Katie McAuliffe

A Performance Right is Not a Tax, Congress should Exit the Music Business

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Posted by Katie McAuliffe on Monday, May 10th, 2021, 4:15 PM PERMALINK

Americans for Tax Reform send a letter to the Senate and House sponsors of the Local Radio Freedom Act, that reasserts our long-held position that the government should not insert itself into markets.

You can read the full letter below and linked to here.

Dear Congressman:

I am writing today to clarify Americans for Tax Reform’s position on licensing and copyright, especially as it pertains to what does and does not constitute a tax.

As language circulates concerning music distribution, we urge the consideration of the entire universe of music distribution and how copyright is applied. Artists and distributors, including broadcasters, should have the opportunity for free-market negotiations, as do other businesses.

When Congress considers reform, it should support market forces rather than increased government intervention as the best tool for unleashing innovation and fostering creativity.

All parties, e.g., writers, artists, recording companies, broadcasting companies and others, should be allowed to negotiate mutually agreeable terms. There is no way, ultimately, for a legislator to decide what the fair market value of a product or service is.

We should move toward a market where setting prices; forbidding actions on one side or another; preventing the acceptance of payment for one service or another; or prohibiting collection of compensation for the use of property, are things of the past. We should not prevent compensation for work created or compensation from promotion supplied. This should not be a regulatory issue. This should be the work of a functional market.

The debate on performance rights is an interesting and important one. Ultimately, it should be made in the marketplace, not in House and Senate office buildings. Prior private agreements between music creators and record labels demonstrate that the performance rights issue is better addressed through private contracts than a broad government mandate.

By definition, charging for content is not a tax. Specifically, a performance right is not a tax. We often correct tax proponents who try to call a new tax something (anything) other than a tax, however, the term “tax” doesn’t apply in this case.

We believe in an open and free market, and the vigilant protection of property rights. Government should extract itself from this debate to allow an environment for negotiations to develop among broadcasters, record companies, artists, and other interested parties.

Moving forward, I urge you to enact reforms that protect intellectual property, nurture the private sector and allow the free market to determine prices and compensation for labor and intellectual property.

Onward,

Grover Norquist
President,
Americans for Tax Reform

 

Photo Credit: Firmbee.com

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ATR Tells Congress Don't Waste Taxpayer Dollars on Broadband Failures

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Posted by Katie McAuliffe on Thursday, May 6th, 2021, 11:25 AM PERMALINK

WASHINGTON – Today, Americans for Tax Reform sent a letter to the House Energy and Commerce Subcommittee on Communications and Technology urging them to avoid the Biden Administration impulse to throw taxpayer dollars into broadband subsidies that are already proven failures.

Our letter highlights policies that Congress should follow if taxpayer dollars are to be spent closing the digital divide. Some our recommendations include: 

  1. Follow a technology neutral approach to broadband delivery.  
  2. Continue to champion private-sector investment over government-owned networks (GONs). 
  3. Continue our light-touch regulatory framework that put us ahead of our European counterparts. 
  4. Enact meaning reform to the Lifeline program. 

 

The Subcommittee will be holding a hearing today on this issue today. You can read the letter below or click HERE  to view it as a pdf. 

May 06, 2021

The Honorable
Michael F. Doyle, Chairman
U.S. House of Representatives
Subcmte on Communications & Technology
2123 Rayburn House Office Building
Washington, DC 20515
The Honorable
Robert E. Latta, Ranking Member
U.S. House of Representatives
Subcmte on Communications & Technology
3222-A Rayburn House Office Building
Washington, DC 20515

 

Dear Representatives:

If Congress is to address broadband connectivity and cost issues, we urge you to do so in a targeted, cost-effective way that considers the entire broadband universe, rather than the narrowly defined, non-technology neutral view proposed by the Biden Administration.

Congress should avoid overly restrictive definitions of what constitutes broadband. There are more choices than fiber. Cable, wireless, fixed wireless, satellite are all acceptable methods for achieving speeds that meet the needs of Americans now and into the future for working remotely, telehealth, remote learning, and entertainment. According to Zoom, only 2 Mbps is required for high-quality video calling for both upstream and downstream, while Netflix requires only 0.5 Mbps per second. Calls for symmetrical speeds at 100 up and 100 down end up mandating on fiber and doesn’t take into consideration the asymmetrical needs of individual broadband users or the ability of private networks of to upgrade to meet demand over time.

