Lorenzo Montanari

Poland’s Digital Advertising Tax is a Mistake

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Posted by Tomasz Wroblewski, Lorenzo Montanari on Wednesday, April 14th, 2021, 4:18 PM PERMALINK

Poland is moving in the wrong direction on taxes. In February the government decided -- against longstanding principles of international taxation -- to impose new taxes on digital advertising. This new levy, from 5% to 10% on digital ads, will affect the private digital media market in favor of the state-run pro-government media. This is a clear anti-market policy that will affect foreign direct investment and increase bias public spending.

In Poland, substantially raising tax revenue from private digital media businesses will enable the government to spend more on state media. For example: 

  • Television, radio, and cinema companies whose annual advertising revenue is between PLN 1,000,000 ($262,692 USD) and PLN 50,000,000 ($13,134,585 USD) will pay a 7.5% tax. Companies with higher advertising revenue will pay 10%. 
  • Newspapers reporting advertising revenue between PLN 15,000,000 ($3,940,375 USD) and PLN 30,000,000 ($7,880,751 USD) will pay a 2% tax, while newspapers earning more will pay 6%. 
  • A 5% tax on Internet advertising will be placed on any company exceeding EUR 5,000,000 ($5,955,250 USD) of advertising revenue.

When plans to impose a new tax were announced, almost all private media went on strike, suspending publication of any content. Although the strike lasted only one day, it was the first time since 1989 that the media in Poland––often of different ideological orientations––united in this way and on such a large scale.

An American bad example: Maryland

In the United States, starting on March 14, Maryland was the first state to impose a digital advertising tax.  Republican Governor Larry Hogan vetoed this bill in May 2020. The bill violates the Internet Tax Freedom Act, but the Maryland Senate, run by Democrats, ignored the Governor’s decision, as well as fierce opposition from many legal scholars and overrode the veto. This bill imposes a tax on digital advertising with a tax rate span from 2.5% to 10% which is applied to a company’s global annual gross revenue from digital advertising services in Maryland. The cost of the digital advertising service tax will ultimately be borne by Maryland-based employers and consumers in the form of higher prices and fewer options for advertising services, as companies that utilize online platforms will pass the added costs on to consumers. This will not come as a surprise, as companies like Amazon and Google had to adjust prices in response to similar measures in France, Spain, and other countries.  This tax will be paid by people and not by the companies the government is targeting.  The Maryland DST will not only affect the economy in the state but also undermine the powerful opposition of the USA's global position against digital service taxes.

A European bad example: Austria

But much closer to Poland, in Europe, is the Austrian digital advertisement tax.  Despite the initial commitment to wait for and find a solution during the ongoing OECD negotiations, Austria implemented a digital advertisement tax of 5% on digital advertising on revenue, effective on January 1st, 2020. This levy is applied to all companies that reach or exceed an annual global revenue of 750 million Euro and annual revenue of 25 million Euro or more on digital advertising services. By nature of the design of the scope of the tax, only American tech companies are subject to it. It is the most advanced unilateral attempt by a European government to target U.S. digital corporations such as Google, Amazon, Facebook, and Apple.  As consequence, the United States Trade Representative (USTR) launched an investigation into Austria's digital advertisement tax and concluded it was discriminatory against American companies.

New taxes – new normal? 

The imposition of a new tax on advertising is harmful. But at least in Poland’s case, there’s something more to this story. The Polish government has long moved away from a free-market economic model to a statist hybrid in which social spending, state-owned companies, and the national media are seen as parts of a single taxpayer-funded orchestra. And the demands of this orchestra are constantly increasing. The tax on advertising would already be the 35th  tax raised, or imposed, by the current government. It is worth remembering that as far as new "big" taxes are concerned, in 2016 the so-called bank tax among other things, was introduced, bringing an additional 4 billion zlotys ( more than 1 million USD) a year to the budget. Those Poles, whose income exceeds one million zlotys (more than260,000.00 USD), pay the solidarity levy, enriching the government by another 1.2 billion zlotys (more than 315,000,000.00 USD). In turn, revenues from the sugar levy imposed this year on all drinks containing sugar, sweeteners, and caffeine, taurine, and guarana are expected to amount to around 3 billion zlotys in 2021 (more than 780,000,000.00 USD). 

