Max Baucus: “American judge and judicial philosopher Learned Hand once wrote: ``Any one may so arrange his affairs that his taxes…”

“American judge and judicial philosopher Learned Hand once wrote: ``Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury.'' Judge Hand would probably have been surprised to learn that, through the use of patents, certain individuals have acquired monopolies on methods of arranging one's affairs to lower taxes. That is precisely what patenting a tax strategy does: it gives the holder the exclusive right to exclude others from a particular transaction or financial arrangement without permission or payment of a royalty. And patents have been granted on ideas as simple as funding a certain type of tax-favored trust with a specific type of financial product or calculating the ways to minimize the tax burden of converting to an alternative retirement plan. These commonsense tax planning approaches should be available to everyone. No one should be able to patent those techniques. Let's first assume that the tax planning technique is legitimate under the Tax Code and does, indeed, reduce taxes. In that case, every taxpayer should be able to plan in a way that they can lower their taxes without paying royalties or worrying that they are violating patent law while filing their tax returns. This is a matter of fairness and uniform application of the tax laws.”