While the government may be suggesting an influx of $100 billion is revolutionary, it is not. A one-time spend, on a chosen technology, with a preference for government operators who will likely compete with existing private networks will not address the remaining digital divide.

The private sector has invested over $1.6 trillion into wireline broadband since 1997 and after the lifting of several government restrictions, the private sector invested $80 billion in 2018 alone. The US’s prioritization of investment through both the public and private sector instead of the burdensome government regulation seen throughout Europe leads to better broadband results hands down.

Looking only at wireline broadband connections the US beats out the EU when it comes to provider competition. In 2019 86% of all US households had a choice of two or more providers, while only 46% of Europeans had that choice. In rural areas, 49% of US residents had multiple access points while only 11% had choices in the EU. This isn’t surprising because between 2012 and 2018, US investment in broadband was about 40% higher than in the EU; US broadband providers invest about $708 per household which is about three times higher than in the EU’s $230 per household.

Municipal or government run networks are also not the answer, especially ones that compete with private networks already in place. They can charge below market rates because they receive tax subsidies and they still fail as projects. Taxpayers should not be forced to subsidize an ineffective service they may not even want to use. Similar programs, like the Broadband Technology Opportunities program (BTOP) have been tried and failed.

We hope you will look towards reforming the lifeline program at the FCC to be a sustainable solution to lack of connectivity due to cost, rather than returning to the failed programs of the past. Doing away with the Universal Service fee, which continues to put extreme pressure on a small segment of the population and moving to a Congressionally approved appropriation possibly attached to spectrum proceeds could be a viable solution. Congress should also do away with the Eligible Telecommunications Carriers requirement and move to a voucher program rather than a carrier directed program to increase options to individuals struggling to get online.

Should you have any questions or comments on this matter, please reach out to me, or our Director of Federal Policy, Katie McAuliffe, kmcauliffe@atr.org.

Onward,

Grover G. Norquist
President
Americans for Tax Reform
 

 

Photo Credit: Louis Velazquez

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ATR Supports Equal Act

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Posted by Katie McAuliffe on Friday, April 30th, 2021, 9:43 AM PERMALINK

Americans for Tax Reform supports the EQUAL Act  – a measure that promotes equality under the law by eliminating unequal mandatory minimum sentences between crack cocaine and powdered cocaine.     

Equal and fair treatment under the law is a sacred tenant in the United States. This legislation creates a more equal system by establishing consistent punishments for abusing the same chemical substance, regardless of physical form. That is why a coalition of 28 organizations wrote a letter supporting this legislation. 

In 1986, Congress passed the Anti-Drug Abuse Act, which enhanced penalties for drug crimes. This law included separate provisions for cocaine in the powdered form and cocaine in the crack form. Five grams of crack cocaine had the same mandatory minimum sentence as 500 grams of powder cocaine. A ratio of 100:1.   

This sentencing ratio was narrowed to about 18:1 with the bipartisan Fair Sentencing Act of 2010. However, any such disparity for possessing a chemically identical substance serves no real-world purpose. The EQUAL Act would eliminate any disparity in the punishment between powdered and crack cocaine.  

The enhanced punishments for crack cocaine were designed to target “kingpins” and “middle level dealers,” however research conducted by the U.S. Sentencing Commission found that it primarily impacted low level dealers. Additionally, research has shown that these different mandatory minimums for crack cocaine has resulted in 65% higher sentences for African Americans and Hispanic Americans.   

The EQUAL Act also provides the opportunity for pending and past cases to apply for a reduced sentence based off this new change by Congress.  

You can learn more about the bill HERE.  

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VIDEO: Broadband Doesn’t Need One Size Fits All Approach


Posted by Katie McAuliffe on Monday, April 19th, 2021, 2:44 PM PERMALINK

Earlier this month, ATR President Grover Norquist joined Jacqueline Alemany on Washington Post Live to speak about President Biden’s $2 Trillion infrastructure deal.  

