I think that the United States can be pardoned for thinking that the EU is picking on us with its proposed tax on technology companies. There are fewer than 50 European technology companies with annual revenues of $1 billion or more. There are 150 U. S. tech startups with revenues of $1 billion or more. That leaves out the real giants, e.g. Microsoft, Google, etc. The editors of the Wall Street Journal lament:
One difference between President Trump and the European Union is that Mr. Trump makes mistakes on his own and off the cuff, while Brussels makes mistakes by committee after careful study. So while European mandarins are kvetching about the trade war Mr. Trump risks starting with metals tariffs, Europe is now launching its own economic war with a proposal to tax U.S. tech firms.
Not that European leaders will admit the tech-tax plan they unveiled Wednesday is protectionism. The European Commission, the EU’s bureaucratic wing, is plugging for a 3% tax on revenues—no matter the profits—that large tech firms earn from sales in Europe. The companies would pay the tax to each country in which a sale occurs, rather than in the countries where their European headquarters are based, as under current rules.
For “large tech firms†you should read “American companies†since the rules are tailored to apply to the likes of Amazon, Apple, Google and Facebook . The tax proposal ensnares companies that sell digital advertising or provide a platform for online trade between third parties. This exempts such firms as brick-and-mortar department stores that sell designer handbags over their websites, no matter how digital the transactions look.
The measure would apply only to companies with at least €750 million in annual world-wide revenue and €50 million in sales within the EU. Europe wishes it had a tech company of that global heft.
The editors had best get used to this. Governments everywhere are hungry for more revenues and, when the U. S. government taxes foreign companies it’s protectionism while when European countries tax American companies it’s fair because. I’m surprised Illinois hasn’t thought of this.
Maybe we have passed peak globalism and are on the cusp of a retrenchment.
Trump wants to raise revenues by placing tariffs on items my family cannot afford to buy anyway? Good. The Feds are deeply in debt, and funded their services with tariffs before 1900. Our competitors will complain, then adjust. Do it now, there will never be another Trump.