Favoring Hi-Tech Tax Cheats Over Consumers of French Wine

Favoring Hi-Tech Tax Cheats Over Consumers of French Wine

Hoping to buy a nice bottle of French wine? Doug Palmer of Poltico has some bad news for you:

The Trump administration announced Friday a 25 percent tariff on $1.3 billion worth of French handbags, cosmetics and soaps in retaliation for a digital services tax on U.S. internet giants, but said it would suspend imposing them for up to six months. The United States believes the way the French tax is structured unfairly targets large U.S. internet companies like Facebook, Google and Amazon. However, other countries are increasingly determined to find a way to collect revenue from firms that earn billions of dollars in their markets.

Let’s note that Amazon, Facebook, and Google made yuuuuge profits and evade U.S. corporate profits taxes. So paying a modest excise tax on European sales is not exactly going to bankrupt these tax cheats. But back to the story:

U.S. Trade Representative Robert Lighthizer’s office concluded last year that France’s digital service tax was unreasonable, discriminatory and a burden on U.S. commerce. It also laid out a list of $2.4 billion worth of French goods — including Champagne, cheeses, handbags, soaps and fine dinnerware — that could be hit with retaliatory duties as high as 100 percent. U.S. trade officials said the final retaliation figure announced Friday reflects the value of U.S. digital transactions covered by France’s 3 percent digital services tax, which is estimated to be in the range of $15 billion per year, and the amount of taxes that France is expected to collect from U.S. companies.

If collecting tax revenues were the goal, the U.S. could make much more from Amazon, Facebook, and Google by simply enforcing the transfer pricing rules. Oh but that would be taxing rich people which is not the Republican way. Back to the story:

The final retaliatory list leaves off Champagne, cheese and fine dinnerware. U.S. wine wholesalers and retailers, who have already been hurt by a 25 percent U.S. retaliatory duty on European wine in a separate dispute over European government support for aerospace giant Airbus, fought Lighthizer’s threat to include French Champagne in the retaliatory list for the digital services tax.Industry groups estimated an additional 100 percent duty on French sparkling wine would increase the cost to importers by $718 million and cause the loss of more than 17,000 jobs throughout the distribution chain. A tariff of just 25 percent would boost costs by $179 million and jeopardize an estimated 6,000 jobs, the groups said.

Screw the little guy and consumers too. That’s the Republican way.

 

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