A large part of Biden’s plan includes dumping billions of dollars to support the deployment of municipally owned fiber optic networks. This approach would do nothing to close the digital divide but rather waste taxpayer dollars repurposing the broadband networks of urban areas who already have high-speed and quality internet connections.  

Grover Norquist:  

They want to do broadband because they’ve decided broadband is the future. Somebody didn’t tell them about satellites, somebody didn’t tell them about 5G. And so they are taking yesterday’s technology and deciding that everybody’s got to have this one size fits all approach; as opposed to subsidizing those people in the rural areas who really need it because of the increased time it takes to get internet. Or you might think that it makes more sense to use satellites which are being put up right now to solve some of these problems.    

You can watch the video above or click HERE to watch it on our YouTube page. 

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ATR Supports Calls for a New Grace Commission

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Posted by Katie McAuliffe on Thursday, February 4th, 2021, 3:20 PM PERMALINK

WASHINGTON, D.C. — Americans for Tax Reform wrote a letter asking all members of Congress to support the bipartisan effort of Congressmen Jack Bergman (R–MI) and Edward Case (D–HI) to reconvene President Reagan’s cost-saving Grace Commission. 

Grover Norquist, President of Americans for Tax Reform said:

The "Grace Commission" in the 1980s was a great example of common sense, bi-partisanship and public service by Americans from all walks of life.  It is a model of what works.  Success is always worth repeating.

The Grace Commission, or The President's Private Sector Survey on Cost Control (PPSSCC), brought together 2,000 Americans from all walks of life to figure out ways the federal government could reduce wasteful spending. The Commission produced 2,478 recommendations that could have saved taxpayers over $420 billion if fully implemented. 

With government spending at unprecedented levels while the effects of COVID-19 wreak havoc on our economy, its time citizens join together once again find sensible solutions to make our government work for us again. 

You can read the letter below or click HERE for a downloadable version.

February 1, 2021

Dear Representatives:

I urge you to support the bipartisan initiative by Representatives Jack Bergman and Ed Case to reconvene a President’s Private Sector Survey on Cost Control (PPSSCC), by joining their letter to President Joe Biden.

The PPSSCC would serve as an advisory committee to investigate and report on opportunities for the federal government to cut waste and curb inefficiencies. It would be fully funded by the private sector at no cost to taxpayers.

The PPSSCC was first created by Executive Order 12369, signed by President Ronald Reagan in June of 1982. Known as the “Grace Commission”, this body pulled together over 2000 private citizens of all backgrounds to produce 2,478 recommendations that could have saved $424.4 billion if they had been fully implemented.

Recommendations could be as simple as setting printer defaults to printing two-sided documents instead of one-sided and examining regulations that were foregone during the pandemic to see if they should be permanently removed.

With record national debt, an understanding of the effects of regulation, and the sobering economic impacts of COVID-19, the federal government needs a rejuvenated effort by its citizens to control the cost of government, for its citizens.

We hope that you support will this initiative by joining their letter requesting that the Biden Administration reconvene the PPSSCC. If you have any questions please feel free to contact me or our Director of Federal Policy, Katie McAuliffe at kmcauliffe@atr.org

Onward,

Grover G. Norquist President Americans for Tax Reform

Photo Credit: Peter Souza

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Sen. Klobuchar's "Aggressive" Antitrust Plot Crushes American Innovation

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Posted by Katie McAuliffe, Tom Hebert on Thursday, January 28th, 2021, 1:59 PM PERMALINK

Yesterday, Senator Amy Klobuchar (D-Minn.) praised the Department of Justice and the States Attorneys General for the Antitrust cases that they have brought against so-called “Big Tech” companies. 

However, Klobuchar does not want to let the Federal Trade Commission, DOJ and State AGs do their jobs and due diligence in the courts. Rather, Klobuchar wants to take this moment to increase political power over favored and disfavored companies by changing antitrust law.

Klobuchar calls for “aggressive and effective” antitrust enforcers, which means that she wants the FTC and DOJ staffed with bureaucrats armed and ready to carry out her interventionist, anticompetitive antitrust vision. 