This year has also witnessed the introduction of the trade tax (i.e. tax on retail sales), which is expected to translate into an additional 1.5 billion zlotys (more than 390,000,000.00 USD) in the State coffers. The costs of new taxes are always passed on to the end customer. However, as far as manufacturers are concerned, they are not neutral either. Some new taxes are imposed on goods for which demand is highly elastic. Their producers raise prices, but at the same time are unable to maintain their former profitability. This translates into a reduction in the rate of investment in the economy, which is actually occurring in Poland, with the rate falling to 17.1 % in 2020 compared to 18.5 % in 2019. This is a rate 5 percent lower than the government's plan presented in 2016. (Strategy for Responsible Development). 

Taxes are not the answer

The decline in private investment cannot be indefinitely replaced by the investments subsidized by state-owned companies and the creation of new such entities. Unfortunately, new taxes stifle investment not only because of a reduction in their expected profitability but also because of the complexity of the fiscal and regulatory system they cause. In fact, all taxes on products and services introduced in Poland are based on complex and not entirely clear (even for tax advisors) mechanisms of calculation and collection. Moreover, even the solutions meant to simplify tax settlements, in practice they work exactly in the opposite direction (Slim Vat, Estonian Cit, JPK). As a result, Poland occupies distant places in the rankings assessing the operation of the tax system. For example, in the International Tax Competitiveness Index, Poland is ranked 3rd from last among the  OECD countries and penultimate in Europe (just behind Italy), and in the "Paying Taxes" category of the World Bank's "Doing Business" ranking, Poland is ranked as low as  77th - globally.  

A complicated tax system means that companies have to spend more and more money on legal services and consulting, which consumes resources away from productive activity. The smaller the company, the less capital it can devote to dealing with regulatory complexity, which translates into fewer innovative ideas: they are simply nipped in the bud. Another effect of growing fiscalization and the associated bureaucratization is the room for tax optimization or tax avoidance. The more regulations there are, the more space there is for various lobbying organizations to seek 'exemptions' from such taxes, with translates into stifling market competition. 

Poland has enjoyed years of prosperity and in order to maintain the right policy course that contributed to the country’s success, the time of the pandemic should be a time devoted to reviewing the State’s economic policy, aimed at reducing fiscalism and reducing the regulatory burden.

*President of the Warsaw Enterprise Institute (Poland)

Photo Credit: Giuseppe Milo


Ukrainian Parliament Over-Taxing EHTP Is A Mistake

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Posted by Lorenzo Montanari on Tuesday, March 9th, 2021, 6:39 PM PERMALINK

Ukraine is struggling to relaunch its economy after months of decline due to the pandemic. According to a recent analysis by Reuters, the Ukrainian economy will recover to 10% growth in Q2 of 2021 after 5% economic decline in 2020. But now the Verkhovna Rada (the unicameral parliament) is trying to extract cash from the people by raising taxes contrary to the health of its own citizens.  

In fact, according to the No 466 Law about amendments of the Tax Code of Ukraine, the excise tax rate on electrically heated tobacco products (EHTP) was increased by 320% effective 1st January 2021. However, a recent amendment would replace that with an excise tax rate of 200% in 2021, and gradual increases of 30% annually during 2022-2025 on EHTP. 

Many lawmakers claim that if tobacco is heavily taxed then other nicotine-delivering items should be taxed likewise. Public health considerations about the taxation of e-cigarettes as well as EHTP are not in the first line. The focus is set on the tax revenues only, even with the significant benefits of vaping products as well as EHTP as a harm reduction tool. For example, electronic cigarettes are 95% less harmful (Public Health England, 2018) than combustible tobacco. The 2021 report of Public Health England compared to the 2018 review gave stronger evidence that nicotine vaping products are effective for smoking cessation and reduction. According to the latest Global State of Tobacco Harm reduction (GSTHR) report (GSTHR, Burning Issues 2020) almost 100 million people are now using a range of vaping products and they do not use at all combustible cigarettes. The convincing evidence provided by this report shows that e-cigarettes are effective means of quitting and have substantially lower exposure to harmful products of combustion seen in cigarettes.

