Andreas Hellmann

EU Digital Services Tax Plan All But Dead - Win for American Tech Companies

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Posted by Andreas Hellmann on Tuesday, November 6th, 2018, 12:54 PM PERMALINK

The European Union has closed the door on digital services tax until 2020 in a win for American tech companies and global tax competition. At an EU finance minister conference in Brussels, German finance minister Olaf Scholz said the European Commission should revise its plan for a 3 percent EU digital service tax on American tech companies like Google, Facebook, and others and insisted that the new tax should only be implemented if there is no global solution on an OECD level by the summer of 2020.

 
The French government later joined him also supporting this action. It elevates the process as now not only the 28 EU member states have to agree on one proposal, but 36 OECD member states which will likely not be less complicated. More importantly, it gives an opportunity to the United States to participate in negotiating an issue that mainly affects U.S. companies and reduces the risk of transatlantic tensions.

With this definite statement finance minister Olaf Scholz concluded the process of the EU member states desperately trying to agree on what a European digital services tax should look like. The previously scheduled meeting in Brussels in December was the last chance to come to a unanimous agreement under the current Austrian EU council presidency but came under extreme pressure by opposition from member states led by the Nordic countries, Ireland, Malta and Greece. France and Germany are now aiming for an “ambitious political declaration” in December to explain their plans further. 

Scholz also said that a revised proposal should limit the scope of the tax urging to exclude the sale of data and the internet of things.  These two sectors could specifically result in the taxation of German carmakers. 

The new proposal almost copies the UK government’s recently announced approach to move ahead with a 2 percent digital services tax in 2020 if there is no OECD solution.

Photo Credit: Stuart Chalmers


U.K. Threatens American Tech Companies with “Digital Services Tax” in 2020 And Joins EU Plans

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Posted by Andreas Hellmann on Wednesday, October 31st, 2018, 9:09 AM PERMALINK

In stark contrast to PM Theresa May’s claim that post-Brexit the U.K. would have the most pro-business tax code in the world, her finance chief has just released a budget that imposes a new Digital Services Tax, possibly the worst business tax idea of the 21st century.

U.K. Chancellor of the Exchequer Philip Hammond revealed a surprising endorsement of this American-targeted tax in his autumn budget, aiming to raise more than 400 million pounds a year ($515 million) by levying a 2 percent tax on the global revenue of certain tech companies. 

Like in the case of the EU Commission and member state proposals ATR has noted, the U.K. aims to tax companies above a certain threshold of global revenue. 

In the Hammond tax, the threshold is crossed if tech firms have global revenues of £500 million ($640 million) or more and are operating profitably.

This puts the UK in the front of the pack in targeting—largely American—major tech companies like Google, Amazon, Facebook, Uber and others through a new tax on worldwide income. The May government has now, unfortunately, joined the voices of the EU Commission and some member states against those companies, claiming at present they are not paying ‘their fair share.’ 

So who will pay the tax that U.K. Treasury says is aimed at search engines, online marketplaces, and social media firms? 

Almost exclusively American companies. There are no qualifying search engines other than Google and Microsoft’s Bing that fit in the measure. In the second category of social media firms, only Facebook and Instagram, which is also owned by Facebook, qualify. In the third category of online marketplaces, eBay would be hit, and Amazon likely exceeds the £500 million benchmark due to its Amazon Marketplace. 

The U.K move has Europe-wide implications as well.  Hammond’s moves further pressure the European Commission and member states to finalize their version of an even higher 3 percent digital services tax. He explicitly says that the U.K. favors such a multinational approach.  If a ‘better’ tax solution emerges before April 2020, the U.K. would consider adopting an EU measure instead of its own policies. The Theresa May government is therefore surprisingly using Brexit as leverage for forcing an EU  tax on the worldwide income of American companies. 

This announcement comes at a time when U.S. Senate Finance Committee chairman Orrin Hatch (R-Utah) and ranking member Ron Wyden (D-Ore.) just released a strong letter opposing the European Union’s plan for a Digital Services Tax, worrying it will create more tensions for transatlantic relations in already difficult times. 

“The EU DST proposal has been designed to discriminate against U.S. companies and undermine the international tax treaty system, creating a significant new transatlantic trade barrier that runs counter to the newly launched US and EU dialogue to reduce such barriers. Therefore, we urge the EU to abandon this proposal, urge the member states to delay unilateral action, " said Hatch.