Klobuchar said multiple times that the courts would be too slow to achieve her objectives of breaking up successful American companies that the left dislikes. She wants to use legislation to nullify the basic, longstanding principle of antitrust law that the consumer's welfare comes first.

Instead of focusing on harm to consumers and protecting the competitive process, Klobuchar would reorient antitrust law to make the size of any company the enemy. Big companies, no matter how much they benefit consumers or compete fairly with rival firms, would be in Klobuchar’s crosshairs. 

Klobuchar’s plan is to harness Republican anger at certain Tech companies over limitations on speech and de-platforming of individuals and services to create broad, sweeping legislation that would reshape the entire economy and affect more than the technology sector. She has publicly stated that this will be a stepping stone to regulate other industries as well such as pharmaceuticals, retail, agriculture and manufacturing.

Rather than focusing on benefits to Americans such as solving food deserts, increasing transportation opportunities, enhancing logistics, lowering prices, safe delivery of essential items during COVID, increasing access to services, developing a COVID vaccine in record time, and increasing access to flexible job opportunities; she repeatedly puts the emphasis on protecting competitors regardless of their objective success in the marketplace. 

The consumer welfare standard, which maximizes consumer benefits instead of protecting individual competitors in the market, has undergirded antitrust law for over four decades. Antitrust law under the consumer welfare standard is designed to benefit consumers and strengthen the competitive process, not to protect individual companies from being out-competed by other firms. 

The consumer welfare standard’s objective rule-of-law approach to antitrust enforcement ensures a level playing field for American companies and a robust competitive process with limited political involvement. 

Klobuchar’s radical approach to antitrust would reshape the American economy, discourage American innovation, and harm our competitive advantage on the world stage. 

Photo Credit: Gage Skidmore


Fond Farewell to FCC Chairman Ajit Pai

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Posted by Katie McAuliffe on Wednesday, January 20th, 2021, 1:52 PM PERMALINK

Americans for Tax Reform would like to express our gratitude for the important work that Federal Communications Commission Chairman Ajit Pai accomplished throughout his tenure. 

The following statement can be attributed to Grover Norquist, President of Americans for Tax Reform:  

"During the Trump Administration, Ajit Pai’s nomination as Chairman of the FCC was second in importance only to Neil Gorsuch. Chairman Pai stood up to doomsayers prophesizing the destruction of the internet if the government didn't exert more control over the internet's infrastructure. Guess what — It didn’t happen. Even under the added stress of the pandemic, the internet not only worked, it thrived. Congratulations to Chairman Pai's many successes at the helm of the Commission, and I wish him well in his future endeavors."

The following statement can be attributed to Katie McAuliffe, Executive Director of Digital Liberty and Americans for Tax Reform’s Director of Federal Policy

"Chairman Pai led the most transparent and productive FCC in years. No longer are DC insiders the only ones to know beforehand what the Commission is doing. Under his direction, proposed orders and rulemakings had to be publicly available three weeks in-advance of an FCC vote. Before, items were not public until after the Commission voted on them. For daring to remove excessive regulations on the internet, Chairman Pai faced harassment and threats of violence against him and his family. But it was those actions nonetheless that kept the internet working, while connecting more Americans than ever to broadband, throughout this pandemic. I thank him for his service and look forward to what the future has in store for such a dedicated public servant."

The Pai FCC has a long list of accomplishments ranging from internal agency reforms to deregulatory policies that maximized benefits to all Americans. 

During the Pai FCC, the Commission doubled its productivity from previous ones. The average Commission meeting under Chairman Pai voted on 6 items while previous ones ranged 2 – 4. The Pai FCC did this while reaching record levels of bipartisanship as well.   

Chairman Pai remarked that when he was just a staffer at the FCC, he was told dozens of times that agenda items could not be made public before Commission meetings. As Chairman, he changed that policy in the first two weeks to increase transparency. The result was that the American people now have the same access to agency plans that only lobbyists or DC insiders had before. 

Chairman Pai also ensured the FCC would have access to sound economic analysis for agency decision making. During his tenure he advocated for the creation of the Office of Economics and Analytics at the FCC. This new office consolidated economists across the agency which increased independence and added to the professionalism of their work. 

