Global Digital-Tax Detente Ends, as US and France Exchange Blows (wsj.com) 70
Detente is ending in the global fight over tech taxes. Earlier this year, France agreed to suspend collection of a tax on digital revenue from large technology companies such as Facebook, Amazon and Alphabet's Google. Meanwhile, the U.S. delayed the application of tariffs it was putting on French goods in retaliation for the tax. But now France has resumed collecting what is known as its digital-services tax, a French official said. Other countries, including Italy and the U.K., whose similar taxes went into effect this year, are also set to begin collection in coming months. From a report: The U.S., meanwhile, is set on Jan. 6 to impose tariffs on $1.3 billion of French imports, including cosmetics and handbags. Washington also has pending investigations that could lead to similar tariffs on 10 other countries, including the U.K., Italy, India and Spain. At issue in the dispute is how to tax an increasingly digital economy. For decades, tax treaties have generally allocated corporate profit based on where value is created. But modern multinationals -- particularly ones with digital offerings -- can sell their products across borders in ways that leave little taxable profit in a country where those products are consumed.
France and some other big European countries say tech companies should pay more taxes in the countries where their users and clients are located, something that could boost their tax revenues. But in long-running multilateral talks on how to update the tax system, the U.S. has opposed any solution that is too targeted at tech companies -- slowing progress. "These taxes are a reaction to dissatisfaction with how long it has taken to get a global multilateral solution," said Manal Corwin, who served as deputy assistant secretary for international affairs at the U.S. Treasury Department in the Obama administration, and now works at accounting firm KPMG. "You may need some trade battles back and forth before there's a strong incentive to say, 'OK, enough.'"
France and some other big European countries say tech companies should pay more taxes in the countries where their users and clients are located, something that could boost their tax revenues. But in long-running multilateral talks on how to update the tax system, the U.S. has opposed any solution that is too targeted at tech companies -- slowing progress. "These taxes are a reaction to dissatisfaction with how long it has taken to get a global multilateral solution," said Manal Corwin, who served as deputy assistant secretary for international affairs at the U.S. Treasury Department in the Obama administration, and now works at accounting firm KPMG. "You may need some trade battles back and forth before there's a strong incentive to say, 'OK, enough.'"
One possible solution (Score:2)
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One possible solution is to assign profit for any multinational to any country based on turn-over. If that outcome doesn't arrive we will see increased calls for just a turn-over based tax or value-added tax per country.
France already has a value added tax, as do UK and Italy (and EU countries in general).
https://en.wikipedia.org/wiki/... [wikipedia.org]
https://en.wikipedia.org/wiki/... [wikipedia.org]
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Turnover taxes unfairly penalize high-volume low-margin businesses.
IMHO, this is bad policy. We should be encouraging business that sell lots of units at low per-unit profit relative to those selling a small number at higher markup. But that part is just a policy preference.
Re: One possible solution (Score:2)
VAT gets around the high turnover low margin issue. Just donâ(TM)t allow VAT reclaim from other countries.
I think trying to tax profits is not the best. Tax consumption / spending instead. That way, companies canâ(TM)t spirit their taxable income to low tax countries.
Correct... but there's a cost/benefit (Score:2)
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VAT does not incentivise middlemen any more than a transaction tax!
A transaction tax is a truly terrible idea, mostly because it can penalise efficient business arrangements. An example is AMD making chips via a foundry like TSMC. A transaction tax would force them to incur additional expenses vs Intel which is a more integrated company and does not have to transact between its foundry and design units.
VAT does not have those problems, and ensures that the taxes are paid only once for a unit of consumption,
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This is a stage in the ongoing re-ordering of international tax norms after the deterioration of what has been called a “century-old, mostly European gentlemen’s agreement”. But it is not the case that nothing has been done about it, as with the OECD BEPS project operationalizing "meaningful changes in the participants, agenda, institutions, norms, and legal instruments of international tax." as described and argued in this paper:
https://papers.ssrn.com/sol3/p... [ssrn.com]
And by exchange blows... (Score:2)
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French wine is pretty cheap, actually.
Just leave it for 3 more weeks (Score:2, Insightful)
After you get an adult back in charge, it may be easier to start dealing with things...
