Yes, You’re Right, Margrethe Vestager Is An Idiot

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The pity being that she’s also an EU Commissioner and thus has power over other peoples’ lives. The stupidity is here:

Margrethe Vestager, the EU competition commissioner recently promoted to take charge of Europe’s digital policy as well, said she was a “strong supporter” of national digital taxes in order to advance the chances of an international agreement. She said the EU would revive plans for a digital tax within a year if international efforts to find a solution failed.

“I think it is very important that we keep up the momentum. Because of this very fundamental injustice that most people and businesses pay their taxes and they are competing with businesses who create value but do not pay taxes,” she said in an interview with the Guardian and other European newspapers.

Why do you want to tax the creation of value?

Sure, government is necessary, meaning that taxes are too. And we can see the logic of taxing the people who gain value – they are the people who have some value to tax after all. But why the taxation of the creation of value?

Isn’t that what we want people to be doing, creating value? And we get less of whatever it is we tax?

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Spike
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Spike

Well, many taxes one expects to produce revenue are levied on beneficial economic activity and their existence inhibits that benefit. A principle of US taxation (not always followed) is that it is levied on “creation of value” (tapping a flow of syrup up the maple tree) versus levied on things that just are (like chopping down the tree). This is because parasitism ought not kill the host. This is all that Ms. Vestager is saying. Her error is in saying the companies don’t pay taxes. You’ve pointed out that they pay their full share, in places where multinational tax law… Read more »

MrVeryAngry
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MrVeryAngry

If ‘creation of value’ means if her mouth ‘profits’, then yes, taxing profits is what we do (even though it would be far better to tax ‘rents’.) But I suspect that that is not what she means, because ‘digital enterprises’ are paying tax on their profits. It’s just that for many of them their profits are small. (ex outfits like Amazon, Facebook etc).