US launches inquiry into French plan to tax tech giants

https://www.bbc.co.uk/news/world-europe-48945828

by Isofarro • 7 years ago

55 84 7 years ago

bbc.co.uk

The US can continue to bully everyone around them, but one day there will be no friends left and while the US is starting a trade war (or even an actual war) with friends and enemies other nations will strengthen their relations and the power balance will shift eventually.

China has been on track to overtake the US as the largest economy for many years now. The US obviously feels threatened by the shift of economic powers and currently tries every thing they can to prevent this from happening, but it's going to happen regardless. China has a stable country, a hard working population, people feel content and the government is looking after its people despite what Western media is reporting. The Western world is increasingly becoming divided, fueled by capitalist greed, social media which is anything but "social", huge wealth disparities, racism and many other deep ingrained problems. The US might complain about other nations spying, etc., but it is the US and the NSA who has been the only nation which has been proven black on white that they have been grossly spying on everyone else in this world, it is the US which is the only nation which is constantly starting wars with other nations and destabilising economies. It's not China, nor France, nor the EU.

I can only recommend anyone in the US to go and visit other nations and explore the world and it becomes very quickly apparent that the Western world has some deep issues which other countries seem to be much better in control of. If entire freedom of everything means that people live divided, in poverty, exploited, plagued by suicide, mental health issues, obesity and mass shootings, then maybe the way the West has shaped in the last 50 years is not all that great which everyone wants us to believe.

Other countries have other issues, but honestly, after being to many many other places and far East I can only say that these problems look minor in comparison to what I observe in the West.

nolok7• 7 years ago

I don't stricly disagree (nor agree) with your comment, but there are several thing that you include as "a global grave issue of the western world" in general but is actually very US-centric. When I look at the list you give, "people live divided, in poverty, exploited, plagued by suicide, mental health issues, obesity and mass shootings", it's not that those issues don't exists in other countries, but in the western world the US has that strange habit of always exhibiting the most extreme form, and frankly to not look like it's working and making any advance at fixing them.

kodz42• 7 years ago

The US is a much more diverse population and a much larger population. It's going to be more chaotic than anything the Europeans have to deal with.

But dealing with that chaos, at that scale, produces lessons and learning that won't happen anywhere else, other than probably India.

mhkool• 7 years ago

frankly to not look like it's working and making any advance at fixing them.

yes and no. It appears that nothing is done to prevent or fix since mainstream media do not report anything. The US has the largest number of doctors of "functional medicine", which contrary to the rest, seek to find the root causes of disease, and many times find them and restore health with supplements, probiotics, life style changes and toxin avoidance. For the hardliners that deny functional medicine, I recommend to read about the full story of Dr Terry Wahls. TL;DR a professor with the best treatment for MS by many top doctors deteriorated to being in a wheelchair and she cured herself by reading the scientific literature, understanding the whole body and doing a different treatment. She now treats MS patients who who has heard of her? So fixes exist but are unknown.

buboard• 7 years ago

It's not China, nor France, nor the EU

Dont disagree, but this comes part and parcel with being a global superpower. When USSR was alive, we had 2 of them.

eeZah7Ux• 7 years ago

You posts paints a false dichotomy between US and China.

The "West" never existed. There are hundreds of languages, cultures and paths in history.

Your criticism of "poverty, exploited, plagued by suicide, mental health issues, obesity and mass shootings" is grounded in reality but you framed it in a completely one-sided way.

fyoving5• 7 years ago

Shouldn't be a long inquiry, this tax is textbook discriminatory trade barrier.

If you look at EU policy as france and germany protecting their perceived interests by targeting US tech companies it starts making sense, I think a rule of thumb there is: "if it hurts google it should be law".

lm28469• 7 years ago

by targeting US tech companies

It's targeting tech giants, not US companies. "Any digital company with revenue of more than €750m - of which at least €25m is generated in France"

nolok7• 7 years ago

by targeting US tech companies

It does not. In a preliminary evaluation, there are 26 companies that would match the criterias, 11 are not americans, 4 of them (that's 1/6th) are even french companies to begin with.