EU member states opposing a Digital Services Tax in their own countries or on the EU level now have to make their voices heard louder than ever with the surprise of the U.K. joining the dark side, and in the U.S., the Trump administration must further ratchet up its opposition. 

This new tax poses unprecedented dangers to tax competition, tech-fostered innovation, and European and worldwide economic growth. The new tax would represent a dramatic and irreversible shift for the international tax system.  It would mean damage to the transatlantic relationship and could lead to a spiral of retaliation.

Photo Credit: Tiocfaidh ár lá 1916


Senate Finance Committee: EU Digital Services Tax Discriminates Against U.S. Companies

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Posted by Andreas Hellmann on Tuesday, October 30th, 2018, 7:30 PM PERMALINK

Senate Finance Committee chairman Orrin. G. Hatch (R-Utah) and ranking member Ron Wyden (D-Ore.) are opposing the European Union’s plan for a Digital Services Tax on major – mostly American – tech companies like Google, Amazon, Facebook and many others as it “violates the long-held principle that taxes on multinationals should be profit-based, not revenue-based.”

In an October 18 letter, addressed to European Council President Donald Tusk and European Commission President Jean-Claude Juncker, Senators Hatch and Wyden write: 

The EU DST proposal has been designed to discriminate against U.S. companies and undermine the international tax treaty system, creating a significant new transatlantic trade barrier that runs counter to the newly launched US and EU dialogue to reduce such barriers. Therefore, we urge the EU to abandon this proposal, urge the member states to delay unilateral action.

As ATR has noted before, the European Union’s proposal for a Digital Services Tax affects tech companies even if they are not physically present in the EU, potentially taxing them close to €5 billion Euro.  Companies with annual worldwide revenues above 750 million Euro ($924 million) or yearly “taxable” revenues above 50 million Euro in the EU could face a 3% tax on their turnover—in most cases the gross revenue. The plan would erect a new tax regime, as the tax would be levied by the countries where the digital users are located, not based on where the companies are physically present.

The letter points out that the European Union and their member states already have a revenue tax based on the location of the customer with their Value-added tax (VAT): Consequently, the DST will undoubtedly lead to double taxation of multinational companies.

Though the EU is claiming that the Digital Services Tax “responds to calls from several Member States for an interim tax which covers the main digital activities that currently escape tax altogether in the EU,” and would, therefore, be temporary, Senators Hatch and Wyden are concerned it could “conceivably last indefinitely.” Their concern is not surprising as the interim Digital Services Tax would only be ditched after the EU’s long-term proposal would be successful:

The first initiative aims to reform corporate tax rules so that profits are registered and taxed where businesses have significant interaction with users through digital channels. This forms the Commission's preferred long-term solution. 

This letter comes as the Trump administration is beginning official trade talks with the European Union this week and Trump's threat to impose a tariff of up to 25 percent on imports of cars and parts into the U.S. aimed mostly at Germany, the EU's largest economy, is still on the table. President Trump has agreed not to go ahead with the new auto import taxes as long as negotiations are underway, and it is noteworthy that Austria, France, and Spain are at the same time desperately trying to convince all 28 EU member states to agree on an EU wide proposal in order to stop local efforts by member states to impose their own Digital Services Taxes. Spain and Italy have already legislation similar to the EU original proposal in place that will start taxing companies in 2019.

Therefore, France has recently signed a communique with Spain to call on Austria to join them in their efforts. 

The measure needs unanimous approval by all member states. Many EU member states led by Ireland, the Nordic countries and Malta have been the most outspoken opponents. Germany worries that increasing the tensions on trade with the United States by launching a direct attack on Silicon Valley may threaten German auto exports and is therefore not supporting the EU plans, but pushes for a global solution: We need a minimum tax rate valid globally which no state can get out of,  said German finance minister Olaf Scholz.

Photo Credit: Kevin White


GOP Tax Cuts Help CarMax Give Employee Bonuses

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Posted by Andreas Hellmann on Saturday, October 20th, 2018, 2:00 PM PERMALINK

With help from the GOP tax cuts, CarMax Inc. provided special bonuses to associates. Bonuses ranged from $200 up to $1,500 based on length of service with the company.

A company statement notes

CarMax, Inc., the nation’s largest retailer of used cars, announced plans to provide one-time bonuses to most hourly and commissioned full-time and part-time associates as a result of the recently passed Tax Cuts and Jobs Act of 2017. Bonus amounts will vary from $200 up to $1,500 based on length of service with the company.