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Harris/Biden owe their offices to US Big Tech. They will be well represented by the US in their tax disputes with Europe et al. Also, this dispute predates Trump, when US Big Tech interests were similarly well represented by Obama.
But do keep knocking back your TDS kool-aid.
Re:French imports? (Score:5, Informative)
Why such a snide remark?
Ultimately, the fact that there are imports to put tariffs on, means somebody is buying something from France. LVMH alone is worth $230 billion (more than Intel!). Much of what they sell is French and they sell plenty to the US.
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Would it be a faux pas to mention foie gras?
Tax Flashback (Score:4, Interesting)
In 1884, the United States began it moves towards a permanent, national income tax--precisely to avoid these problems. Every import duty becomes an international tax battle. That's why the IRS is named "Internal" Revenue Service. VAT, on the other hand, has its own international problems, which have be catalogued by the French government [impouts.gouv.fr]. The best way to avoid these international tax problems in the future is to switch to a National Retail Sales Tax.
Re:Tax Flashback (Score:4, Informative)
You're an ignorant idiot. The US passed a Constitutional Amendment legalizing it over a century ago.
Grow up, you two year old.
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Income tax is unconstitutional and IRS should abolished.
16th Amendment to the United States Constitution, ratified in 1913:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
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The Constitution is not a buffet.
Love it or leave it.
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So the obvious answer is an international taxing authority. That would keep multinationals from gaming the tax system (like Apple in Ireland), and the billionaires (like the Orange Hairball) from paying anything anywhere.
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That would keep multinationals from gaming the tax system
Imagine being that naïve.
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It is obvious but not at all easy to create. They can't even agree within Europe on what the rules should be.
The problem is that large companies have both the means and the motive to game the system. A billion dollars can pay for an awful lot of accountants, lobbyists, lawyers, etc. If a company can save billions per year, they will do so.
My personal opinion is that the corporate tax rate should be 0 and then make up for the lost revenue by higher rates on personal income and/or sales taxes and the like. Th
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Their customers.
Good. Their tax-evasion is passed on to everyone , customer or not.
hmm. Trade between nations? (Score:4, Informative)
Of course, for France, that is $58B out of a $2.7T economy (or 2% ), [cia.gov]
vs.
America's $38B out of an $18T economy (or
THis is going to damage France's economy more than America's. What is needed is for ALL nations to realize that we are ALL BEING SCREWED by these companies, who continue to off-shore, as well as do lots of tax hiding.
What I find interesting is that France already charges a VAT on goods/services that are shipped there, along with much higher tariffs, yet, America does NOT put any sales/vat tax on Goods/services, just a lower tariff.
Re:hmm. Trade between nations? (Score:4, Informative)
France (and the rest of Europe) charges VAT to every single item sold in France regardless of the origin. It isn't just applicable to imports. If you allow VAT-free imports, there will be a very large incentive to import everything. I am fairly sure that every single state with a sale tax applies it to imports as well as local products.
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Technically, Consumers within the states are supposed to pay the sales tax for goods/services they get from out their state. In practice, few do.
Basically, French goods/services pay a lower tariff on goods here, than they pay on VATS for selling in others parts of Europe.
This is also why I support the idea of American government charging a 10% sales tax on everything, having the deli
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American tech/advertising companies don't pay company taxes in America, and so have an unfair competitive advantage selling into France.
If it is true that France discovered a US company that didn't pay its tax bill they should report it to the IRS.
They should definitely not try to collect substitute taxes unless they're going to turn them over the US.
This is a natural result of the really pathetic losing arguments they choose. They hardly buy shit from us, they have no leverage to achieve such stupid goals against a much more powerful nation. When they join us in a war we even have to deliver their bombs to the airport for them, because the
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LOL, no no no and no.
I don't give a rats ass about your country's rules. If somebody visits my server, pays me in dollars, gives me a French mailing address, and pays for shipping, that is where I'm shipping it.
If France doesn't like that, they should reject the import, not whine to me about it.
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Technically, Consumers within the states are supposed to pay the sales tax for goods/services they get from out their state. In practice, few do.
False. I only pay sales tax on marijuana, beer, and gas.
I don't owe your State any tax, because my State didn't make an agreement with your State that would require it, and your State has no legal powers to tax me.