• Vente de biens: Alibaba, Amazon, Apple, Ebay, Google, Groupon, Rakuten, Schibsted, Wish, Zalando.

• Intermédiaire de services: Amadeus, Axel Springer, Booking, Expedia, Match.com, Randstad, Recruit, Sabre, Travelport Worldwide, Tripadvisor, Uber.

• Publicité en ligne: Amazon, Criteo, Ebay, Facebook, Google, Microsoft, Twitter, Verizon.

The point is to catch up with something everyone else has figured out: that the value is in the users data. Investors have caught up to it and acted on it, so did VC, so did companies, so did everyone ... Except governments. If the data is what you extract your value from, then it should be normal that it is what you are taxed on.

fyoving5• 7 years ago

If my math is correct then most of the companies are American, and by far most of the potential revenue.

Considering the rhetoric leading to this tax and the french government's many raids and failed investigations into US companies and their taxes it's difficult even with careful wording for the french government to deny the actual target of this tax in a WTO type setting.

zaarn• 7 years ago

If Axel Springer is taxed on board. I'd sign the law with my own blood if it brings them into financial ruin.

And Criteo too, they're the forgotten Data-kraken of Europe. Just go watch their Marketing Material!

fulmicoton• 7 years ago

Call it discriminatory if you want.

They have been playing the system using different tax evasion schemes. France makes a law to force them to pay their fair due.

aluren2• 7 years ago

To be frank, a 3% tax is too little too late.

nolok7• 7 years ago

We still hope to get it turned into a global EU thing rather than each of us bickering with its own ten of a percent competition over who gets screwed up more. But several EU countries are not on board, so we're taking baby steps, mostly aiming to prove that it does work and no those tech giants will not leave the french market (or if they do, yes someone else will rise in place).

dustinmoris2• 7 years ago

Agreed, I applaud France to take a first step in the right direction.

baud147258• 7 years ago

It's a start, once it exists the gov can change the rate. And it will perhaps lead to similar laws in Europe.

Superleroy• 7 years ago

Well, its a start. Maybe other countries will see that its not the end of the world to tax big companies and follow suit.

astonex• 7 years ago

It's easier to get it accepted with a small rate. Later on it can be increased.

Ragnarork• 7 years ago

Quite funny of the US to complain about protectionism. I guess that's the paradox attached to it. When you do it it's fine, when someone else does it and you're affected, suddenly it's "discriminatory". Well yeah it's always been discriminatory in nature.

They make a profit somewhere, they pay their taxes, period. Those loopholes need to be closed.

fyoving5• 7 years ago

Even with recent tariffs, US tariffs are still generally low, it's hardly a poster child for "protectionism", the EU has other barriers in addition to tariffs and much of it is due to french protectionism.

If you think that these "loopholes" should be closed then close them for all companies and countries, don't enact discriminatory laws and then act indignant about it.

nolok7• 7 years ago

The US strong protectionism is not through tariffs but through tax incentives, targeted investments hidden as national security contracts and things like "buy american" acts.

Just because you dress it up doesn't change what it actually is.

chmod775• 7 years ago

the EU has higher tariffs

The estimated trade weighted average of tariffs by the US after the tariff announcements in 2017 was 2.2%. I couldn't find any more recent number. [1]

For the EU this appears to be around 1.8% (2017). [2]

It is true that the EU used to have higher tariffs though, but I don't think this is still true with the new, recent tariffs by the US.

You can find the old number of 1.7% by the US in the second link I provided.

In any case those numbers are still low. The US was at 2.3% and the EU at 3% in 2015. [3]

[1] http://www.iberglobal.com/files/2018/Trade-Wars_CPB.pdf Page 10

[2] https://data.worldbank.org/indicator/tm.tax.mrch.wm.ar.zs

[3] https://www.bbc.com/news/business-44291103

runeks• 7 years ago

They make a profit somewhere, they pay their taxes, period.

