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AFF Sentinel V20 #58 - Income Definition and Patent Protection

The Federal Government's Grasp Knows No Bounds

Steve Dittmer | AFF Sentinel

Colorado Springs, CO

Originally sent to subscribers 12/14/23

We’ve written before that when AFF was founded the idea was to discuss issues of critical importance to the beef industry, typically like government regulation, basic free market issues and public education about our industry. We did not expect to be discussing so many Constitutional issues.

Under President Obama, those basic Constitutional rights came up several times. But under President Biden, constant pressure or the outright flaunting of ignoring Constitutional rights has become commonplace.

We never expected to see the definition of “income” being parsed like Bill Clinton’s “It depends on what the meaning of the word ‘is’ is,” or to hear Biden’s government threatening to steal patents from private companies if the administration didn’t like the company’s pricing.

Yet, here we are. The federal government in front of the U.S. Supreme Court this week was contending that “income” was income to be taxed even if a taxpayer had not received it as income, if it was as yet, unrealized profit. How many times have we seen “paper” profits disappear and never land in our checking account? Like Bill Clinton’s parsing, how can income be received if it never came “in?” Yet the government is arguing that income doesn’t have to be received to be taxed under 1913’s 16th amendment authorizing the “Income” tax.

What was it Rush used to say…”More mindboggling after this word from our sponsors?”

We’ll deal with this one some more in future columns.

The grasp of the left, the big government movement, should never be underestimated. Taxing unrealized income is a reflection of the left’s unyielding, ever enlarging need for more of other people’s money to fund things they want but cannot pay for. Neutralizing patents is another manifestation of destroying private property, of granting more power to the central government. If there is no patent protection, there can be no protection for innovation, no possession of the rights from one’s intellectual property. What is the difference between China stealing a company’s intellectual property and the U.S. government stealing a company’s intellectual property?

Only that taxpayers are paying their own government to steal property from its own citizens.

We’ve all seen those flashy drum majors, almost bending over backwards leading the marching band onto the football field. Well, think of that as a blowhard government official marching onto the field and announcing that the price of Drug X has been ruled too high by Administrator High N. Mighty and the company that worked with public and private funding to develop the drug, then commercialized and is marketing Drug X now must license the patent on Drug X to competing drug companies because the government says so.

That is what “marching in” is all about. In 1980, the government owned thousands of patents on drugs developed partially with government funds that were lying around unused because the government would grant only nonexclusive licenses. Few companies were willing to spend the money to take scientific discoveries to commercial products without owning the rights.

Sens. Birch Bayh and Bob Dole wrote a law that allowed universities, nonprofit research institutions and small businesses receiving federal funds to develop scientific inventions and then license the commercialization and marketing of those inventions to private sector companies. The companies usually paid royalties back to the university or institution.

The law fostered the commercialization and marketing of thousands of drugs.

The statute included a safeguard that allowed the government to “march in” if patent holders were unable or unwilling to commercialize the product and make it available to the public. The government could then license the use of the patent to other companies.

There is no mention of price in the statute and Bayh and Dole specifically held that “the law makes no reference to a reasonable price that should be dictated by the government,” (“Biden Decides to `March In’ on Drug Patents,” Wall Street Journal, 12/13/23).

Now the Biden administration is, like Joe and his associates are prone to do, making up the contention that price should be part of the public accessibility equation. They claim that would increase competition and lower drug prices. That kind of faulty economic reasoning is what scares us about USDA “studying” competition in cattle marketing.

Of course, what Biden’s drug plan would do is dry up the supply of new drugs from those sources because no company would spend the billions necessary to produce a drug they can’t have exclusivity on. That’s what patents and licensing is all about. But that is all over the heads of bureaucrats and political dunderheads on Biden’s team. They just want to get political credit for beating back drug prices.

When we closely followed animal drug development in the early ‘80s, the development of new pharmaceuticals took $500 million and ten years to get to approval -- for the ones that made it. Now, the Journal article said that figure is $2.6 billion on average for human drugs. Roughly 90 percent of drugs don’t get to the approval stage.

We agree with John Carney of the Breitbart Business Digest, who said some critics of Biden’s “march in” plan figure Biden’s team is calculating that while their gambit will likely fail in court -- eventually -- they’ll get political credit for it next fall. It’s kind of like the student loan forgiveness program that failed in court but gained student votes in 2022.

For socialist and Marxist government to function, the government must take everything everyone earns and eradicate the notion of private property. Here are two examples of those theories being tried. Besides the elimination of individual liberty and private property rights, it also dooms such governmental structures to fail, as the money has to be produced somewhere, and governments don’t produce money, they just take it. And there are no “earnings” if one doesn’t own the fruits of their labor.

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(Old link is in column at right.)

Edi. Note: Picture below courtesy beef Check off).


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