The European Union has promised to impose Digital Services Taxes (DSTs) targeted at American tech companies. The EU is attempting to restrain American success through these DSTs. If the EU successfully passes this unprecedented international tax, America’s innovative future is at serious risk.  

Here are the top 5 reasons why DSTs are a bad idea. 

  1. 1. DSTs might lead to double taxation.  

Traditionally, businesses pay income tax on actual profit. With DSTs, companies will have to pay a revenue tax on any earning gained through search energies, social media services, and online marketplaces. Companies will now pay both income and revenue tax, a double taxation.  

  1. 2. DSTs will ultimately hurt consumers and workers – in the U.S. and abroad

Large tech companies will have to increase overall costs in response to losing significant profit to DSTs. Workers will directly feel the impact of these increased costs through decreased pay and jobs. Third-party sellers, in partnership with large tech companies, will have to increase their prices to remain competitive. This will lead to consumers being charged more for services.   

  1. 3. DSTs could lead to a trade war.  

By passing this unprecedented tax, it will soon become the norm. The EU will have the green light to impose escalating tariffs on America continuously. This will compromise jobs and businesses on a global scale.  

  1. 4. The EU will target more American companies.  

At the moment, DSTs are targeting large tech companies. By imposing DSTs, smaller American businesses will be open to EU overreach. If the EU can directly steal from giant corporations, they will indeed find a way to tax smaller tech companies. This will put at risk American innovation and competitiveness.  

  1. 5. Profit from DSTs will line the wallets of the EU.  

The EU is using DSTs as an easy source of money. The profit they will gain from taxing large American tech corporations will be invested in EU competitiveness. This money grab will surely benefit the EU at the expense of American business.  

The Trump administration has fought to protect American innovation by opposing an international tariff system. The Biden administration needs to continue this sentiment. DSTs are both an economic and diplomatic liability. Rejecting DSTs ensures the prosperity of America’s financial and innovative success.