Federal Extortion Tax

First Published in the Bend Bulletin 8/29/25

The world’s expectation of the United States has shifted—and with it, the nation’s business climate. In recent months, the U.S. has altered long-standing treaty commitments, reduced foreign aid, and extended cordiality toward governments once deemed global pariahs. But what’s unfolding domestically may be worse: an extortion tax on America’s innovators and businesses.

New Gatekeepers of Innovation:  Universities—the cradle of U.S. invention—are under pressure not just to meet academic standards but to bend to the political and financial whims of federal funding agencies. The current administration recently invoked the Bayh–Dole Act to demand that Harvard disclose all patents tied to federally funded research and justify their use. Officials threaten to seize or relicense patents if unsatisfied. Harvard holds more than 5,800 such patents, making the scope of this action unprecedented in modern U.S. research policy. It also ignores the principles behind a patent, which is to protect the holder from infringement and allow unfettered use for their chosen purpose.

This follows similar disputes in which Columbia paid over $220 million and Brown about $50 million to settle federal claims tied to research funding. While the Bayh–Dole Act technically allows such interventions, the tactic has rarely been used to this degree and is viewed by critics as an intimidation lever—discouraging innovation rather than protecting the public interest. Federal funding for university research has already fallen 18% between 2011 and 2021, placing the U.S. 27th among OECD nations relative to GDP.

The result: private investors could increasingly control university-generated intellectual property, profiting when it suits them—or worse, foreign research entities could surpass U.S. capabilities entirely.

Corporate Pay-to-Play:  The private sector is not immune. Under the Hart–Scott–Rodino Act, mergers above set thresholds must pay filing fees ranging from $30,000 to over $2.3 million. These fees are predictable; the new problem is the creeping insertion of ideological conditions into merger approvals.

In one recent case, the Federal Trade Commission considered requiring merging companies to pledge not to boycott platforms based on political content. The Federal Communications Commission has also been accused of pressing telecom firms to dismantle diversity, equity, and inclusion programs in exchange for approval. Such moves transform regulatory review from market oversight into ideological enforcement.

Tribute for Trade:  Meanwhile, domestic companies face conflicting regulations, shifting markets, and tariffs imposed without transparent justification. Tariffs—already a hidden tax—are now coupled with the specter of requiring companies to share a percentage of revenues or profits to secure an export license. While no such policy is yet on the books, the idea mirrors the royalty extraction models of state-controlled economies. It would not just reduce profitability; it could drive companies to cede markets to foreign competitors.

From Rhetoric to Reality:  For an administration elected on promises of being “pro-business” and “cutting regulations,” these actions move in the opposite direction. They discourage innovation, deter mergers, burden trade, and concentrate control in the hands of government gatekeepers. This is not the free-market leadership America once championed—it is a pay-to-play extortion system closer to the state-ownership models of authoritarian regimes and organized crime—what wonderful examples to replicate for a government of the people. Just hope someone with integrity is keeping track of the extorted money. #NeverFearTheDream