Tag Archives: political economy

Still a Foolish Tax

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The EU’s usurious digital tax on international tech companies that they had proposed has met with sufficient resistance from low-tax member nations—Ireland and several northern European nations—that France and Germany, the drivers of the proposal, have offered a modified version.  This new effort would

  • limit the tax to a 3% levy on online advertising revenues rather than all online revenues
  • effectively exempt Amazon, AirBnB, and Spotify—a sop to non-EU administrations, especially Trump
  • run until 2025

The beef underlying this drive to tax techs centers on tech firms paying less tax than putatively traditional firms on their EU earnings.

The European Commission estimates traditional companies pay 23% tax on profits—compared to just 8 to 9% for internet firms, with some paying effectively none.

Given that low tax rate nations like Ireland and Luxembourg are attractive to businesses, including tech firms, the foolishness of this new proposal is exposed.  It tries to get a common, high, tax imposed on tech firms at least.

Maybe not foolishness, so much as cynicism.  It remains inconceivable to the EU to lower its overall taxes to competitive levels rather than trying to suck those low-tax members into raising theirs to uncompetitive levels.

What’s So Hard?

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Great Britain is agonizing over how to deal with the People’s Republic of China’s Huawei Technologies Co and the latter’s desire to supply the nation’s 5G mobile network.  On the matter of Huawei’s having supplied the predecessor 4G network, Great Britain thinks it had arrived at “an understanding” with Huawei concerning the latter’s behavior vis-à-vis the installed 4G—which, astonishingly, allowed Huawei to monitor “aspects” of 4G tech.  Britain’s MI6 head, Alex Younger, seems to be the chief agonizer.

5G will by and large be based on Chinese technology, chiefly with Huawei. We need to decide whether we are comfortable with the ownership of these platforms in the case where our allies take quite a definite position…This is not straightforward[.]

Why must Huawei be the supplier of Britain’s 5G network?

And: Huawei is an arm of the People’s Republic of China government—how is this not a straightforward decision?  Why is it so hard to decide whether the nation wants to let the PRC government spy on every aspect of the British government, its defense, its economy, its citizens?

Rewarding Thuggery

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Recall the rioting, looting, and graffiti-spraying—on l’Arc de Triomphe, yet—in France over the Macron government’s decision to raise fuel taxes and utility rates.  Now the government has abjectly surrendered to the rioters: it will not implement the new tax and utility rates at all (Deutsche Welle has reported that the tax is suspended for six months rather than canceled altogether).

The tax and rate hike were bad moves on principle: it’s nearly always wrong to raise taxes before cutting spending or to raise utility rates for reasons other than to cover expenses and preserve a measure of profit, but these were especially foolish: they were intended to fund the nation’s even more expensive—to the citizenry, and especially the nation’s poor and unemployed—move to a purely “green” economy.  This, though, was the wrong time to correct the error, and it’s the wrong reason to do so.

This was done, not in response to the will of the people demurring, it was in immediate, meek obedience to thugs.

And far from putting an end to the troubles, it has had the opposite—and obvious to objective outside observers—response from the thugs.

France’s Prime Minister, Edouard Philippe:

No tax is worth putting the nation’s unity in danger[.]  …  The violence must end[.]

I plead with you.

The response for his reward:

But the announcement is unlikely to put an end to the road blockades and demonstrations, with more protests possible in Paris this weekend.
…
“It’s a first step, but we will not settle for a crumb,” said Benjamin Cauchy, a protest leader.

And

Segolene Royal, a former candidate for president, lauded Philippe’s decision but said the course correction on the climate change tax came too late.

And

Marine Le Pen lashed out at the decision as too little, tweeting it was “obviously not up to the expectations of the French people struggling with precarity.” … “A moratorium on taxes is being considered. But a moratorium is only a postponement.”

President Emmanuel Macron:

I will never accept violence.  No cause justifies that authorities are attacked, that businesses are plundered, that passers-by or journalists are threatened or that the Arc de Triomphe is defiled.

Tough talk for someone who has just surrendered to the thugs.  No, Macron’s government isn’t finished paying up.

Another Free Trade Deal

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As Ashley Tellis, of the Carnegie Endowment for International Peace, pointed out, a free trade deal with “Taiwan” would be a Good Thing.  Indeed, that would be a good start, but it really would be better to sign a free trade deal with the Republic of China rather than with an island.

He also pointed out that such a trade deal would go a long way toward easing, if not stopping, the People’s Republic of China’s effort to diplomatically isolate the RoC.

Accordingly, a free-trade agreement would demonstrate American solidarity with Taiwan is just a bit ironic given the thrust of Tellis’ piece.

Second Thoughts?

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The New York City city council has decided to hold a series of hearings on the just concluded Amazon HQ2 deal cut with the city.  The council’s beef is the secretive nature of the negotiations between amazon.com and the folks purporting to represent the city.

Deputy Mayor Alicia Glen, Economic Development Corp President James Patchett, and Amazon executives have been invited to the hearings, which will take place during the next few months, City Council Speaker Corey Johnson’s office said Thursday.

There’s nothing wrong with the negotiations themselves being done behind closed doors; that’s the only place “frank and open” discussions can occur.

However.

Now that the negotiations are concluded, and before the city council has to vote on accepting or rejecting the deal—especially over what the negotiated deal wants to commit the city to—it’s time for the city council and its members’ constituents to hear the full details of the arrangement.

The council’s hearings should be open to the public and moved to a larger venue if needs be.  If the constituents don’t like what they hear, the deal should be voted down.  Or maybe the deal should be put to a referendum.

If amazon.com walks away from that, that would demonstrate the uselessness of the deal to the city’s residents.