United Kingdom, New Zealand, and Canadian governments support smokers to switch from traditional cigarettes to proven less harmful alternatives such as e-cigarettes. In the UK, vaping policies are not grouped with smoking policies. Tobacco control plans and not over-taxing policies should be utilized by other governments around the world to develop evidence-based regulations. 

Taxes play a significant role in consumer behavior. Α higher price is a trade barrier for a harm reduction tool. Consumers will not consider switching to vaping products or to EHTP and might continue using cigarettes combustible tobacco. Around the world, e-cigarettes or EHTP have become extremely popular, increasing from about seven million users in 2011 to 41 million in 2018 and that number is expected to reach 55 million by 2021 (Euromonitor International). If smokers can find satisfactory alternatives to cigarettes that do not involve combustion but do provide nicotine, then they would avoid almost all the disease risk. 

Higher taxes and prices for licit cigarettes or EHTP are positively associated with an increasing number of smokers switching to cheap, illegal tobacco products. In past years Ukraine has turned into the world's hub' for smuggling cigarettes to Europe. In 2020, the illegal cigarette market was 9%, including smuggling, counterfeiting and cigarettes with counterfeit excise stamps. 

For 2016 the share of illegal cigarettes was 1%, showing that the specific excise tax on tobacco products by 29.7% from January 1, 2018, increased the percentage of illicit trade in the country. 

Smokers find a steady source of nicotine at a much lower price, representing a loss of revenue to the government, while also acting as a major source of revenue for the black market. Costs of illicit trade go beyond financial measures, with consequences such as encouraging youth uptake smoking and increasing health threats for consumers from unsanitary ingredients used.

The data showed that over-taxation on tobacco for heating illicit trade will flourish resulting in direct budget losses from unpaid taxes. According to the national statistics report in 2018, the population of Ukraine had 5.96 million smokers. The Tobacco Control Policies should not strictly regulate the most innovative solutions for tobacco harm reduction products such as EHTP and e-cigarettes. Innovation makes the products differentiated relative to what customer needs. Overtaxing restricts public health opportunities. During the ongoing pandemic crisis, every single person understood how significant innovation is for tackling worldwide health issues. It is an important tool for developing an effective global strategy and showing progress in tobacco control.

The Government of Ukraine should maximize the population benefit from vaping or heated tobacco products and diminish the population harm from tobacco. Obstructing smokers to switch from smoking by making tobacco alternatives less appealing and more difficult to access is not an effective regulation. The framework for consumer nicotine products should be developed without damaging the market-driven innovation. Harm reduction and tobacco control should be on the same page.

Photo Credit: by Andrew Milligan


Americans for Tax Reform & Property Rights Alliance Call on NAFTA Negotiators to Re-Affirm Their Commitment to Free Trade and to Protect IP

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Posted by Lorenzo Montanari on Friday, May 4th, 2018, 4:25 PM PERMALINK

Americans for Tax Reform has joined Property Rights Alliance in a letter to the chief negotiators of the North American Free Trade Agreement to call for stronger IP protections and a commitment to free trade in a reworked agreement. The letter highlights the important role that free trade plays in the development of the countries in the NAFTA bloc. It also details the how IP has transformed NAFTA’s modern economies, along with why these protections must be updated.

 

The full text of the letter is below:

 

Americans for Tax Reform and Property Rights Alliance call upon the negotiating teams to reaffirm a commitment to free trade and strengthen the intellectual property provisions in a reworked North American Free Trade Agreement. Since NAFTA was enacted in 1994, the global economy has changed drastically. Capital moves more freely across borders, technology is more advanced, and barriers to trade around the world have declined significantly. A reworked NAFTA agreement must reaffirm a commitment to the principle of free trade, while also having updated IP protections to protect content creators' rights in the highly digital economy of the 21st century. We have previously called for this in a September 2017 international coalition letter in partnership with Canadian and Mexican advocacy groups.
 
Withdrawing from NAFTA would have a disastrous effect on the American economy. Studies have shown that if NAFTA was terminated, the U.S. could expect to lose 1.8 million jobs, with U.S. production declining by $120 billion. With a reaffirmed commitment to free trade, the parties can focus on more niche issues, including the protection of intellectual property rights.
 
