It isn’t common for a punitive tariff proposed by the White House to receive so much bipartisan support, especially in our ultra-polarized political condition known as America 2019-2020. But that’s what we’re seeing as early reactions to a proposed tariff against France over their tech tax point to just about everyone not on the right or left fringes on Capitol Hill voicing support for the move.
It’s a good move, but not for the reason it has been proposed. They’re doing it because Big Tech has lobbied Washington DC to step in and do something about obtuse taxes being placed on them by France, Italy, Austria, and Turkey. And it’s as harsh as it gets – 100% duties on luxury items like handbags and champagne to the tune of $2.4 billion per year. They say the tax is unfair to American companies which control the digital space such as Google and Facebook. But this is the wrong reasoning. I’m not going to oppose it, though, because the better reason for doing so aligns with DC on this one.
The U.S. Trade Representative’s office said its “Section 301” investigation found that the French tax was “inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected U.S. companies,” including Alphabet’s Google, Facebook, Apple and Amazon.com.
U.S. Trade Representative Robert Lighthizer said the government was exploring whether to open similar investigations into the digital services taxes of Austria, Italy and Turkey.
“The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies,” Lighthizer said. His statement made no mention of proposed digital taxes in Canada or Britain.
The U.S. trade agency said it would collect public comments through Jan. 14 on its proposed tariff list as well as the option of imposing fees or restrictions on French services, with a public hearing scheduled for Jan. 7.
It did not specify an effective date for the proposed 100% duties.
What France and the other nations are doing isn’t just unfair to U.S. companies. Frankly, the last thing I want from DC is for them to go around protecting Big Tech, and I’m not alone. Those on the far-right and far-left agree on this one. Big Tech doesn’t need the federal government helping them.
But this is still a good tariff because the tax itself is anti-progress. It’s an attack on the types of innovations in the future that could help the world improve and connect us in ways we need. I’m not worried about Big Tech today. My concern is how his stifling tax will harm better tech of tomorrow, whether it comes from the United States or not. Granted, the vast majority of tech innovations that could be affected by this tax are from the United States, so in a way there’s a protectionist bone I have with it. But this is about not being obtuse when it comes to advancements.
In geopolitics it often behooves us to take wins regardless of how they come. This is one of those cases. While DC seems bent on protecting companies that don’t deserve it, they’re also protecting future innovations that do.
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