In 2018, the Pai FCC passed the Restoring Internet Freedom (RIF) Order, which repealed short-lived Obama-era regulations on internet-service providers. Activists on the left scare mongered that this would bring “an end to the internet” or that the internet would populate one word at a time. These claims were absolutely baseless. In actuality, in the two after passage of RIF, we saw increases in broadband investment, increases in network speeds, and 10x times the number of cell sites deployed than in previous years. This occurred despite the COVID-19 pandemic where internet traffic dramatically increased. In places like Europe where they held onto their utility-style regulation, they saw decreases in speeds, and had to take preventative measures to prevent networks collapsing.  

The Pai FCC also took unprecedented steps to repurpose spectrum. Spectrum is a finite resource that is necessary for wireless communications. Repurposing spectrum is a must be done, but it can be immensely difficult. To quote the Chairman, “there is no more greenfield spectrum available. That means there are no easy solutions. Whenever you explore new uses for spectrum, you’re going to draw battles with incumbents or others worried about harmful interference.” In 2018 Chairman Pai promised to make more spectrum available for 5G over the next 3 years than what was already available. And he did it. The Pai FCC opened up almost 5,000 megahertz of spectrum for use by 5G technologies. 

Americans now rely on the internet more than ever to go to work, go to school, and receive healthcare. The Pai FCC laid the groundwork to reverse-auction billions in funding to develop rural broadband and telehealth programs; ensuring that American tax dollars will be put to their best use in bridging the digital divide.  

These accomplishments are just a handful of many that will improve the lives of American citizens and businesses in ways obvious, and no-so-obvious ways for a generation to come. We wish the Chairman the very best of luck on what the future has in store for him. 

Photo Credit: Gage Skidmore


COVID Relief Package: Broadband Funding Guardrails

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Posted by Katie McAuliffe on Friday, December 18th, 2020, 12:14 PM PERMALINK

While broadband funding may have a place in an end-of-year COVID Relief Package, the current proposal doesn’t include many of the widely agreed upon goals of extending broadband to unserved areas and looks more like a Trojan Horse for pet projects that don’t actually help Americans dealing with fallout from the pandemic. 

First, it does not include money for mapping, which is a necessary component for identifying areas that actually need federal funding to reach unserved area. 

Second, it lacks any guardrails that would ensure that the money is actually directed at those unserved areas. 

Accordingly, Congress should focus on funding existing FCC plans to improve broadband maps. The Broadband DATA Act requires the FCC to develop these better maps, and the FCC says it needs $65 million to implement the law.   

The FCC has been begging Congress to for these funds, but instead of this minimal spend for maximum benefit, the COVID Relief Package includes expansive pet projects that would lead to network overbuilds and shoddy municipal networks. 

The FCC is already distributing $16 billion for service in unserved areas through the current Rural Digital Opportunity Fund (RDOF) auction. All Commissioners have said time and again that the most pressing need is to develop better maps that can identify census blocks that are partially served so as make these areas eligible for support in a future funding round.   

 If Congress includes new funding for broadband infrastructure as part of a Lame Duck package, it should follow several important principles to actually move the needle on extending broadband to unserved communities and homes:   

  1. focus funding on unserved areas and use a challenge process to verify;  
  2. avoid conditioning funding eligibility on antiquated regulatory classifications that discourage participation from otherwise qualified broadband providers – you shouldn’t be required to offer phone service in order to qualify for funds to provide broadband;  
  3. make awards on a technology-neutral basis (no fiber preferences); and   
  4. include robust accountability measures to ensure funding is used for its intended purpose within specified timeframes.   

 

These are pretty simple requirements that would lead to maximum benefit for people most in need. Building new networks run by in experienced local governments in areas where broadband availability already exists, does not solve the problem. 

We’ve already set aside billions of dollars, outside of the upcoming COVID Package, what needs to be done in the current agreement is fund the mapping process, so dollars go where they are needed most. Not throw billions of taxpayer dollars in the air and see where they land. 

Photo Credit: Wikimedia commons


ATR Supports Nathan Simington for FCC

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Posted by Katie McAuliffe on Tuesday, December 1st, 2020, 9:44 AM PERMALINK

Today, Americans for Tax Reform sent a letter to Majority Leader Mitch McConnell urging him to confirm Nathan Simington as Federal Communications Commissioner before the end of this year.