The overwhelming majority of trade between the NAFTA partners is in IP-intensive industries. This includes chemicals, software, pharmaceuticals, and creative works such as movies and music. IP-intensive products have been a main driver of growth for the NAFTA bloc. This is why it is imperative that NAFTA provisions are updated to ensure stronger protection of intellectual property rights. One key goal for US negotiators should be ensuring 12 years of data exclusivity for biologics, which require immense capital investments, long-term research commitments, and then must go through stringent regulatory approval processes before reaching consumers in the various markets.
 
However, IP rights are currently being abused by the United States' NAFTA partners. Mexico is currently the 2nd largest market for the illicit recording of films. In 2017, 81 American films were illegally recorded in Mexican theaters. This robs creators of the right to disseminate their works how they wish, and of potential revenues from the film being shared.
 
In Canada, innovative medicines are undervalued and there is longer time before reimbursement for these medicines compared to others. This stifles research & development in the pharmaceutical industry and blocks Canadians' access to life-saving medicines.
 
A reworked NAFTA should adapt IP protections to the modern economy and reinforce strong intellectual property rights. Robust intellectual property protections will advance free and competitive markets by removing government from the marketplace, and leaving decisions to be made between buyers and sellers. This will allow innovators and creators to devise business models that best serve consumers, foster competition, and benefit the economy as a whole, without worrying about their works being infringed or illegally distributed. 
 
Including strong IP protections in a reworked NAFTA will be beneficial to all parties. Harmonized IP standards will put all countries on a level playing field, allowing content creators to be certain about the protection of their product when it is traded in a foreign market. This protection will encourage innovation within NAFTA countries and international trade in IP-intensive products.
 
We call on the negotiators to reaffirm a commitment to free trade, and strengthen IP protections in a reworked NAFTA. Economies that promote free trade and protect the rights of content creators and entrepreneurs perform better economically than those that do not protect rights. Continuing to promote free trade and the protection of intellectual property rights is essential for North American innovation, entrepreneurship, and economic growth.

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Free Market Groups Urge Trump to End Cuba Embargo

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Posted by Jorge Marin, Lorenzo Montanari on Wednesday, June 14th, 2017, 3:47 PM PERMALINK

 

Today, free market groups, including Americans for Tax Reform, sent the President Trump a letter urging him to consider lifting the remaining restrictions for trade with Cuba. The groups urge the administration, and Congress, to “solidify a growing agricultural trade relationship, increase the freedom of Americans to travel to Cuba, and remove the remaining constraints on private-sector industries doing business in Cuba.”

The Castro dictatorship should certainly be judged by its political repression and the historic human rights abuses. Nonetheless, it is no longer fair to expect American individuals and companies to bear the burden of the embargo. Now is the time to ease the travel and trade embargo. This is not about giving a life line to the Cuban government, rather the costs of restricting American’s economic and travel liberties have moved to outweigh the benefits.

President Trump rightly focused on American jobs and the domestic economy in his successful presidential campaign. Conversely, studies show that reversing the recent gains on economic freedom with Cuba would deprive the American economy of $6.6 billion over 4 years and over 12,000 jobs.

The best way to spread free markets and democracy is to engage with the world. History has shown that there is no better system to generate wealth and prosperity than capitalism. For this reason, we see no reason to deprive Americans of their own economic freedom for a policy that is not keeping them safe, or advancing national interests.

We hope that leaders in Washington will take a serious look at what is best for America, and her citizens. It is time to reconsider the trade restriction policy in favor of expanding American economic opportunity.

Here is the text of the letter,

Dear President Trump,

We, the undersigned free market organizations representing millions of Americans, write in strong support of easing trade restrictions with the Republic of Cuba. Representatives Crawford, Sanford, McGovern, Emmer, and Castor have all introduced legislation that would gradually remove trade barriers between the U.S. and Cuba and have significant economic benefits for America in the long-run, while opening a new pathway to effecting change in Cuba. The proposals solidify a growing agricultural trade relationship, increase the freedom of Americans to travel to Cuba, and remove the remaining constraints on private-sector industries doing business in Cuba.

H.R. 525, the Cuba Agricultural Exports Act, would remove the remaining restrictions on farm exports by allowing Cuba to access credit when purchasing agricultural products from America. H.R. 351, The Freedom to Travel to Cuba Act, restores the ability of Americans to travel to the only nation they are currently prohibited from visiting. H.R. 442, The Cuba Trade Act, lifts the rest of the embargo.

