Macron and Trump Declare Truce in Digital Tax Dispute (reuters.com) 52
French President Emmanuel Macron said on Monday he had a "great discussion" with U.S. President Donald Trump over a digital tax planned by Paris and said the two countries would work together to avoid a rise in tariffs. From a report: The two leaders agreed to the truce after Paris offered to suspend down payments for this year's digital tax and Washington promised to keep negotiating toward a solution rather than acting on a tariff threat, French sources said. Specifically, Macron and Trump agreed to hold off on a potential tariff war until the end of 2020, a French diplomatic source said, and to push ahead with broader negotiations at the Organization for Economic Cooperation and Development to rewrite the rules of international taxation during that period. "They agreed to give a chance to negotiations until the end of the year," the source said. "During that time period, there won't be successive tariffs." France decided in July to apply a 3% levy on revenue from digital services earned in France by companies with revenues of more than 25 million euros ($28 million) in France and 750 million euros worldwide.
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Trump will be escorted out of the White House by the FBI and placed directly on a private jet to Leavenworth, KS where he will spend the rest of his natural lifetime under solitary confinement for Treason and violation of the Emoluments Clause of the US Constitution.
Trump is the second coming of god. He will simply beam himself out of Leavenworth, straight to heaven and press the big red button that triggers the rapture.
informative tip for newscasters in the near future (Score:2)
Text from one of the upcoming impeachments (Score:2, Funny)
Testimony from the 3rd impeachment:
Trump: You have no crime here. What are the charges?
Pelosi: Contempt!
Trump: [...awkward silence]
A serious question (Score:4, Informative)
A serious question to the readership that majored in economics.
I'd like to leave behind the fact that this is Trump (or Macron), and that the election is coming up - the implication being that Macron can simply wait a year and deal with someone else.
In an academic sense only, people keep saying that trade wars are bad. I understand that point and have seen the analysis behind it.
In this case it *appears* that France was thinking of raising tariffs, and the US was threatening to raise tariffs in response. As a summary explanation, it would seem that the US is trying to prevent a trade war, with the goal of lowering or eliminating tariffs. And in current economic theory, this is a good thing.
Is that an accurate description of this situation?
And further, leaving aside the particulars of Trump and China, it *appears* that China had already raised tariffs and made other trade policies that put US goods and services at a disadvantage, and that these policies had been in place for several years.
In that case a summary description might say that China was already waging a trade war with the US and had done so for several years, and the US had finally begin to respond. In other words, the US did *not* start a trade war with China (MSM notwithstanding), but had only acted to stop the trade war.
Is that also an accurate description?
Again leaving the president out of it, it seems that the US is working towards mutually reducing tariffs with our trading partners, and that this should be good for every country involved. It's probably one of the roots of the current economic boom.
So... what the US is doing is ultimately a good thing, both for the US and other trading partners.
Economically speaking, this is what we should be doing... yes?
Re:A serious question (Score:5, Informative)
In this case it *appears* that France was thinking of raising tariffs, and the US was threatening to raise tariffs in response. As a summary explanation, it would seem that the US is trying to prevent a trade war, with the goal of lowering or eliminating tariffs. And in current economic theory, this is a good thing.
Is that an accurate description of this situation?
No, it's not. France didn't want to raise any tariffs. Tarifs are taxes on imported goods at a border.
France wanted to change its corporate tax structure. It would have applied equally to both domestic and foreign corporations and didn't target the USA in particular.
On the other hand, Trump threatened to start a trade war, by raising tariffs on some French goods, to make them less attractive than goods coming from the USA or elsewhere.
Re:A serious question (Score:4, Informative)
Re:A serious question (Score:5, Insightful)
France wanted to change its corporate tax structure. It would have applied equally to both domestic and foreign corporations and didn't target the USA in particular.
This is a bit disingenuous. What you say is technically true, but everyone involved knew that the big US tech companies were the only ones who'd pay any significant amount, and the tax was specifically designed to tax them.
There's an argument that this is fair, given the fact that the structure of international tax law allows foreign companies whose primary business is purely IP-based to legally avoid paying much tax. But it's misleading to argue that this was just a domestic tax policy change, because it was specifically targeted at the US tech giants.
Re:A serious question (Score:5, Informative)
It was specifically target against tax avoiders. That a lot of them happens to be based in the USA (although it doesn't mean much since they usually bill from offshore, low tax jurisdictions) is a side effect. The tax itself didn't target any country in particular.
