Billionaire financier Mark Cuban tore into a tax proposal President Donald Trump's administration is currently considering, to levy an ongoing fee on holders of patents.
"One of the dumbest ideas in the history of business," Cuban, a frequent critic of Trump's policies, posted to X on Friday.
Making matters worse, he noted, this comes at a moment when the explosion of artificial intelligence is creating a greater demand than ever for patent filings, to safeguard people's work from being copied. "The crazy part is that fewer patents will be filed as inventors try to protect their creations from LLMs," he wrote.
The idea to tax patents was first reported by the Wall Street Journal.
"Commerce Department officials are discussing charging patent holders 1% to 5% of their overall patent value, a shift that could dramatically increase fees, according to people familiar with the matter. The idea is being considered by Commerce Secretary Howard Lutnick as part of his plans to raise revenue and narrow the government’s budget deficit," wrote Amrith Ramkumar. This idea "would be a major change in the 235-year old practice of applying for a patent, a bedrock process in the U.S. economy."
Currently, patent holders are charged a flat fee up front of up to $10,000, which they can pay in installments. A perpetual tax on patent value, the report noted, would make the patent system work more like local property taxes, and in many cases be a massive increase in costs to inventors and businesses that innovate new technology.
The real problem with this idea, Cuban continued, is that it would not be a tax on actual profits made on new inventions, but on the estimated potential amount of profits that could be made, whether or not they actually are.
"Let’s call a tax on patent value what it is — A Tax on Unrealized Capital Gains," Cuban wrote. "It was dumb when Biden proposed it. It is just as dumb to tax the estimated value of a patent."