The United States prospers by engaging with the world. Access to foreign markets unleashes domestic productivity and gives workers a greater range of employment opportunities. Likewise, Americans should be allowed to travel to other nations and serve as diplomats who can spread our soft power abroad.

Scaling back the decades-long embargo with Cuba would be a needed boost to the American economy with a nation that had historically strong ties with the United States. Estimates predict that the agricultural sector alone could see $365 million

in additional sales to Cuba and support 6,000 American jobs.  More importantly, by increasing trade with the United States, more and more Cubans and Cuban government officials will encounter the infectious spirit of the free market. 

Establishing free trade with Cuba is not an endorsement of a communist dictatorship. Rather, restrictions on trade violate the rights of American citizens without any policy benefit.

Crucially, H.R. 442 enforces a

Prohibition On Foreign Assistance And Financing Of Trade With Cuba.—Notwithstanding any other provision of law, the United States Government may not provide any foreign assistance to Cuba or any financial assistance, loans, loan guarantees, extension of credit, or other financing for exports to Cuba.

Violation of political rights by the Cuban government deserve strong condemnation. But today there is a glimmer of hope and an openness to new ideas.  The Cuban government has taken some steps towards supporting local entrepreneurship and attracting more U.S foreign direct investment.  Today, the sanctions are a hindrance to the opening of Cuba.  Instead of spurring change, the sanctions now provide the regime with an easy scapegoat for their own failed policies, obscuring the real source of hardship by placing blame on the United States. Gradually ending the embargo can help to dispel the fiction that America is responsible for the Cubans’ plight. 

Engagement with other communist regimes has proven that American influence grows as trade develops. Countries like Vietnam, Burma, Laos and most famously China prove that previously hostile countries can move in a better direction when encouraged to trade with free nations. National security would greatly benefit from trade and travel relations with Cuba that will improve stability in the region.

Conversely, reversing the recent improvements in America-Cuba trade and travel would put thousands of U.S. jobs at risk. Your successful presidential campaign was correct in stressing the need to boost the job market; putting up more trade barriers runs counter to that goal. Congress must act to continue economic gains.

We urge you and every member of Congress to support proposals to increase travel, ease of business, and economic ties with Cuba.

Sincerely,

Grover G. Norquist

President,

Americans for Tax Reform

Norm Singleton

President,

Campaign for Liberty

Jeffrey Mazzella

President

Center for Individual Freedom

Katie McAuliffe

Executive Director,

Digital Liberty

Matt Kibbe

President,

Free the People

Jason Pye

Director of public policy and legislative affairs,

FreedomWorks

Lorenzo Montanari

Executive Director,

Property Rights Alliance

David Williams

President,

Taxpayers Protection Alliance

Austin Carson

Executive Director

Tech Freedom

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GOP Senators Investigate Taxpayer Funding of Soros-linked, Left Wing Macedonian Political Organization

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Posted by Elizabeth McKee, Lorenzo Montanari on Monday, March 20th, 2017, 3:24 PM PERMALINK

Six GOP senators have written a letter to Secretary of State Rex Tillerson, imploring him to investigate claims that the federal government is channeling millions of taxpayer dollars to left wing organizations that interfere in Balkan domestic politics. The signatories - who include Mike Lee and Ted Cruz - believe one of USAID’S partner organizations used taxpayer dollars to “push a progressive agenda and invigorate the political left” in Macedonia.

The organization in question is the Foundation Open Society Macedonia (FOSM), an offshoot of George Soros’s Open Society Foundation. In Macedonia, the VMRO-DPMNE party (one of Macedonia’s two major political parties), has accused FOSM of inciting violent protests in which 50 police officers were injured

Since 2012, USAID has awarded multiple grants totaling $5 million to FOSM, and has granted aid to as many as 61 FOSM affiliates. In 2015, USAID named FOSM as one of their top partners in the region, and recently earmarked $9.5 million to be spent by FOSM and its partner organizations.

According to the FOSM website, “the foundation has worked with young people to express their frustration with poverty and corruption through increased mobilization and activism on social and political issues.” Government officials speculate the “political issues” around which FOSM mobilizes young people are part of a liberal political effort to influence the party dynamics of Macedonia and other Balkan states. In particular, the self-avowedly Eurocentric FOSM may be working to counteract Eurosceptic political groups like the VMRO-DPMNE party.

