U.S. tech firms like Apple and Amazon pose ‘huge’ tax challenge for France

“The way large U.S. firms are taxed in the European Union is posing major challenges for France, the country’s finance minister told CNBC Thursday,” Silvia Amaro and Karen Tso report for CNBC. “Bruno Le Maire, the recently appointed French finance minister, is at the forefront of an initiative to impose an ‘equalization tax’ for tech companies across the EU — a potential new policy that is set to disrupt the way companies operate in Europe.”

“One of the biggest proposals is to tax companies on their revenues rather than on their profits. Taxing the latter would usually culminate in a smaller number. The idea with an ‘equalization’ tax is to avoid firms taking advantage of different tax codes across the 28 European member countries, which has allowed many of them to pay little tax in some countries,” Amaro and Tso report. “Many large U.S. tech firms base their European headquarters in EU nations with favorable tax regimes, that often means they book the majority of their European profits in those countries.”

Amaro and Tso report, “Paul Gambles, managing partner at MBMG Group, told CNBC that it seems that the European Union is backing rising protectionism and thus helping its own companies against competition from U.S. firms.”

Read more in the full article here.

MacDailyNews Take: If France squeezes out some additional tax monies, we’re sure they’ll spend it oh so wisely.

SEE ALSO:
France and Germany plan tax crackdown on U.S. tech giants – August 7, 2017

40 Comments

  1. “The idea with an ‘equalization’ tax is to avoid firms taking advantage of different tax codes across the 28 European member countries, which has allowed many of them to pay little tax in some countries,” Amaro and Tso report. “Many large U.S. tech firms base their European headquarters in EU nations with favorable tax regimes, that often means they book the majority of their European profits in those countries.”

    Equalization, whether one likes it or not, KILLS incentive. Those that like it cannot seem to fathom that equalizing (a form of “communism” ideology) does not elevate a country, culture, business, medical technology, but instead brings all down the the lowest common denominator and inhibits knowledge and growth. Of course, proponents will say ideally that there will be no disparity and it is for the common good. Look at Albania and Cuba. Communism/socialism doesn’t work that way in practicality. Even China acknowledges that capitalism spurs growth and advancements in technology and medicine. Capping capitalism decreases these advancements. The only ones that are wealthy are the governmental officials. Hate by those of a socialist mindset – for those that get ahead by their entrepreneurial enterprises – brings everyone down to their level, killing incentive. The difference between 35+% tax and 20% tax is the difference between life and death to many people.

    The Euro state is headed this way and cannot see it, only equalization.

    Capping or curbing the entrepreneurial mindset and even countries – is disastrous. Making all countries operate on a flat equal basis is the beginning of a death nell for technology, medical research and the advancement of society. As much as I liked Star Trek TNG as a TV program, the brightest people in technology, medical and business will cease to advance when tied up. Socialism in government will be the death of many people simply by the capping of incentives to get ahead by the greatest minds and companies.

    1. The original notion behind the EU and its predecessor organizations back to 1951 was to prevent the competition between European nation-states for limited resources that had led to two world wars. There was, and is, no intent to stifle entrepreneurial competition among businesses or impose uniformity. However, that business competition was to be exercised within a common market that includes all of Europe, rather than just a single country. Goods, capital, labor, and information were freed to move across the entire community without facing obstacles at the national borders.

      The argument, which you are free to disagree with (of course) is that this enhances competition and an entrepreneurial mindset at the level where it really matters: the individual entrepreneur or company, not the nation-state. Making comparisons to Cuba or the old Albania (modern Albania is a pretty nice place) is entirely misplaced, because the EU and its predecessors were set up in conscious and overt opposition to Communism and all it represented.

      This “equalization” proposal is not directed either at imposing higher tax levels or even at requiring the equalization of tax rates. It is about providing a level playing field for free competition. Countries will still be free to offer incentives, so long as the incentives are applied across the board and not focused on individual companies to the exclusion of others. EU members will, however, be prohibited from schemes that allow them to collect income taxes on income that was actually earned in some EU member state.

      The primary notion is to impose income taxes in the country where the revenues are collected, rather than in the country where the final net profit is booked. The current system allows for too much game playing. Does anybody really think that Amazon is making most of its European income in Luxembourg, or Apple in Ireland? The idea should be for businesses to make their decisions based on genuine business considerations and not on local tax policies that impede a genuinely common market.

        1. Get a clue, chicken hawk: extreme nationalism is the first step to war. Tou seem to think that is a good thing. Probably because you’ve never lived in a war zone. You obviously haven’t a shred of empathy for those people who have no realistic choice but to flee from the war.