“Our success as a company is due to the hard work and dedication of our talented Associates,” said Bill Nash, CarMax President and CEO. “We are always looking for ways we can support them, and I’m pleased to have this opportunity to thank associates for all that they do every day for our customers and for each other.” About 80 percent of associates will receive the bonus, which will be distributed in March 2018.

With headquarters in Richmond, Virginia, CarMax has 202 stores and nearly 25,000 associates nationwide.

See also: over 700 examples of tax cut good news -- raises, bonuses, benefit increases, utility rate reductions, business expansions

 

 

 

Photo Credit: Sanjoy Ghosh


Thanks to GOP Tax Cuts, Powder Monkey Fireworks To Start SEP IRA's For Employees

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Posted by Andreas Hellmann on Friday, October 19th, 2018, 3:22 PM PERMALINK

The Tax Cuts and Jobs Act continues to ignite small business growth across the United States. Companies are raising pay, giving bonuses, and enhancing employee benefits. And now, Powder Monkey Fireworks Inc, of Weldon Spring, Missouri is starting SEP IRAs:

As noted by Chris Sander, President of Powder Monkey Fireworks:


"The Tax Cuts & Jobs Act brings confidence to seasonal firework retailers and patriotic consumers who celebrate freedom each July 4th with fireworks. Our success in 2018 has allowed powder monkey FIREWORKS, Inc to contribute a bonus equal to 25% of annual payroll into SEP IRA accounts at no cost to employees. Our employees work evening, weekend, overnight, and seasonal summer job shifts to earn extra income retailing fireworks. Lower tax rates bring higher wages, more payroll, and more employee benefits."


                                             

Powder Monkey Fireworks is the newest addition to the growing Missouri Examples of Tax Reform Good News list.

Missouri Democrat Senator Claire McCaskill voted NO on the tax cuts.

See also: over 700 examples of tax cut good news -- raises, bonuses, benefit increases, utility rate reductions, business expansions

Photo Credit: Chris Sander


AutoNation Doubles 401(k) Match And Launches Cancer Benefit Program Thanks To Tax Cuts

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Posted by Andreas Hellmann on Friday, October 19th, 2018, 10:40 AM PERMALINK

With help from the GOP tax cuts AutoNation doubled its 401(k) match and launched a cancer benefit program that includes medical coverage for employees and their families.

As noted by a company statement:

AutoNation will use the savings from tax reform to invest in its future and its employees, through enhancing its benefits programs, including launching an innovative cancer program to assist employees and family members who were recently diagnosed with cancer, and investing in progressive training programs that will allow its associates to better serve its customers and drive their career advancement.  The Company also plans to accelerate its brand extension strategy as well as further expand its Drive Pink initiatives.

AutoNation's Chairman, CEO and President, Mike Jackson, said, "We are excited about the pro-growth environment for business in the U.S., which includes the recently signed tax reform bill. As a U.S.-based company, our employees, customers and shareholders will benefit greatly from a reduction in our corporate tax rates."

AutoNation is America's largest automotive retailer owning and operating 360 new vehicle franchises from coast to coast. 

See also: over 700 examples of tax cut good news -- raises, bonuses, benefit increases, utility rate reductions, business expansions

Photo Credit: Screenshot


Sprouts Farmers Market Invests $10 Million in Higher Pay and More Benefits Thanks to GOP Tax Cuts

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Posted by Andreas Hellmann on Thursday, October 18th, 2018, 10:56 AM PERMALINK

With help from the GOP tax cuts, Sprouts Farmers Market, with headquarters in Phoenix and over 280 retail locations, raised wages and enhanced employee health care and parental leave benefits.

As noted by CEO Amin Maredia:

To ensure we remain in a leadership position to attract the right talent, we will further invest in our team members by improving pay and improved benefits, such as healthcare and expanding maternity leave. We will invest an additional $10 million, or approximately one-third of our tax savings, for our team members in 2018. The investments will be strategically aligned to our long-term strategy of health, value, selection, and service.  

The very first Sprouts Farmers Market opened in Chandler, Arizona in 2002. Now, Sprouts employs more than 27,000 individuals in 15 states from coast to coast.