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It was specifically target against tax avoiders. That a lot of them happens to be based in the USA (although it doesn't mean much since they usually bill from offshore, low tax jurisdictions) is a side effect. The tax itself didn't target any country in particular.
One very, very specific type of tax avoider... which really only fits the US tech giants.
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Comment removed (Score:5, Informative)
Thanks (Score:2)
Great explanation. Thanks!
I wish slashdot could have more of these realistic, rational explanations.
Especially since most of the news these days seems to be clickbait intended to generate reader outrage against a target of the writer's choice.
Not neutral at all. (Score:4, Insightful)
That's a completely normal tax, it's neutral on the origin of the products being sold.
Except it's not really at all, because the reality is that it would exclusively effect U.S. companies.
Now if they hadn't put the revenue floor in, so that it affected all companies equally - then you could argue it was "just a tax". But the way it was structured, how would the end effect differ from a tariff for the (almost exclusively U.S.) companies involved? It would not.
this is not a salvo by France in a "trade war"
It was absolutely an attempt to soak American companies. A trade war by any other name...
Re:Not neutral at all. (Score:4, Interesting)
That's a completely normal tax, it's neutral on the origin of the products being sold.
Except it's not really at all, because the reality is that it would exclusively effect U.S. companies.
No it wouldn't. But even if it did, the tax would still be perfectly OK and neutral. Just because tax avoiders happen to be based in the US shouldn't mean the tax code shouldn't be fixed.
Re:Not neutral at all. (Score:4, Insightful)
Except it's not really at all, because the reality is that it would exclusively effect U.S. companies.
Except it doesn't. You just think that because you are under some incredible delusion that only a US company can make 750million EUR in global revenue. The reality is (since we're talking about revenue) that this tax would have affected many thousands of companies doing business in France, and only a portion of them are USA based, and I bet you can't even name more than 3.
Now if they hadn't put the revenue floor in, so that it affected all companies equally - then you could argue it was "just a tax".
Nearly every tax in the world has some kind of revenue floor. This is "just a tax" in the most literal sense your lack of understanding of global business notwithstanding.
Re:A serious question (Score:4, Insightful)
That's a completely normal tax, it's neutral on the origin of the products being sold.
Sort of. Not really.
It's at the very least an unusual and novel tax. Taxing revenue is very uncommon, because governments -- rightly -- don't want to penalize low-margin industries or unfairly advantage high-margin industries. The size clause is also a little unusual; it's common to exempt small business from regulations but not so much from taxes, and the numbers in this case limit the targets to fairly large companies.
The worst anyone could argue is that there aren't really many French companies this applies to compared to the large number of non-French companies
No, the worst anyone could argue -- and they'd have a very legitimate argument, given the unusual and narrowly-focused nature of the tax -- is that it was specifically designed to target US tech giants.
Leaving aside questions of whether it's a good idea in general, no, this is not a salvo by France in a "trade war".
Agreed. There's no indication that France planned any other tariffs or taxes, nor that they were trying to use this tax as leverage to pry something else loose, or any of the other reasons countries engage in trade wars.
Had the US decided to punish France for it, the US would have been entirely in the wrong
That would depend on the punishment. If the US decided to make additional taxes designed to primarily affect French companies, without actually specifying national origin, that would have been simple turnabout.
Some evidence (Score:2)
Agreed. There's no indication that France planned any other tariffs or taxes, nor that they were trying to use this tax as leverage to pry something else loose,
Maybe, but there is the very real example that dropping this tax was used to offset potential U.S. tariffs...
Tariffs are used to protect industry (Score:4, Insightful)
First for Tariffs to work there has to be an industry to protect. We shipped most manufacturing overseas and what we didn't ship we automated.
Moreover we'd need a practical way to protect our industries. It's too cheap to move factories in 2019. Trump's tariffs were mostly useless as a job creation tool. All it did was move manufacturing to Vietnam & Mexico.
So to answer your question, no, the Tariffs didn't help. The fact that we backed down so quickly is fairly good proof of it. There's a fair amount [marketwatch.com] online to back this up [thehill.com]
What this means is that at this stage if we want a manufacturing jobs renaissance in the States we're gonna have to do what China does: Federal Jobs programs. That's what the "Green New Deal" is about. The 10 million jobs aren't from hand outs to companies, they're by and large government jobs. The ones that aren't are quasi-gov't jobs like what Ratheon does.