      1. Since you are obviously convinced that those round-eyed white devils have been lying to us since 1951, what do you think has driven the pan-European movement for nearly 70 years? Why have so many additional countries been clamoring to get in for the last several decades?

        Please don’t use any more ad hominem arguments. President Obama hadn’t been born yet. Besides, we have it on the highest authority that some Nazis are really nice people.

          1. Impressive argument, bot. It wasn’t TxUser who provides moral backup to Nazis, it’s that occupant of the white house that you worship who does, which makes that occupant the treasonous one, and by extension, you.

  2. The French have got to try and get tax from somewhere, to pay for all the lazy sods in their own country that don’t want to work any more than 30 hours per week and want to retire at 50 (their new head Macron is now going to try and change this … good luck with that!)

        1. Remember these images when you go to the polls to vote in this great, free country.

          God bless the courageous citizens of Catalonia in their battle against the tyranny that is the European Union. The EU is the pimp to the whore that is the Spanish “government.”

      1. botvirnnik,

        I think the picture you’re looking for is the Currier & Ives print “The Bombardment of Fort Sumter,” with the caption:

        God bless the courageous citizens of South Carolina in their battle against the tyranny that is the United States of America. The US is the pimp to the whore that is the Lincoln “government.”

        If the Catalonian region has the absolute right of secession to protect their way of life, then so did the 291,330 white South Carolinians in 1860 who fought the threatened Yankee effort to free their 412,320 slaves. From your other comments here, I’m sure you agree that these patriotic state citizens were just defending their natural right—guaranteed by the 5th Amendment—to life, liberty, and property.

        South Carolina had only been part of the American constitutional republic for 73 years. Catalonia has been part of Spain since their King Ferdinand II married Queen Isabella I of Castile in 1469.

        I actually support Catalonian independence; Barcelona is my wife’s favorite city in the world. I would fully defend their right to negotiate independence or greater autonomy from Spain, just as I might have supported negotiations with South Carolina. (Although negotiating over slavery is a tougher sell than negotiating over the Catalonian tax burden.)

        However, neither set of secessionists made an honest effort to make a deal before they acted unilaterally. Spain in 2017 has the same right as the US in 1861 to defend its territorial integrity. Only an anarchist could believe that any nation should tolerate a one-sided effort to tear the country apart. From your other remarks here, I did not think you were an anarchist, or even particularly fond of democracies.

          1. As always, you jump straight to an insult. As I said the other day, most people our age learned in grade school that ad hominem arguments have no logical persuasive force. So,

            You lose.

            Again.

            1. Most educated people learned as well that non sequitur (“it does not follow”) arguments are also both irrelevant and unpersuasive. For example: “refuting” an argument about Catalonian independence with an utterly irrelevant out-of-the-blue insult to a former First Lady. As far as I can tell, Ms. Obama has never set foot in Catalonia, although her daughter Malia did visit Barcelona last year. Ms. Obama has met the King of Spain, but there is no evidence that she is manipulating his efforts to maintain the unity of his country.

              Also, you have no idea whether either Ms. Obama or Mr. Weinstein are among my favorite people. I don’t remember mentioning either one of them in several years on this site. So, both ad hominem and non sequitur. So,

              You lose.

              Again.

            2. Oh, and I forgot to say that the original shift in subject from EU tax policies to Spanish secessionism was itself a non sequitur argument.

  3. ““One of the biggest proposals is to tax companies on their revenues”

    This is how the EU calculated Apple’s potential tax bill to Ireland. The problem is what rate do you apply to sales that is appropriate.

    I thought the EU ministers were working on harmonizing EU tax rates, so that the tax advantages in countries like Ireland and Luxembourg and the Netherlands is minimized.

  4. “Equalization” may weaken entitlement Socialism just enough so that corporations can’t any longer cheat a nation’s commons by using loophole deductions to reduce their taxes, in some cases, down to zero.

  5. The United States figured all this out by embracing competition, instead of removing it in the name of equality. Different states have different tax plans, and different companies move to different states because of those tax plans. That’s why so many banks are headquartered in Delaware. France recognizes their problem has two solutions, attract businesses to France with better rates, or punish businesses not from France. They chose the latter.

      1. The USA is only marginally less socialist than France. Seriously, do you feel you have significant competition in your pharma, ISP, television, hospitals, airlines, … ? The USA has allowed itself to become a corporatocracy. News flash: corporations are not democratic and many of them aren’t efficient either. In many things, your consumer convenience blinds you to the fact that you really don’t have as much choice as you think you do. Coke or Pepsi, Mac or PC You get what your megastores offer and the profits all funnel to the Fortune 500 executives’ private accounts. Your representatives are lapdogs for multinationals that pay no taxes, hold no legal risks, and offload all externalities. Political parties have corrupted your election system so your vote is completely ignored in DC. Yet still you have untraveled people like boty think that the little world they know __must__ be best. They are too lazy to work abroad to know anything different.

