Foreign Taxation

Various nations insist on taxing corporations that provide digital services—imposing a “digital services tax”—to ensure, those nations are pleased to claim and as most clearly articulated by Canada’s Finance Minister Chrystia Freeland, that

everyone pays their fair share

The Canadian government has been explicit in another direction, also: Canada will act unilaterally if an international taxing regime isn’t worked out by the OECD quickly enough to suit them.

French Finance Minister Bruno Le Maire has said he’ll demand a European Union response if the US goes ahead with our impertinent objection to the French government’s decision to tax those same digital service-providing corporations.

There are three problems with this insistence.

One is—let’s be clear—those corporations providing digital services are almost exclusively American companies—Alphabet, Facebook, and so on. European nations and Canada (and Indonesia) don’t want to compete economically in the digital services industry, for all that they’re jealous of American success. Rather than repeating that success for themselves, they want, in the finest socialist tradition, to cap our success: they’re implementing mercantilist, protectionist taxes against us.

The second problem is that these nations refuse to identify what “fair share” is, and they refuse to say what their limiting principle is regarding that claimed fair share. That refusal makes clear that their position is a deliberately open-ended one: “fair share” always will be “more,” and the limit of their principle is “all of it.”

The third problem is these nations’ naked assault on American sovereignty. Using the OECD as their tool, these nations are demanding that American domestic taxing laws be submitted to international approval and control.

Each of these alone is a contemptible disguise of those nations’ refusal to compete, whether economically, politically, or morally. Any combination of them is…unacceptable.

The Biden administration will be inviting national disaster if it accedes to any of these.

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