So, if I — as a danish citizen — make money from someone in France, I should pay taxes to both the Danish and French government?

jklepatch5• 7 years ago

US has a trade deficit with France. So potentially there is more to loose for France in case of a trade war: https://www.census.gov/foreign-trade/balance/c4279.html

And generally speaking the US has a trade deficit with Europe: https://ustr.gov/countries-regions/europe-middle-east/europe...

My understanding of the economic system between the US and the world is that other countries support the US dollar by using it for trade, and that the US in turn is able to print a lot of US dollars that can be used by american consumers to buy goods from the world.

Could other countries retaliate to US trade tariffs by dedollarizing trade?

nolok7• 7 years ago

The EU already does a fair amount of trade in euro.

Also, it's important to understand that for France this is a very important issue of fairness. Not just for political gain, but at the street level. We are one of the best countries in the world in terms of change between income inequality pre and post tax redistribution (meaning while we're not terrible but not great either in terms of income inequality pre taxes, post taxes and redistribution we jump to one of the best overall).

This law is not anti US (again like in my other comment: 11 of the 26 companies that fit the criterias are not from the US, several are EU based, and 4 are even french), it's merely making sure each pay (what wes believe to be) their fair share compared to the value they extract, and thus finally acting on the loophole that is "everyone knows and act like data is all the value / tax agencies should act like data has no value whatsoever so it can leave without being taxed".

It's not even a move against the weird licencing trick "à la" Starbucks or anything like that, it's merely a tax on data extracted. Either it has value, and it should be taxed, or it doesn't (or not enough) and then it's fairly easy to stop extracting it.

jklepatch5• 7 years ago

I wasnt trying to defend the US position. I actually think the position of France makes sense.

I just wanted to present a strategic view of the situation. At this level, its not really a matter of who is right, and more of who has the power to do what.

fajr_rd• 7 years ago

As I see it, France may benefit from its trade with the US because it has a global trade deficit so the extra dollars from America can be used to buy, say, oil from the Gulf. But for Germany and for EU as a whole (or China etc), the surplus dollars will probably never be used to buy anything useful so these exports look like a tribute offered to US.

throwaway9252• 7 years ago

Trade balances aren't really a good measure of who is winning and losing. The more trade, the bigger the welfare gains. Shutting trade in order to close a trade deficit is bad policy. I understand that Trump uses that threat in order to get more favourable terms for the domestic producers, but I am sure he's aware of the mutual damage of blocking trade altogether.

geocar2• 7 years ago

Not sure I agree with the analysis, at least on France.

France's top exports to the US are aircraft parts and beverages (wine).

Since the US needs those parts to export the (assembled) planes, I think the aircraft lobby (e.g. Boeing) will press hard to prevent a tariff here because it'd raise rates across the board, so that leaves wine: My hunch is even a 100% tariff on wine is unlikely to dissuade anyone from purchasing French wine -- the American wine is better, so the only people buying it are people who really wanted French wine anyway oh là là.

I don't know yet what I think about a trade war with all of Europe though.

jklepatch5• 7 years ago

Thanks for this precision. Knowing this detail about aircraft parts seems to change the dynamic though.

I have to disagree with one point though:

“American wine is better than French wine....” (gulp!).

enraged_camel• 7 years ago

>the American wine is better

By what objective metric?

aluren2• 7 years ago

Lol at 'American wine is better'. It sure feels nice to pay $17 for a much-touted fancy bottle that turns out to be meh at best when in the States. Meanwhile you could just pick anything at random for like 3€ in any French or Italian grocery store and still get something decent. I probably didn't try everything the land of the free has to offer but this offside remark really makes me wonder what is considered good there.

r00fus• 7 years ago

the American wine is better,

Californian wine due to the drought has much higher alcohol %s in recent years.

This does impact the taste, and it's not all good.

user59944614• 7 years ago

I'm not familiar enough with the US but I don't think you'd find any French wine there.

From my experience in the UK, none of the French wines I could find in supermarkets exist in France. They appear to be specifically made for export and they are priced double or triple what a comparable bottle would be sold in France.

Given the US is a hell further than the UK, that's probably even worse, stranger wines and more pricey.

olivepistacchio3• 7 years ago

the trade deficit is rather small though and France could easily make up for it through additional taxes.

csomar2• 7 years ago

Countries including France and the UK have accused firms of routing some profits through low-tax EU member states such as Ireland and Luxembourg.