        The big gripe that extremist right wingers like boty always raise is tax rate but they never discuss the value and quality of life that amortizing huge life expenses brings. Would your life be better if you didn’t have over $50k of debt when you graduated college? Would your life be better if an unavoidable health incident or accident didn’t bankrupt you? Would your life be better if you could spend 10 hours more per week with your family? Would your life be better if you had not just your personal car to fill with dino juice while you slog along congested potholed roads, but also the option of real rail networks to use?

        While boty loves to air his ignorance and prejudice, he has no facts to bring to the discussion. It is beyond tiring to have to link to all the facts that show reality. I am not going to waste my time doing so because boty won’t read. His haterade never stops and everyone knows by now that he is clueless about other people outside his gated community. Suffice it to say however that everything following can be proven with minimal effort — and although there are tonds of outliers and stuff, the averages are indicative. By objective measurements, the USA is slipping in health, education, per capita wealth, etc. The gap between haves and have nots in the USA is wide and growing, and thanks to a totally disfunctional government, the social fabric is tearing with opiod addiction, scary rates of urban homelessness, and regular mass shootings.
        France isn’t the world leader in all things but the divide between rich and poor isn’t totally out of control, educational opportunities are pretty good for everyone. Health aside from the never ending Marlboro epidemic is way better than in the USA. It is also a sign of an enlightened society that everyone puts technology to work for them so they can live life comfortably while giving your boss only 30 hours per week in the office. Nothing stops you from giving more if that’s your thing. For a nation the size of Texas, France punches well above its weight class.

        Have a bit more respect to the nation that enabled the USA to win its independence.

        1. So true. Have lived in 3 countries and traveled a lot. The USA offers the best and the worst at the same time. Average it all out and you see a nation of debtors struggling to maintain their disposable quality of life, with most failing to make ends meet without working multiple jobs or carrying scary levels of consumer debt.

          France is not perfect but the quality of life we find to be very attractive.

          I like that a government will look out more for its people than for some foreign corporation. Botvinnik chants America First and then goes batshit crazy when Feance says, La France en Premier.

        2. C’est si bon,

          My mental image of botvinnik is that he lives in a 55+ gated community somewhere in the Sun Belt. He and his buddies (who are overwhelmingly well-off white American retirees with little experience of other cultures) tool around the community in their golf carts fulminating about the barbarians at the gate. When such men suffer future shock from a rapidly changing culture, they build up a head of steam that must ultimately find release.

          Stephen Paddock was such a man. I’m hoping that MDN affords botvinnik a safer way to release the pressure.

  6. So sad to see that MDN condones the resident uneducated thug botvinnik to sully what could be a nice tech forum. Again.

    Why bother posting a user policy when it’s plainly obvious you support the antisocial behavior. Morally corrupt hypocrites. The only thing unusual from this particular page is the other two asswipes, goeb and first whatever, to join the gang of disgrace in insulting everyone else. Shitheads stick together.

    1. I’m sure this is a long-dead thread by now, but I still want to point out that the Value Added Tax isn’t a tax on revenue like the American income tax. It is a consumption tax much like American sales taxes, except that it is broken into pieces so that the entire burden is not placed on the final consumer. Instead, the increase in price at each stage from (for example) manufacturer to wholesaler to retailer to consumer is taxed. The VAT doesn’t care how much or how little revenue the price increase generates.

      The proposed “equalization tax” discussed in the story IS a tax on revenue, but only on revenue generated in one country but shifted on the books to another essentially for income tax reasons. The tax would create a disincentive for companies to create schemes that are motivated purely by tax avoidance and not by some other legitimate business purpose. As with EU policy generally, the notion is to enforce a genuinely common market with free movement of goods, capital, information, and people and without artificial national barriers to free trade.

      As several of us pointed out above, that should enhance competition and entrepreneurial initiative at the personal and corporate level and reduce the influence of national government policies on business decisions. It is the very opposite of socialism or communism.

      Most European countries have both income taxes and a VAT, which is why European countries have much lower nominal income tax rates than the USA. They don’t need as much revenue from the income tax because they get much more from the VAT. They also have far fewer income tax deductions and exemptions than the US, the kind of thing that allows General Electric to pay less in income taxes (during some years) than I do personally as a retired mid-range government employee.

      That is also why it is simply not true that “America has the highest corporate taxes of any industrialized nation.” When you take the VAT into account, a smaller proportion of the US economy is devoted to taxation than in 146 other countries:
      https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio

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