Once you've built an industry then you can use tariffs to protect it. You should also use import bans from countries that refuse to treat workers with dignity and respect. Of course that goes for America too [theguardian.com]
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It's too cheap to move factories in 2019. Trump's tariffs were mostly useless as a job creation tool. All it did was move manufacturing to Vietnam & Mexico.
Worse than that, it moved *assembly* plants from China to Vietnam and Mexico. The parts are still being manufactured in China and just shipped to Vietnam and Mexico for final assembly.
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No, your summary makes it sound like Trump won yet another trade negotiation and thus will rebound from the ears of TDS sufferers. Expect lots of convoluted explanations as to why this was really a bad thing or was really all Trump's fault...
Re: A serious question (Score:2)
that negociation better result in something (Score:3)
Because the current tax scheme is broken in the digital age.
At the bare minimum, all digital services (ads, streaming, downloads, licenses, and more) should be taxed according to the credit card's owner's address jurisdiction. It means that any sale tax / VAT should apply, otherwise it's unfair and local businesses can't compete (even by providing the exact same service online).
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Yeah, how can the local mom-and-pop neighborhood streaming services compete with Netflix? Lets an a tax to fix it.
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By local I didn't mean mom-and-pop.
In Canada there are quite a few "local" streaming services trying to compete with Netflix. Crave TV, Club Illico, Tou.TV, and probably more. They all get taxed both at the federal and provincial levels (which means they have to charge an extra 5-15% compared to Netflix). And I am not talking about corporate profit tax here, which they also probably pay more than Netflix, I am only talking about sale tax.
It's not adding a new tax, it's applying the current tax fairly. Not r
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It means that if I start selling licenses for my software online, I as the seller should NOT declare my (or my company's) income in my country of residence, but should rather declare it in all 195 countries of the world?
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No. I was talking about sale tax, not income tax.
There could also be a minimum. In my jurisdiction, you don't need to charge sale tax if you don't sell for at least $30k/year.
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One way or another, yes. If you are selling through Google Play store, Google could collect the taxes for you.
Also, sale taxes are quite simple. You shouldn't need an accountant to calculate how much is 7% of $100.
But if you are selling for less than $30k in a jurisdiction then you could be exempt. So in the end you might have only a few jurisdictions to care about.
If you are selling for over $30k in 195 countries then you can afford an accountant anyways.
But just like if you shipped a CD version of your so
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And how to do that wi
Re:that negociation better result in something (Score:4, Interesting)
There are various ways to achieve it. Most involve some sort of cooperation between countries.
But the EU and Australia successfully forced Netflix to collect sale taxes. Canada is supposed to be about to do it next. So it's possible.
The first step is to write it clear in the law that corporations such as Netflix (which obviously makes more than $30k in Canada, there is no point in trying to deny it) must collect sale taxes.
After that, it means if you are not doing it, you are illegal in that country. Now, you can try dodging it all you want, but don't ever step foot in that country, and don't complain if one day your payments are blocked. If you are an ebay seller in China selling from you mom's basement, chances are you won't get cut as long as you remain low profile. It's not an excuse for not trying to collect taxes fairly.
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Another option would be to force Visa/Mastercard to collect sale taxes without you even knowing it.
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There is an analog for this in the US tax system.
US citizens have to pay taxes on foreign-earned income, even if they don't live in the US.
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At the bare minimum, all digital services (ads, streaming, downloads, licenses, and more) should be taxed according to the credit card's owner's address jurisdiction.
VAT already does that. It is collected at the location of consumption.
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If an American company sells services to me as an EU citizen without a European branch office involved, then there is no VAT applied. Simply because that American-only company is not subject to EU
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VAT doesn't do that at all. VAT, like all other sale taxes, is only applied to company respecting local rules. Usually it doesn't include foreign corporations.
The EU is a notable exception, as they cooperate on VAT collection, but non-EU businesses selling digital services to a customer in the EU usually do not collect VAT.
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Please, if you think living in France or Europe is better than living in the U.S., you really should take up this offer and go move there.
The rest of us in the U.S. will benefit and probably so will France once you realize the actual differences and start agitating for improvements. It's a win-win...
And if you think I'm wrong, what better way to prove me wrong than to move to France? Another win-win!