Last month, members of the House of Representatives sent their own letter to the U.S. Comptroller General, demanding an investigation into the use of taxpayer dollars to influence Macedonian politics. Signed by seven Republican representatives, the letter asked, “What percentage of US aid money in the fields of democracy, civil society and media is funded through FOSM? Was any organization . . .  that receives US funds directly or indirectly, through FOSM or otherwise, reported to have been involved in violence, either against persons or property destruction, and have any police or security officers been wounded in connection to that violence?” So far, these questions have not been answered.

Macedonia is not the only Balkan state in which American taxpayers are funding one of Soros’s organizations. Foundation Open Society Albania (FOSA) also received funds from USAID during the Obama administration, and these funds, too, may have gone to serve a political purpose. In their letter, the senators suggest that FOSA used taxpayer dollars to enact legal reforms that “aimed to give the [Albanian] Prime Minister and left-of-center government full control over judiciary power.”

If these allegations are true, USAID is funneling money to Soros-backed organizations that work to foment political unrest in Macedonia and other Balkan states. This wasteful and destructive pattern of spending on the part of USAID undermines international conventions on diplomatic relations and state sovereignty - all at the expense of the taxpayer.

There is no justifiable reason why American citizens and businesses should be bankrolling Macedonian political activists. The budget request for the State Department and USAID jointly totals $50.1 billion for FY2017; not a penny of that should be used to interfere in Balkan domestic politics.

 

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The Rich Irony of Using the Sony Hack to Attack Efforts to Fight Online Theft

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Posted by Lorenzo Montanari on Tuesday, January 6th, 2015, 6:02 PM PERMALINK

Without getting into a thorny discussion about the various problems of the much-pilloried “Stop Online Piracy Act” and its senate cousin back in 2012, it’s worth looking at how the detractors of intellectual property rights are using the results of the Sony hack to thwart any ongoing efforts by content creators to protect their property under current laws.  The stunningly ironic story goes something like this: various hackers steal documents at Sony that show movie studios (and the Motion Picture Association of America) are working with state attorneys general to try to prevent their stuff from getting stolen.  You’d think that A proved the need for B, even if you don’t like the particular approach of the movie companies. Instead, those who take a dim view of intellectual property--or at least its robust protection--have now taken to calling this strategy (again revealed by stolen data) “zombie SOPA” in a reference to the breathlessly maligned “Stop Online Piracy Act” of several years ago which set a new record for irritating anyone who uses the Internet.

Predictably, many news outlets then breathlessly reported on the resurrection of the Internet’s favorite law to hate. But, before you get swept up in the “iIndignation”, note that The New York Times was forced to print a correction on December 29, stating:

An article on Thursday about Sony Pictures’ release of “The Interview” online following terror threats misstated the nature of efforts by the Motion Picture Association of America to push for new antipiracy measures. The industry group is currently seeking to enforce existing laws to thwart piracy, rather than pushing for passage of a bill on the issue.

The NYT has to print a correction? I wish I could I say that I’m shocked….

This is a classic example of something done in Washington every day; attempting to staple something some interest groups oppose to something everybody hates.  No one at MPAA or Sony is looking to resurrect SOPA or PIPA.   Pretty much uniquely in Washington, we know this to be a true fact because everybody has seen all their emails.   They are pursuing an effort (love it or hate it) through state attorneys general to defend their property more aggressively using current law.  It’s not SOPA.  Or zombie SOPA. 

While this kind of conflation, as noted above, is standard operating DC PR procedure, in this case it’s almost too much to bear, because the whole basis for the effort is again, documents illegally stolen.  This means that there is now a campaign online  (“#zombieSOPA”!) being run by consultants and the usual detractors of copyright and other intellectual property opposing the enforcement of current laws, entirely based on stolen data.

“These guys are trying to stop people stealing their stuff!! How outrageous…by the way we know this because someone stole all their stuff.”

ATR didn’t endorse SOPA/PIPA and recognized its problems.  But the fact is that there are problems with the incentives that exist today for creating content when everything in the Internet age is so easily stolen.  If there is one thing that the Sony hack (just like the Apple hack before it) proves it’s that.  The last thing the Sony hack proves is that there is no problem with people stealing stuff online.  To use the hack itself in claiming such a thing almost crosses into self-parody.