This seems to be the problem. The EU laws have allowed these companies to avoid taxes. Small countries just next to France (Luxembourg) are able to help these companies. But France will not go against these countries and instead try to handle things through taxes.

I don't think this will workout greatly for France. France solution to everything seems to be: "Put a tax on it". The EU needs to get its crap together.

I don't like Tariffs. But if you worked internationally you should know that the US is one of the most open countries when it comes to doing business. You can open a company, a bank account, get a tax ID, buy shares in US companies, trade, etc...

luckylion• 7 years ago

But France will not go against these countries and instead try to handle things through taxes.

France cannot change Luxembourg's business model (help tax evasion in neighboring countries, live off of EU subsidies), it has no jurisdiction there. They can change their tax code though.

jklepatch5• 7 years ago

Get a bank account? If you are not a US resident, good luck with that. And i dont know what a company will be good for without a bank account.

As for buying shares in the US, there is a 30pct tax for non-resident alien.

speeq• 7 years ago

The UK accuses firms of routing profits through low-tax EU member states?

Did they mention Jersey, Guernsey, Isle of Man + Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Turks and Caicos Islands?

Well, I suppose they aren't EU member states, carry on.

csomar2• 7 years ago

Same with France: Monaco. That's why I said they got to get their shit together.

darkcha0s• 7 years ago

The EU laws have allowed these companies to avoid taxes

It's the lack thereof. Regulators / Lawmakers aren't paid thousands by the hour to find and cover loopholes, and also cannot see the future. Unlike a Google, who is willing to pay someone millions to find loophole. It's a one-sided battle that giant corporations will always win.

I don't think this will workout greatly for France. France solution to everything seems to be: "Put a tax on it". The EU needs to get its crap together.

EU or France, which is it? This initiative is coming out of France, not the EU. What did the EU do wrong this time? Did you forget that the EU is what enables these corporations to easily enter and seamlessly expand within one of the largest shared economies? If it wasn't for the EU, the work companies would have to expand would exponentially increase, due to many different regulations, taxation, tariffs, etc.

You are somehow using the protectionist actions of a member of the EU to paint the EU as the roadblock/point of incompetence, when really it does the exact opposite.

JAlexoid5• 7 years ago

You have to file a federal tax return to get an ITIN in US. And there's a lot of taxes that US leverages...

user59944614• 7 years ago

>> buy shares in US companies

That is not quite correct actually.

You have to pay US taxes on US shares, doesn't matter where you are. They can be quite high, something like 30% of yearly profit. Then you have to pay local taxes too, that can be significant as well.

This makes US shares non viable for most Europeans. The double taxation makes them worthless.

pjc50• 7 years ago

National sovereignty versus globalisation again. Is it reasonable for a company to make profits from customers in a country and then not pay that country's profit-based taxes?

(Also, the US trying to bully France on this one is unlikely to go well, that tends to trigger a French nationalist response.)

bantunes• 7 years ago

It's not reasonable. But it sure is profitable.

raverbashing• 7 years ago

If I'm not mistaken the UK is planning to enact a similar tax as well

Bayart2• 7 years ago

I guess we'll get the usual response of the US trying to bring France to its knees by putting tariffs on wine and cheese.

yusi-san• 7 years ago

They have different pressure means on France now, like what they did about Alstom which is a strategic company for France (they produce essential elements about nuclear plants, nuclear submarines for example) now in the US hand through General Electric.

Bayart2• 7 years ago

Correct me if I'm wrong but GE bought the energy/grid part of the company, not the infrastructure/transportation part.

JAlexoid5• 7 years ago

France has a robust nationalization laws, btw. If US becomes belligerent enough, Alstom may be taken away from GE.

olivepistacchio3• 7 years ago

funny how people feels supportive of some companies based on very loose national links. If you think companies have a national interest at heart (I will make an exception for Chinese), I have a bridge in Brooklyn to sell to you.

US launches inquiry into French plan to tax tech giants

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