Sunday, July 28, 2019

Taxes and Tariffs

All of the following is taken from two articles published by Reuters July 26, 2019.

We woke up Saturday morning to learn President Trump was threatening tariffs on French wine and spirits imported into this country.  Apparently, the day before, President Macron had announced a 3% tax on the revenue our largest technology companies generate in France.  So just like in The Godfather, "They hit one of ours so we hit one of theirs."

France's proposed tax would be retroactive to the beginning of this year and would apply to those tech companies with revenue of twenty-five million euro annually in France ($278 million) and seven hundred fifty million dollars worldwide.  So the tax is only on the very largest of tech companies.  Austria, Italy, Spain and Britain have also announced plans for their own similar taxes in their countries.  Macron has said the tax would be lifted if the OECD (Organization for Economic Cooperation and Development) or similar international entity could arrive at a universal technology tax.

Next month two important meetings on the issue will take place.  On the 19th the United States Trade Representative office will hold a hearing on revenue taxes and their deviance from normal taxing policy.  Revenue taxes are "extraterritorial," revenue-targeted and not income taxes, and they punish commercial success.  Then on August 24-26 the G7 meets to discuss the idea of a universal tax on digital activities.

But there is more...EU director general for trade, Sabine Weyand, says she fully expects Trump to implement the tariffs as an extension of the fifteen year long Airbus subsidy complaint we have in defense of The Boeing Company.

The French alcoholic beverage industry is the second largest in the country after aerospace.  The United States is the largest importer of French wines and spirits in the world with a quarter of all French exports amounting to 3.2 billion euro or 3.6 billion dollars.

Please join us this after 5pm Thursday, the first of August, when Adam Bess leads us in a tasting of Manu New Zealand Sauvignon Blanc, Testamento Argentine Rose, Chateau du Duc Red Bordeaux and Scherrer Russian River Syrah.

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