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ATR Signs an International Coalition Letter against Global Taxation

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Posted by Lorenzo Montanari on Friday, October 10th, 2014, 2:10 PM PERMALINK

On October 13, the World Health Organization (WHO) will meet behind closed doors in Moscow to once again consider mandating expansive excise taxes that degrade national sovereignty. In response to the numerous attempts by global institutions to implement regional and international taxes, Americans for Tax Reform (ATR) and Property Rights Alliance together with 23 taxpayer and free market groups from 18 countries has released an international coalition letter promoting tax competition and outlining firm opposition to transnational taxation and to any increase and harmonization to excise taxes.

Excerpt from the letter:

 We, the undersigned taxpayer, free market groups and individuals support tax autonomy and oppose any regional or international tax changes that include “harmonizing” tax rates or introducing new taxes. Such schemes have been proposed through the European Union (EU), the United Nations (UN) and the Organisation for Economic Co-operation and Development (OECD).

 Tax competition can be a key factor driving countries to lower tax rates and increase economic activity.” […] Tax Competition, by contrast, is a natural dynamic that allows people to move economic resources from high tax areas to low tax areas. […]

 A much-discussed tax is the Financial Transactions Tax (FTT), also known as the Tobin Tax, which has been proposed in various guises by different bodies over the past few years including the EU. One model, proposed by the UN, is a world tax imposed on all financial transactions, with the goal of funding a global model of social services including basic income, free healthcare, education and housing to those the UN deem in need. […]

There have been attempts by the EU and by the World Health Organization (WHO) to establish uniform excise taxes on products such as sugary drinks, tobacco, and alcohol.  This would represent a dangerous precedent, and such excise taxes could be easily extended to all other consumer products.

Please click the link to read the full letter.

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Ireland's Proposed Tax Changes Could Destroy Its International Competitiveness, Push Business Away


Posted by Lorenzo Montanari on Monday, September 8th, 2014, 4:43 PM PERMALINK

Since the 1950s, Ireland has used its corporate tax rate to attract business, which at 12.5% is much lower than the OECD average of 25% and the US rate of 35%. Now, international pressure has forced the Irish government to review modifications to its corporate tax system ahead of a planned international overhaul of global tax rules.

The review was prompted after the Organization for Economic Co-operation and Development (OECD) began a review of global tax rules because of concerns amongst world leaders that corporations were deploying aggressive strategies to minimize their taxes. The OECD review will conclude in November 2015, at which point a binding multilateral proposal to overhaul global business taxation will be considered.

Central in Dublin’s review is a proposal to phase out the “double Irish” tax mechanism, beginning in the upcoming October budget. The mechanism attracted controversy in the U.S. after a Senate hearing on Apple’s use of the system to minimize its corporate income tax rates. Although the Irish government has defended its corporate tax system in the past, increasing political pressure from Washington and elsewhere has begun to take its toll. Several groups including the Irish Tax Institute, the Consultative Committee of Accountancy Bodies and Washington-based Tax Executives institute have contacted the Department of Finance to express their concern over the proposed changes. A change in tax policy would see a reduction in foreign investment, as corporations that have structured their business models based on assumptions around the current policy are forced to make changes and downsize their presence. Ireland, which has long benefited from its pro-business tax policy, would seriously damage the vitality of its economic recovery and threaten the jobs of the 130,000 Irish that are employed by foreign corporations.


According to American Chamber of Commerce, Ireland Chief Executive Mark Redmond, ‘Ireland has for a very long time identified a corporate tax regime as being really important to attracting direct foreign investment.’ The policy has caused significant economic benefits, by promoting an entrepreneurial culture in the country, and being a source of significant tax revenue to the government– US based companies alone contribute between €3 and €5 billion a year to the Irish Exchequer.

Despite these concerns, critics of the current tax system are increasingly anxious about Ireland’s international reputation and want to begin a gradual phasing out immediately. Just last week, EU officials hinted that their commitment to providing a package for Ireland’s debt repayment is linked to a removal of pro-business tax mechanisms and an Irish trade mission to Australia faced criticism over perceptions that Ireland encourages tax avoidance.

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