Washington – On his first day as President of the U.S., President Trump signaled to trade partners that if they tax US companies in discriminatory ways, it will be investigated and challenged.
For years, US officials have been dealing with trading partners around the world who have wanted to tax the revenue of US digital services companies, an uncommon practice that violates trade agreements. Part of the OECD Global Tax Deal negotiations was aimed at replacing unilateral digital services taxes that target largely American technology firms with global tax reform. However, these negotiations have stalled, and more countries may be tempted to enact or reinstate digital services taxes, risking retaliatory actions such as tariffs from the U.S. This week, President Trump signed EOs announcing little tolerance for DSTs in which foreign governments disproportionately tax the revenue of US companies.
Today, CCIA has released a study showing that global adoption of a 3% DST would cost U.S. businesses an estimated $23 billion annually, which would not only reduce export revenues and income for U.S. businesses and their shareholders, threatening up to 31,000 full-time equivalent U.S. jobs, but would also reduce U.S. federal tax revenues by up to $5 billion per year.
$5 billion is enough to pay for nearly 50,000 federal civilian employee annual salaries–more than are employed domestically by the Departments of Commerce, State, Labor, Energy, Housing and Urban Development, or Education.
The following quote may be attributed to Trevor Wagener, CCIA’s Chief Economist and Director of the Research Center:
“Vigorous action by the new administration to defend U.S. trade interests by deterring further adoption of digital services taxes and persuading trade partners to rescind existing digital services taxes can save U.S. companies $23 billion per year, protect 31,000 U.S. jobs, and protect up to $5 billion in federal tax revenue per year. That’s enough tax revenue to pay for the annual salaries of nearly 50,000 federal civilian employees–more than are employed by six major federal departments.”
