, 12 tweets, 6 min read Read on Twitter
So, Trump is promising retaliation against France over the so-called GAFA tax (Google, Apple, Facebook, Amazon) on digital companies that dodge taxes. What are the US' options? (As it happens I'm finishing up an academic paper draft on this topic as we speak.)

Brief thread.
Last month, Senators Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) - the chair and ranking member of the Senate Finance Committee - called on Trump to consider using "all available tools" to retaliate.
They specifically mentioned Section 891 of the U.S. tax code - an obscure provision of law that allow the US to double any U.S. tax owed by citizens and corporations of a country that engages in "discriminatory or extraterritorial taxes" against US corps.
According to a July 11 letter from Trump's Treasury Department, they'd be up for it - meaning taxes on French citizens/corporations' US income could double.
For the corporate tax, that would mean French companies would be taxed at 42%, while US companies and countries that don't follow their lead will be taxed at the 21% now faced (thanks GOP!) by US corporations and countries that don't go GAFA.
The corporate lobby and think-tank crowd has been going nuts over GAFA, calling it a de facto tariff. Usually anti-tariff, they've called for threatening 891 action. It's a contrast with the general handwringing over much of Trump's trade agenda.
How is something like 891 even on the books? It clearly conflicts with dozens of bilateral tax treaties the US has on the books - which are themselves enforceable in US courts. (@martinhearson has the #s).
@martinhearson Like many interesting but forgotten policies, 891 dates back to the New Deal era. It's also never been interpreted in US courts, so we don't really know what it means - nor whether French citizens would prevail should they challenge it as illegal.
@martinhearson 891 dates back to 1934 (when it was Section 104, then Section 103 of the Revenue Act of 1934). Business groups reluctantly backed it as a way to pressure other countries to sign tax treaties.
@martinhearson And businesses were very serious - promising capital flights and strikes unless the US government eliminated so-called "double taxation" - another word for a tax on offshoring or capital mobility.
@martinhearson Business cried, business demanded, and business got. While not too many treaties were signed during the New Deal, the treaty program took off during the Eisenhower years and has never abated.
@martinhearson Since then, no one has much talked about Sec. 891. But it's the latest indication that Trump is willing to reach back into "Golden Age" legal history to help business allies. And like Sec. 232 and especially like Sec. 301, many in Congress and business are willing to let them.
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