Italy’s Digital Tax, Michael Bloomberg

Grind for January 3nd
FIRST SIP:
“Christmas is a tonic for our souls. It moves us to think of others rather than of ourselves. It directs our thoughts to giving.”
– BC Forbes



Follow The Leader

The Headline

Italy imposes new tax on Big Tech

The Grind

Italy’s parliament this week passed a new tax that will affect large tech companies like Facebook and Google beginning January 1st.

The tax imposes a 3% levy on the digital revenue of tech companies with more than $831 million in global revenue and at least $6 million in revenue in Italy.

The tax is nearly identical to one passed by France in July following the European Union’s failure to agree on a uniform digital tax for the entire bloc.

The new taxes are sure to complicate global efforts to formulate appropriate tax policies for Big Tech amid widespread complaints that American tech companies aren’t paying enough taxes to countries in which they operate.

The Details

US negotiators for months have been working with the Organization for Economic Cooperation and Development think tank (OECD) on a global solution to avoid overlapping taxes on American tech companies.

This month, US Treasury Sec. Steven Mnuchin voiced “serious concerns” about the tentative deal and proposed a system that would allow companies to choose the current system over the OECD-brokered rules.

“It’s choppy waters. It’s difficult,” says OECD official Pascal Saint-Amans. “The first feedback we’ve had [is] that optionality may not be welcome, but it’s the US position and no one can ignore the US position.”

Big Tech supports a global tax solution over the kind of taxes imposed by Italy and France.

Under current rules, American tech companies pay the majority of their taxes in the United States because that is where most of the products are designed.

“At issue are decades-old rules that generally allocate corporate profit for tax purposes based on where value is created,” reports the Wall Street Journal. “But modern multinationals…can sell their products across borders in ways that leave little taxable profit in a country where those products are consumed.”

France and Italy have promised to repeal their taxes if and when the OECD reaches a deal.



Bad News

The Headline

Prison labor: another strike for Michael Bloomberg

The Grind

Democratic candidate Michael Bloomberg this week confirmed reports that a subcontracted agency utilized prison workers to make phone calls for his presidential campaign.

“Through a third-party vendor, the Mike Bloomberg 2020 campaign contracted New Jersey-based call center company ProCom, which runs call centers in New Jersey and Oklahoma,” wrote John Washington, a journalist with The Intercept. “Two of the call centers in Oklahoma are operated out of state prisons. In at least one of the two prisons, incarcerated people were contacted to make calls on behalf of the Bloomberg campaign.”

The Details

Mr. Bloomberg says the campaign was not aware that inmates were conducting phone calls on its behalf.

“We only learned about this when the [Intercept] reporter called us, but as soon as we discovered which vendor’s subcontractor had done this, we immediately ended our relationship with the company and the people who hired them,” said Bloomberg in a statement. “We do not support this practice and we are making sure our vendors more properly vet their subcontractors going forward.”

Despite having spent more money on TV ads than any other candidate ($76 million), Bloomberg has struggled to gain support from voters based on policies he supported while he was Mayor of New York City.

According to Real Clear Politics, Bloomberg is polling at roughly 5%. Joe Biden remains in the lead with 28% followed by Sanders with 19%, Warren with 15%, and Buttigieg with 8%.




GOOD TO THE LAST DROP:
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