Tag Archives: taxes

France is Taxing

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The Macron administration utterly failed in its cynical effort to raise its taxes on the French working class and poor with its “climate” tax on transportation fuels, so now it’s going to go after American tech companies with carefully targeted taxes.  And that administration is desperate to get going, and it’s going to do it unilaterally.

In early December, Economy Minister Bruno Le Maire said France would give the EU until March to come up with a deal on taxing US internet giants. But ten days later he announced the tax would be introduced on January 1.

Wait, what?

France said at the start of December it would start taxing Google, Apple, Facebook and Amazon, the big US technology companies known as GAFA, if European Union finance ministers failed to agree on a bloc-wide digital tax next year.

And here’s the game, as confessed by Le Maire.

The digital giants are the ones who have the money.

So he intends to rip off uniquely tax our American companies for the heinous crime of outcompeting his precious French companies and then of being better tax managers than his precious French government.

Our companies need to think very carefully about the value they get from doing business in France compared with the French government’s imposition of wholly artificial costs for the privilege of doing business there.

Taxing Speech

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California has decided to kill two birds with one stone.  The State thinks it needs more money, so it’s going to raise a new tax.  The State is anxious to…manage…speech of which it disapproves, so it has chosen its target for its new tax.

California state regulators have been working on a plan to charge mobile phone users a text messaging fee intended to fund programs that make phone service accessible to the low-income residents, reports said Tuesday.

Here’s Jim Wunderman, Bay Area Council President, on the plot, though:

It’s a dumb idea. This is how conversations take place in this day and age, and it’s almost like saying there should be a tax on the conversations we have.

Wunderman understated the problem.  It’s not just a dumb idea, it works out to a naked attack by Government on its citizens’—its employers’—speech.

In the event, when the FCC decided to designate texting to be  an “information service,” and not a telecommunications service, the State decided to withdraw its proposal to tax it.  The State rationalized it decision by claiming “text messaging was not a classified service under federal law.”

However.

The FCC’s designation is a quibble that’s meaningless in this context. Taxing speech directly is the beginning of an effort to manage permissible speech by artificially driving up the cost of it.  The medium used for making speech–a “telecommunications service,” for instance–is just as critical to the freedom of speech as are the utterances themselves. Taxing the service is an opening toward managing speech indirectly by artificially driving up the cost of using a medium for speaking.

Beyond that, the State’s excuse that text messaging hadn’t yet been designated is disingenuous. Not every activity in which an American citizen engages needs Government designation in order to be engaged.  Only those activities to be explicitly proscribed or managed need designation.  That’s at the core of our founding principles of limited government that works for us and of individual liberty and individual responsibility.

As a result, questions arise concerning this Progressive-Democrat- run State’s move to use taxes to manage speech.

What other forms of speech will California try to tax?

Whose forms of speech will California try to tax?

What can we expect regarding speech–and any other individual liberty and responsibility–can we expect a Progressive-Democrat national government to attempt?  Especially in their universe of “you didn’t build that,” and “we’re a collectivist society in which it takes a village to most anything?”

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.

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.

Quick Thought on Tax Reform

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The Progressive-Democrats won a majority in the House, and the Republicans look like they’re going to expand their majority in the Senate.  That looks like legislative paralysis in the next Congress.

However.

The next Congress won’t be sworn in until 3 January 2019.  That gives two months for the present Congress, with Republican majorities in both houses, to get some remaining stuff done.

Top on that list in my august view is tax reform.  This Congress needs to move to make permanent the individual income tax cuts that otherwise will expire in 2025.  Get it done now, before the Progressive-Democrats, with their gridlock, take sufficient office to block the reform.