The continue reading for the full letter text or click here.

 

December 1, 2020

The Honorable Mitch McConnell
Senate Majority Leader
S-230, The Capitol
Washington DC, 20510
 
Re: Support of Nomination of Nathan Simington to the Federal Communications Commission
 

Dear Majority Leader McConnell:

I write in support of Nathan Simington’s nomination to the Federal Communications Commission.

In the past four years, the FCC, under Chairman Ajit Pai’s leadership, has made major accomplishments in promoting resilient networks that spurred broadband deployment and investment. This foresight and swift action during the pandemic, kept Americans connected through the volatile and uncertain times faced by families as COVID-19 emerged globally.

Right now, Joe Biden is poised to inherit a Democrat-led FCC on day one.  Under long-standing tradition, the current Republican FCC Chairman Ajit Pai will step down in January.  Likewise, current Republican FCC Commissioner Mike O’Rielly will leave the agency when Congress adjourns in a few weeks because his term has expired.  This means that the normally five-member FCC would be controlled by Democrats, 2-1, starting on January 20.  That would give the agency the opportunity to jam through a partisan Biden agenda.  While floor time is limited during the Senate’s lame-duck session, confirming Simington this year would ensure a 2-2 FCC that could forestall billions in economic damage.

The Commission’s role in Restoring Internet Freedom to stop so-called net neutrality prevented regulations that would have treated broadband providers like utilities under Title II of the Communications Act. This created an environment for $80 billion of dollars in investment from 2018 through 2019.  It also prevented giving states and localities the ability to institute their own taxes and fees on broadband networks.

Republicans should not underestimate the harm that a Democrat-led FCC could impose on the American economy during Biden’s first 100 days.

A Biden Administration will likely lean on the FCC to help push through an agenda focused on taxpayer funded broadband, as it did during the Obama years. Many states have opposed taxpayer funded municipal broadband networks, while other states have pursued this path. The courts prevent the Obama era FCC from inserting itself into states who opposed municipal broadband networks. Meanwhile, we have watched networks consistently fail in states that chose to pursue taxpayer funded networks.

A Democrat-controlled FCC is expected to significantly increase its spending of Americans’ hard-earned dollars.  They can do so immediately through the FCC’s Universal Service Fund without any input or check from the Senate simply by adding charges to American’s telephone bills. Democrats have also called for massive increases in in the FCC’s Lifeline and E-Rate programs. Internet connectivity has become even more vital as many of us continue to work, educate, visit doctors, and entertain from home. However, this does not necessarily mean increases in spending are necessary. The FCC has done much to redirect funding  and audit subsidies.

5G connectivity has been a rallying cry across the isles, and while spectrum auctions are sure to continue, another democrat priority may involve rolling back FCC rules that limit how much cities can charge telecom companies for 5G cell sites. Bringing cities in line with market rates has encouraged and expedited the spread of important 5G infrastructure.

By confirming Simington now as Commissioner to the FCC, the Senate can forestall the impending economic harms and damage to deregulatory policies from the last four years.  While the Senate calendar is tight, spending the necessary floor time to get Simington confirmed to the FCC is the most economically beneficial use of Congress’s time.

Americans for Tax Reform urges you to confirm Nathan Simington to the FCC before the end of this year. Simington’s confirmation now would ensure a 2-2 FCC at the outset of a Biden Presidency.  The FCC could continue to pursue important initiatives on a bi-partisan basis, but it would be blocked from jamming through partisan initiatives—whether those involve profligate spending or an anti-growth agenda. Should you have any questions or comments on this matter, please reach out to me, or our Director of Federal Policy, Katie McAuliffe, kmcauliffe@atr.org.

Onward,

Grover G. Norquist
President
Americans for Tax Reform

Photo Credit: David Berkowitz


The Courts Are Cooked - EU Targets American Companies for Budget Shortfalls through Lawsuits

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Posted by Katie McAuliffe on Thursday, November 19th, 2020, 12:16 PM PERMALINK

The European Commission is about to propose a “revolutionary” overhaul of digital regulation. They say it is to protect competition, and the little guy, but it is actually about using fines to fill budget shortfalls. 