--
"Don't use a cashier. Use the self-checkout lane. You're risking their lives, asshole." -- me
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Technically, Consumers within the states are supposed to pay the sales tax for goods/services they get from out their state. In practice, few do.
Specifically, if I, in Colorado, buy something from the web and it is shipped by YOU from say texas, I am to PAY COLORADO tax on it, something like 3%.
Likewise, if YOU were to order from me, and I ship to you, and lets say that your state has NOT SALES tax, then you do not have to worry.
OTOH, if you live in Texas, you are supposed to pay some 7-10% to texas. As I said above, FEW DO THIS.
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Right. That's your mistake; you conflated the set that contains the states of Colorado, Texas, and others with the set identified, which was actually within the states, which refers to all of the United States.
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With this approach, it even up imports, catal
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You can't set a Federal sales tax.
Article 1, Section 9 of the US Constitution includes:
No Tax or Duty shall be laid on Articles exported from any State.
That means you can't invoke the Commerce Clause at all to do a federal sales tax.
You can't impose a sales tax on me. Your support to strip the rights of my State is meaningless, and a waste of your time.
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If you allow VAT-free imports, there will be a very large incentive to import everything.
VAT-free digital imports are easy to ban, just install a national firewall with a highly restrictive default policy to keep people from "accidentally" receiving their services in the US on an American server they were visiting.
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What I find interesting is that France already charges a VAT on goods/services that are shipped there, along with much higher tariffs, yet, America does NOT put any sales/vat tax on Goods/services, just a lower tariff.
That's the problem with attempting a trade war with the US; every country that we come to trade disagreements with is a country that gives us worse terms than we give them. Conflict would be worse for them even if their economy was as big; but it isn't.
If our default, no-negotiation-needed terms are better for you than you would give us even after negotiation, you'll never ever ever be able to "tit-for-tat" us and win.
If you want to win a trade war, you have to be willing to give good terms, because that is
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Generally, nearly all nations have much better terms WRT tariffs than we do. We are generally around 2% tariffs, while Europe charges some 4%, and China even more (and VERY targeted). It is screwing us over badly. We really need a fairness on these.
At the same time, corporate and personal taxation is a joke. That needs to be change a great deal. At this time, Federal America is better off adding VAT or Sales tax to all sales, esp those going across borders (state or federal).
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Many countries even have a 100% tariff on common items like clothing.
I learned all about that when my wife wanted to start a business exporting retail fashion items from the US to Asia. You can do it, but you can only sell to the rich. It is designed that way intentionally.
You're just blathering but you don't actually know about the subject. Pick an export item that isn't a common commodity or natural resource. Pick a finished consumer item. Choose a couple countries on each continent that have large enough
Protectionism (Score:2, Informative)
The tax argument is a red herring. The real reason is that France has been chaffing over the fact that they don't have any competitive domestic tech companies. They've launched several government funded attempts to created them like Qwant. They've banned free shipping to stop Amazon from hurting their domestic book store shops. But they've all failed miserably, and this is just another avenue of attack. You can be sure these "digital taxes" will have loopholes to ensure that French companies don't have to b
Re:Protectionism (Score:4, Insightful)
The problem is the opposite. If you're 100% local in France, you are at a disadvantage and this policy seeks to level the playing field. You must pay all French taxes. If you "import" the digital goods, there is no current way to tax the profits in France. That is the core of the problem.
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If you're 100% local in France
And if you are not 100% local then you get all the same benefits. If France had a large Amazon/Google/Apple/etc competitor selling to Germany, Spain, and the rest of the EU they would be fighting against this tax instead of pushing for it. Just like they do when they push for the EU's massive farm subsidies [reuters.com]. The core of the problem is that France wants the tariff free trade of the EU's common market, but also wants the benefit of big government protectionism. They are willing to put protectionism aside for
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Why should the US benefit from a common market they are not part of?
Because your idiot consumers want to buy shit, and be part of a modern economy.
So they have to do business with large nations. And that benefits both sides.
In fact, the US benefiting from the common market is an absolute requirement for the US to participate in your market.
If you don't want us to benefit, you'll have to ban people from receiving our goods.
We don't need, and didn't ask for, your moral approval in order to benefit from consensual trade.
So there you have it; we are part of your market, as are
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There is only one solution.
Franxit.