United States Tax Policy

Intel public policy: How Intel promotes innovation worldwide

Intel is the world’s largest semiconductor manufacturer and a world leader in computing innovation. As an iconic high tech manufacturer, more than three-fourths of Intel’s revenue comes from outside the United States, yet roughly three quarters of its advanced manufacturing and research and design (R&D) is done here in the United States. Intel’s domestic operations, supply chain, distribution channels and investments have resulted in widespread economic impact throughout all sectors of the U.S. economy. In 2012, Intel was the number 1 investor in research and development among U.S. publicly traded companies and the 5th largest capital investor in the U.S.  For every Intel job in the United States, an additional 13 American jobs are supported, resulting in a total of 774,600 jobs.

Key Issues

As a proponent of comprehensive tax reform, Intel supports creating a more competitive and simplified tax system that encourages innovation and manufacturing investment in the United States and creates a level playing field for US companies who are competing globally. The elements of such a system should include:

  • A lower, competitive corporate rate of 25 percent or lower: The US combined statutory corporate tax rate is 39.2, the highest in the organisation for economic co-operation and development (OECD). In contrast, the average combined statutory corporate tax rate in other OECD countries is only 25.1 percent.

  • A modern, hybrid international tax system: Intel supports a hybrid international tax system that looks like the rest of the world and creates a level playing field for U.S. companies who are competing against foreign companies who benefit from a lower rate and a territorial system. The United States is the only G-8 country to use a worldwide tax system, which collects US taxes on the earnings of US foreign subsidiaries when they are distributed to the United States. Most other OECD countries employ a territorial tax system, where taxes are collected only by the country where the income is earned.

  • An innovation box to encourage companies to locate high-value jobs and investment associated with creation of intellectual property (IP) in the United States: In a global economy, IP is incredibly mobile and other countries recognize the importance of attracting this innovation-based investment. An innovation box that taxes US IP income at a lower rate is pro-growth and pro-investment, and countries like Ireland, France and the United Kingdom have adopted them. A carrot/stick innovation box approach provides an incentive for companies to keep their manufacturing and IP in the United States by providing a 15 percent rate for the IP income tied to those US exports. In addition, it shuts down abuses under the current system and discourages companies from moving their IP by immediately taxing foreign IP income that is in a low-tax country.

  • A permanent and enhanced R&D tax credit: Intel supports increasing the R&D alternative simplified credit (ASC) to 20 percent and making the credit permanent. The credit is needed to keep the United States competitive in the global race for R&D investment dollars. The United States ranks 24 among 38 industrialized countries offering R&D tax incentives (2009 OECD study). Intel also supports extending the R&D tax credit as a part of the tax extenders bill. The R&D tax credit is currently subject to one year extensions. It has been allowed to expire and later extended retroactively making it difficult for companies to plan their R&D investments.