These so-called revolutionary digital regulations will specifically target American tech companies, and we can be sure these new rules will be a pathway to target all successful American companies. Today all business is in some part digital. 

The EU through its Commissioner for Competition, Margrethe Vestager, says it wants to make tech giants more responsible for the content on their platforms, and ensure that competitors have a fair chance to succeed against the big firms. This is supposedly being achieved by numerous antitrust proceedings against primarily American companies. This is in combination with an eminent December announcement of the new Digital Services Act, which is expected to overhaul the management of content on platforms like Google and Facebook.

The EU claims to have the interest of fair competition at heart. But we don’t have to look very hard to find the true motives. Money. American money.

In a deal between the European Parliament and the German Council of the EU presidency, instead of requiring EU leaders to reopen a €1.074 trillion budget agreement reached in July, they found a creative way to top-off some programs at a price tag of €15 billion rather than the roughly €110 billion that MEPs had initially demanded. 

How did they get creative? Of the €15 billion, €12.5 billion will come from funding gained through competition fines imposed by the bloc on… American companies. 

This means Vestager has been directed by the EU to fill a budget gap with fines and fees resulting from competition investigations. Any company targeted by an EU competition proceeding can be sure that the proceedings won’t be fair – they are already guilty – and the fines will be high.  

Its no small coincidence that the same day of the agreement, Vestager announced two investigations on Amazon.

This isn’t the first time the EU looked to American companies to fund their budget shortfalls. Back in 2012 they planned to use nearly €3 billion in antitrust fines to fund part of their €11.7 billion budget shortage. Soon thereafter Microsoft lost their long-standing appeal on cases dating back to 1998 and 2008 with fines totaling out at €1.64 billion. At the time these were the largest fines the EU had ever issued, but they are on a serious upward trajectory. 

In 2017 the EU began a three-year series of investigations into Google. The initial fine in 2017 of €2.4 billion is greater than what 18 other countries contributed to the EU’s budget that year. In fact, Google’s fine would contribute more to the EU’s budget than the bottom 9 contributing countries combined.

But it didn’t stop there. Google saw another record breaking fine of €4.3 billion in 2018 and another antitrust fine of €1.5 billion in 2019 for a total of €9.3 billion in fines over three years. All fines are being appealed. 

The EU budget is unsurprisingly convoluted. Transfers from member states are one element of the budget. Fines, when collected, are used to offset transfers from member states. Overall, many states receive more back from Brussels than they contributed, making them net recipients.

The perverse incentive is clear, and the fairness of these proceedings is certainly in question. If these fines contribute more to the budget than most member states and fines are accounted for on the front end to fill budget gaps, no company can expect a fair hearing in the EU. They just want the money and will craft their laws however they need to fleece American companies.

It’s not new behavior either. The EU has been using its courts to fund its budget for decades. The EU levied 38 individual fines totaling €364 million on companies for breaching competition law in 2015. Uncontested fines from 2015 along with penalties collected from earlier cases that were upheld provided €1.4 billion in revenue in 2015, according to the European Commission.

With a total budget of around €165.8 billion in 2019, member states contributing meagerly, and in the wake of a global pandemic, we can be sure that rather than balance their budget or look to their own population and member states, the EU will be heaping on the competition fines for American companies.

Europe desperately crafts their laws for ill-gotten financial gains. They have been pushing a highly predatory digital tax structure that was written in such a way to only hit American companies after numerous European companies, including automotive manufacturers, pointed out that all companies are digital and that European “champions” would be swept up in the cull. This was confirmed when the OECD admitted that it would impossible to separate the digital economy from the rest of the economy for tax purposes. The digital tax structure, which in varying forms has passed in some countries but not EU wide, was revamped to specifically write out European companies. 

We can be sure the “revolutionary” Digital Services Act expected in December will be just another crafty legal avenue for Europe to fill its budget holes.

It doesn’t matter how you feel about any company. What’s alarming is that Vestager has a budget gap she has been directed to fill, meaning fines and settlements with these companies is a forgone conclusion and few of the companies targeted will be European.  

Photo Credit: European Parliament

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