Tech Industry Praises Trump for France Delaying Digital Services Tax

Tech industry officials praised the Trump administration for defending U.S. interests against France’s digital services tax. France agreed to delay collecting new taxes on tech companies until the end of the year after the administration threatened to levy tariffs on $2.4 billion of French goods (see 1908190043 and 1912030002).

Sen. Sherrod Brown, D-Ohio, shared concerns about President Donald Trump’s close ties with tech executives like Facebook CEO Mark Zuckerberg, saying the president is too often willing to do the bidding of the wealthiest U.S. interests. Sens. Richard Blumenthal, D-Conn., and Brian Schatz, D-Hawaii, said Trump’s recent private meetings with Zuckerberg don’t warrant criticism.

“The president does the bidding of large, powerful corporations, so why not with” Facebook, Brown told us. “I don’t see the way he runs his presidency as appropriate. He’s always willing to do the bidding of the wealthiest interests in the country.”

Schatz told us it’s not the type of thing he would criticize a Democratic president for, so he isn’t holding it against Trump. “I have plenty to criticize Facebook about, but meeting with public officials is not one of them.” Blumenthal said he hasn’t been keeping track of Trump’s visits with Zuckerberg, “so let’s just see whether it’s anything more than just casual conversation.”

The administration correctly considered France’s tax an attack on the U.S.’s most profitable companies and defended American industry, said Information Technology and Innovation Foundation Senior Fellow Joe Kennedy. But he suggested France’s decision could have been an effort to spur U.S. negotiations on digitalization issues through the Organisation for Economic Co-operation and Development. Many EU countries believe digitalization has made it harder to collect tax revenue when companies sell large volumes of goods without a physical presence, he said.

EU critics see the U.S. as less concerned about base erosion and profit-shifting agreements, he said. For the next year or two, international partners should focus on the “serious issue” of properly valuing products sold over the internet. Until OECD reaches a resolution, countries should stand down and not enact unilateral rules, he said. The U.K. is also pursuing its own digital services tax.

Trump’s meetings with Zuckerberg and relationship with Apple CEO Tim Cook aren’t a problem, said Kennedy. The more ideas the president is exposed to, the better, he said, noting the administration has taken positions that go against the interests of Facebook and Apple.

France’s tax is essentially a new tariff on U.S. goods, said NetChoice Vice President Carl Szabo. It’s specifically designed to apply almost exclusively to American businesses, he said, citing France repeatedly raising the minimum threshold to ensure French industry isn’t affected. If it were n tax that also applied to French businesses, the French government would have more of a leg to stand on, he said, calling it taxation without representation. Remote taxation is something the EU tried and decided against through the EU Digital Single Market, Szabo said.