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France has approved a digital services tax despite threats of retaliation by US

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Re: France has approved a digital services tax despite threats of retaliation by US

#411

Earlier quoted context omitted.

They have saturation, or as near as they are likely to get, of the valuable eyeballs. Where else could they expand?

Why would they invest so heavily there if there was nothing to be gained?

Not nothing. Market maximising - if there's nowhere else to sell in the developed world, go to the developing world and take 5% or whatever their margin is, on a much lower value of sales (for now).

I'd say it's pretty obviously a calculated risk that they'll develop in value once hooked. Didn't Facebook have a scheme that gave net access in the developing world that re-created the AOL model? Free internet, but it's only FB internet.

The complete or comparative lack of regulation in many areas probably encourages too.

Worked for tobacco companies, works for most other industries.

Re: France has approved a digital services tax despite threats of retaliation by US

#412

Earlier quoted context omitted.

And you think this new surcharge won’t be passed onto the consumers in France?

This is the biggest fallacy about taxation, if they could charge whatever the price+tax is, they already would be.

It’s not a fallacy. They charge to maximize revenue. If they charge more, people buy less. If their cost to produce goes up, their optimal price likely goes up, depending on elasticity.

This is Econ 101. Draw some supply-demand curves, compute total profit, increase costs, and see how the optimal point moves on the curve.

Historically companies do raise prices as cost to produce increases.

Re: France has approved a digital services tax despite threats of retaliation by US

#413

Earlier quoted context omitted.

Which makes local businesses better able to compete. Win-win.

Win-win, until you realize that this action is pretty much the opening shot of a trade war, precisely because it helps local businesses. Imagine if the US responded in kind and tailored some new rules that targeted European businesses in US markets with similar taxation.

> Imagine if the US responded in kind and tailored some new rules that targeted European businesses in US markets with similar taxation.

Evidently they consider that a fair risk.

Re: France has approved a digital services tax despite threats of retaliation by US

#414
post #308
post #299

Earlier quoted context omitted.

That’s not what they say when the subject of tariffs comes up. “We’ll have to pass it on to consumers”.

But in reality, a share of the tariff is paid by the supplier and a share is paid by the consumer. And if I remember my classic macroeconomics class correctly, that share depends precisely on the elasticity of demand (slope of the demand curve).

This is correct.

Re: France has approved a digital services tax despite threats of retaliation by US

#415

Earlier quoted context omitted.

This typically doesn't happen. Companies don't pass the increases in taxes 100% to the consumer. By that argument all taxes would be immoral since they directly increase the prices consumers pay. Now we can argue as to how much said tax is passed onto the consumer and whether or not the additional tax revenue towards various social services offsets the hit. Which is an important distinction to make when choosing what…

Companies don't receive money from the ether. They receive money from their customers. Ergo, 100% of taxes paid by companies are indeed paid by customers. Any increase will indeed be passed on to the customer. Any decrease in profits to the company is temporary and will be made up by the customers in the near (if not immediate) future. Companies won't just sit idly by while their profits decrease due to tax - they'll…

That’s not how taxes work. Look up “economic incidence of tax.”

Re: France has approved a digital services tax despite threats of retaliation by US

#416
post #28

Earlier quoted context omitted.

Those large tech companies can make money in France because the french government provides all that is necessary for a free, fair and functioning market. How could Google make money in France if there was no french police force, education system, market regulation, court system, contract enforcement? All money made on the white market in any country is facilitated by that government, and taxes are paid on all profits…

It's not free and fair if a tax is written to target 30 companies, is it?

How is it any less fair than the tariffs that Trump is throwing on anyone that pissed in his corn flakes that morning?

Re: France has approved a digital services tax despite threats of retaliation by US

#417
post #297

Earlier quoted context omitted.

(replying to sibling) Some do. Source: I'm French and I do :)

Out of curiosity, would you say most French people think the same way? I ask because I'm American and we really hate taxes here.

I would consider myself both.

It's true that in the US, the average person sees very little benefit to federal taxes. Most real, helpful things such as police, roads, schools and such are perceived to be only from local or possibly state taxes. This is not entirely true of course since Federal taxes do help for education and roads notably, but I would say that most people don't really think about it that way. There's also a very strong individualism in the US, which tends to make people overlook outside factors when evaluating success, the "if you work hard and believe in yourself anything is possible" kinda thing. Finally there's a general belief in the corruption and incompetence of big government, the idea that this money taken will just be wasted.

So taxes, especially Federal taxes, are seen as a burden, a form of robbery even. And by a bunch of incompetents no less.

In France, people do see direct benefits of paying taxes in their daily lives, mainly related to the medical system.

There is also a history of things like trains, the post office, ferries, electricity, telephone service, being handled by the central government (this is before the privatizations starting the 1990s), and crucially, people associating the involvement of the state in what were in some cases world class services. And the French don't generally see a problem in letting the government handle these sorts of things. As an example there is now a petition going around in France to keep the Paris airports under government control.

So, paying taxes in France is seen more as a necessary burden to having a functional society rather than highway robbery.

What does piss off the French is not everyone paying their fair share, which these new taxes are helping to compensate. Even if not much at all in terms of actual revenue for the state, it's more of a symbolic gesture to appease the population.

Re: France has approved a digital services tax despite threats of retaliation by US

#418
post #15

I never understood the logic behind taxing large internet businesses. The idea behind taxes is that you use some public resource and you pay for that service. You own a home in a neighborhood, you pay property tax that funds the schools. You drive a car, you pay gasoline tax that funds the streets. You hire workers locally, you pay the tax to pay back all the contributions public institutions made to adding the skill…

With respect, you do not understand the logic behind taxes, much less the logic behind taxing international businesses. > The idea behind taxes is that you use some public resource and you pay for that service You are framing taxes as if the government is a business selling people health care, fire protection, security, and infrastructure. I benefit from infrastructure I don't personally use. For example, even if I a…

Prosperity is causally prior to taxation, not the other way around. To quote the great Bryan Caplan, "It takes a colossal host to sustain colossal parasitism."

Re: France has approved a digital services tax despite threats of retaliation by US

#419

Earlier quoted context omitted.

Which makes local businesses better able to compete. Win-win.

Win-win, until you realize that this action is pretty much the opening shot of a trade war, precisely because it helps local businesses. Imagine if the US responded in kind and tailored some new rules that targeted European businesses in US markets with similar taxation.

At least one French company is affected though. The taxes apply based on total worldwide revenue.

Re: France has approved a digital services tax despite threats of retaliation by US

#420
post #170

Earlier quoted context omitted.

Because these large tech companies don't pay taxes currently. The current tax laws have a huge loophole in respect to large foreign internet businesses. Now they're trying to close that loophole.

I think it is impossible to sell anything in the EU without VAT, which is a much higher taxation rate than profit (not as percentage, but as money: VAT is 20-25% of the product or service price, profit can be as low as 1-5%. What the likes of Amazon, Google or Facebook are not paying is profit tax, pretending they have no profits. French companies that have no profits also don't pay profit tax.

Before the new VAT rules Amazon had a deal over VAT with Luxembourg, similar to the deal with Ireland on income tax.

http://europa.eu/rapid/press-release_IP-17-3701_en.htm

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