See also: over 700 examples of tax cut good news -- raises, bonuses, benefit increases, utility rate reductions, business expansions

Photo Credit: Kelly Sims


Thanks To Tax Cuts: GE Appliances Is Investing $200 Million And Adding 400 New Jobs

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Posted by Andreas Hellmann on Thursday, October 18th, 2018, 10:00 AM PERMALINK

With help from the GOP tax cuts, GE Appliances is investing $200 million in U.S. manufacturing operations and adding 400 jobs. The National Association of Manufacturers detailed the GE Appliances announcement on their Shopfloor blog, one of the best sources to learn about the positive effects of Tax Cuts and Jobs Act:

GE Appliances unveiled their biggest move yet, announcing an incredible new $200 million investment in its Kentucky dishwasher and laundry manufacturing operations that will support up to 400 new manufacturing jobs and help the company meet increasing consumer demand.

“The changes in rates and favorable tax treatment of investments in machinery and equipment play a big role in our expansion plans,” Kevin Nolan, president, and chief executive officer for GE Appliances, said Monday morning in the announcement of the investment.

According to GE Appliances, the $200 million investment will fuel two areas of growth:

Investment in its laundry production facility, which will increase manufacturing capacity by approximately 20 percent
Investment in dishwasher production to expand the facility’s production capability by 35 percent

“The combined impact of operations, employee compensation and today’s announced $200 million investment will result in creation of an additional 13,500 jobs in the Commonwealth,” GE Appliances said in their statement. Appliance Park is expected to increase its already substantial economic impact by an additional $18 billion.

GE Appliances’ investment comes at an important time for manufacturing workers in the United States. Manufacturers promised that the passage of tax reform that gives manufacturers in the United States a competitive advantage would unlock an unprecedented wave of big investments, new jobs, and rising paychecks. Today’s exciting news from GE Appliances confirms that manufacturers are keeping that promise.

This is not the first time GE Appliances has made large investments in 2018 because of the tax cuts: The company invested $150 million to open four new distribution centers adding 220 new jobs all over the United States. Last May, the manufacturer announced a $9.3 million investment supporting 210 new jobs in Tennessee and another $115 million investment in a manufacturing facility in Alabama, adding another 225 jobs. All investments are totaling $275 million. 

View the full list of tax reform good news here

Photo Credit: Thomas Hawk

More from Americans for Tax Reform


Ulta Beauty Gives Employee Bonuses Totaling $12.3 Million Thanks To GOP Tax Reform

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Posted by Andreas Hellmann on Thursday, October 18th, 2018, 9:00 AM PERMALINK

With help from the GOP tax cuts, Ulta Beauty Inc., headquartered in Bolingbrook, Illinois, awarded bonuses to all hourly associates, totaling $12.3 million. 

The company is profiting from a booming economy and is, therefore, able to give bonuses to their employees. "We are deploying a portion of the tax reform benefits to invest in our people and accelerate investments to drive growth and innovation,” said Mary Dillon Chief Executive Officer.

Ulta Beauty has approximately 1,000 locations. Since opening their first store in 1990, Ulta has grown to become the largest beauty retailer in the U.S. and a premier destination for cosmetics, fragrance, skin care products, hair care products, and salon services.

See also: over 700 examples of tax cut good news -- raises, bonuses, benefit increases, utility rate reductions, business expansions

Photo Credit: Mike Mozart


U.S. is ranked the world's most competitive economy

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Posted by Andreas Hellmann on Wednesday, October 17th, 2018, 3:07 PM PERMALINK

The U.S. ranks first in the World Economic Forum’s annual global competitiveness study for the first time since the 2008 financial crisis. 

Thanks to the GOP tax cuts and deregulatory progress, the U.S. beat Singapore (83.5), Germany (82.8), Switzerland (82.6), and Japan (82.5), the other top markets, with a high score of 85.6 out of 100. The global median of 140 assessed countries is 60, and Chad scoring last with 35.5. 

America is competitive again after Trump's tax cuts brought the U.S. corporate tax rate from 35 percent, among the highest rate in the developed world, to 21 percent.

The study uses a new methodology to define the dynamics of the global economy, characterized by a combination of artificial intelligence, cybersecurity, idea generation, entrepreneurial culture, and the number of businesses that disrupt existing markets among other factors. 

These new models describe the competitiveness through 98 indicators, using a scale from 0 to 100, which are organized into 12 categories that state how close an economy is to an ideal state or frontier of competitiveness. The categories are infrastructure, institutions, the adoption of information and communications technology, macroeconomic stability, health, skills, product market, labor market, financial system, market size, business dynamism, and innovation capability.

See the full World Economic Forum study here.

Photo Credit: Siete Media


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