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| Apple's repatriation of cash from Ireland was deemed illegal and has subsequently been required to pay $14 billion to the European Commission. |
Both entities argue that multinational corporations are not paying their fair share of taxes while the US raises import tariffs on steel and aluminum from abroad.
An example from the article states how Amazon's headquarters being stationed in Luxembourg locks them into a roughly 9% digital business corporate tax rate as opposed to 23.3% for traditional businesses. Additionally, Google was ordered to pay $2.42 billion to the European Commission for using it's own search engine to favor their own comparison shopping service and demoting service results of their rivals.
To me it seems that the central European nations and those in charge of most regulatory commissions just want to milk as much money from the tech sector as possible and probably incentivize these tech firms to place an emphasis in their own nation rather than fringe EU partners which may flake on collecting taxes. The only true benefits for this plan would be the largest participants in the EU which are Germany and France, leaving the likes of Luxembourg and Ireland to fend for themselves or defend law suits against their respective governments for not complying to regulation.
Do you think the EU has the right to command such a high price tag on these tech cases?
Tech firms are smart and will always try to find the best deal because they know almost every city wants to host a massive corporation for it's implied positive externalities but, do you think they will no longer feel it is worth their while to have a headquarters in the EU as a byproduct of this decision? How will the EU collect if this becomes a reality?
https://www.nytimes.com/2018/03/19/us/politics/europe-digital-tax-trade.html
3 comments:
To begin with, I think it's ridiculous that the EU is demanding 2.42 billion from Google for preferring their own shopping service over others. Google is not a public entity! It should be able to portray search results however it pleases because the company is the one paying for the servers and the company is the one that invested the money into the algorithm and programming. If consumers are really dissatisfied with Google's search results, they can go to another search engine like duckduckgo, Bing, or Yahoo. If the EU wants to release statements to make the public aware of Google favoring itself, then fine. But to demand billions of dollars for what I see as a totally legitimate business move is poor.
I don't see why more nations, particularly those in the EU, embrace the housing of offices and headquarters in their home country instead of driving them away with high fines. As you stated Nick, the positive externalities generated from having 15,000+ new workers in a region is tremendous considering housing, food, entertainment, and other general consumption.
I can't really imagine what the EU could do in its situation do get these tech giants to cough up these imposed fees short of an outright ban. I hope this doesn't turn into a hostage situation where citizens of the EU are barred from access to non-fee paying sites.
I'm interested in hearing any arguments regarding the trade off the income generated by high tax versus the income generated by positive externality of hosting plus a small tax.
Totally agree with your ideas here Austin. It should be well within the rights of Google as a private company to elevate the search results of their own services as any sensible company would do. Demanding billions of dollars should be out of the question because consumers should know that search engines naturally want to drive more traffic to their own sites and thus create more name recognition. Almost all tech firms try to emulate the "all encompassing" experience to make their site either feel like the one-stop-shop (Amazon) or make you part of their ecosystem of products (Apple).
I think what the EU is trying to do is outcast other 'inferior' members who may not contribute as much economically and drive headquarters into mainland Europe (ie. Germany, Italy, France) so they can profit off the potentially massive influxes of workers as opposed to nations like Ireland which are much further from the financial center and thus harder to control.
Ireland and Luxembourg are pretty content with their low tax rates for these companies, because the low rates explain why companies are over there in the first place. They're their own countries, let them handle things the way they want to handle them. The EU is just trying to profit under the guise of "we want people to pay their fair share"
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