $15 million for individuals, $30 million for married couples.

Conservatives for Property Rights member the Taxpayer Protection Alliance gives perspective on the legislation: “It is without doubt a significant accomplishment that lawmakers extended pro-growth tax policy enacted under the TCJA. Unfortunately, tax hikes buried elsewhere in the bill derail the hard-earned promise and progress of tax reform. Remittance taxes will punish millions of hard-working Americans, while new taxes on solar and wind projects will cost thousands of jobs across the country. Tax hikes make everyone poorer, while giving government bureaucrats the power to pick winners from losers. This is true regardless of which party passes them.”

Heritage Action’s assessment is, “This legislation makes headway on conservative priorities to reduce spending and ensure Americans’ tax dollars are not used to further liberal wishlist priorities.”

The mix of this sausage led our coalition to remain neutral on this legislation. The Senate got rid of a good bit of the unfair, punitive tax increases, like those on small businesses and the self-employed that the House bill contained. The final bill is a base hit or maybe a double. But more property-rights priorities remain to be accomplished if the baserunner is to score a run.