Sure, but assume they somehow pass the tax 100% onto the customer. So now French citizens are the ones paying for the "right to the free market" of their own country. Does that seem fair?
This typically doesn't happen. Companies don't pass the increases in taxes 100% to the consumer. By that argument all taxes would be immoral since they directly increase the prices consumers pay.
Now we can argue as to how much said tax is passed onto the consumer and whether or not the additional tax revenue towards various social services offsets the hit. Which is an important distinction to make when choosing what to tax, since some consumers (namely the poorer ones) have less in the way of dealing with modest price increases.
It also could be argued that companies are stealing money from nations they reside in by taking advantage of tax havens or various loopholes to reduce their tax burden. At that point companies starve the various social services and results in consumers being unfairly affected.
Companies don't receive money from the ether. They receive money from their customers. Ergo, 100% of taxes paid by companies are indeed paid by customers. Any increase will indeed be passed on to the customer. Any decrease in profits to the company is temporary and will be made up by the customers in the near (if not immediate) future. Companies won't just sit idly by while their profits decrease due to tax - they'll "innovate" their business method, or change the company organization, or restructure their pricing to 'hide' the increase.
The fact that the money to pay taxes ultimately comes from customers does NOT mean that increased taxes will be levied on customers.
Here is a concrete example. According to economic theory, the competitive price of a good in a free market should be the marginal cost of the least efficient supplier in that market. If a tax increases your costs but you are (still) not the least efficient supplier, then prices should not change at all, and the taxes will entirely come out of your margins.
This tax is aimed at a handful of large internet-only businesses doing business in France. These businesses are large and profitable in part because they operate very efficiently, and are in competition with offline companies whose operating costs are much higher. It is unlikely that this tax will by itself make their margins higher than the competitors, and therefore is unlikely to make them raise their prices.
What is an interesting scenario, though, is that taxes + GDPR fines + complying with new copyright legislation + whatever else gets dreamed up becomes enough that internet companies decide that it is worthwhile to take a stand and exit various EU countries. They haven't for a variety of reasons (including that corporation vs country battles can make other countries wary of said corporation), but if France keeps picking a fight, those calculations could change.
One of the upcoming interesting battlegrounds along this line is from recent EU copyright legislation. It strongly implies that various tech giants will be required to put software chosen by various national governments on their network to proactively identify and block copyrighted content. Software out of their control that processes everything coming in and has legitimate reasons to "phone home". Maybe you trust countries like France and Germany to only require trustworthy software. But what about more corrupt countries like Romania? Do you trust their copyright filter software to not cross the line into spying and censorship?
Yes, because all those local businesses are selling nothing but artisanal, locally-sourced, organic goodness; nobody other than Amazon imports goods from China.
And I think you're mixing your enviro-zealot metaphors; it's whale oil and dolphin tuna.
An individual company sets its prices to optimize revenues. That depends only on the demand curve and is independent of costs. However, it's a rare market where even the most marginal suppliers earn enough producer surplus to make up for significant increases in production expenses. If the optimal revenue isn't enough to turn a profit then the business will close. That decrease in supply with no change in demand allows the remaining suppliers to raise their prices—though not necessarily by the full amount of the increase in cost, because only part of the decrease in supply manifests as an increase in price. The rest manifests as potential consumers doing without the good altogether, perhaps turning to lower-priced (but less satisfactory) substitutes.
> A 3% increase could make their costs higher than revenue.
This might be true for many businesses but likely not the large digital ones, which enjoy ungodly margins (hence why they grow so much and so quickly). A unicorn's back is strong enough to carry quite a few saddles.
I'm American and I support the French doing this. Some Americans "hate taxes", but I have enough money. What I don't have is enough control in a country ruled by oligarchs and corporate fiefdoms. Governance is all about fostering a healthy society, by balancing incentives and disincentives. If you don't do that actively and carefully, curbing abuse and exploitation, then they grow to a breaking point.
So you believe paying more taxes somehow gives the taxpayers more control over their country ? Giving away more money doesn't mean you have more control over how said money is used. The most direct consequence actually goes in the other direction, you have now less agency (=money). There's no obvious mechanism that makes a monopoly (=government) more accountable the more money it's given.
I don't believe taxes give me more control. What I believe is that taxes aren't inherently bad and that we should express more concern over where the money goes and what economic effects it has, not paint all taxation as bad.
Effective democracies do have an explicit mechanism to make government accountable: votes on issues (like where taxes are gathered and how they're spent) and representation. Through an effective democracy, using government as a proxy, people can also keep bad behavior by big amoral profit-motivated corporations in check. We don't have an effective democracy in the US. That's because it is overtly influenced by money, which, amorally or immorally, goes to help the spender.
There's very little democracy in France as well. Corporate lobbying might not be as prevalent (simply because they don't have as many humongous corporations), but it's still the same old self-serving oligarchy story.
If we really want to compare, American-style plutocracy might actually be more democratic, because it's easier for a diverse array of citizen to become rich, than it is for French citizens to join the elite club from ENA [1] and co.
Money is more fluid and impartial than political club camaraderie. It crosses and fills the moats dug up by the ruling class better than the occasional "working class", "diverse" guest-candidate could ever hope to.
I'm not saying the USA is a Democracy, just making the point that the average USA citizen may have slightly more hard (=concrete, realistic) agency over their rulers than French citizens do.
It does enable it to spend on things like healthcare to prevent monopolies (or oligopolies which are often just as bad) from exploiting people. At least in theory a government is a benevolent monopoly, which is often better than one which only cares about profit.
The US has issues with government corruption, but this seems at least in part to do with americans' disdain for their government, which is partly because underfunding makes it difficult for it to operate smoothly.
I am not French, but Swedish, We have similar total tax burden. In general Swedes accept taxes. As it pays for: education, childcare, healthcare, a functional bureaucracy, defence, police and legal system etc. If you don’t get those or they don’t function well, then I can see that people are more hesitant.
But there is a cultural difference too. Many (most?) people around me accept that we pay for some freeloaders, as long as we also manage to protect and help those that really need it.
It seems to work [1] which is why we accept the taxes (more or less).
[1] Sweden scores high in most indexes trying to measure these things.
Maybe at one point. Today it is all borrowed against the future in the form of private debt, a propped up property market, sold off companies, and tax breaks. Of course people accepts taxes when it is primary labour that is highly taxed and they made hundreds of thousands in the property market so they don't feel like they need to work much any more. It is very unlikely that people would accept taxes to properly fund infrastructure, pensions, the military and whatever else these days.
Edit: Maybe this is uncomfortable for people but it is true. If people are so comfortable paying taxes how come the social democrats are the weakest in decades? How come there is no wealth tax, no inheritance tax, no gift tax, no property tax, deduction for debt, low corporate tax, special tax deals for family businesses, some of the highest privates debt in Europe, as well as some of the highest wealth inequality, most rapid privatization and the highest retirement age? The amount of tax money spent on private sector health care has doubled in 10 years. There is a housing shortage pretty much everywhere, for employees and students alike. The Stockholm subway is run by the Chinese. Volvo is Chinese. So is what is left of SAAB, essentially all Swedish cinemas, mobile operator 3 and partly Spotify, the other Volvo, the Stockholm airport train etc. There isn't going to be any Swedish companies left in 30 years. The steel and paper mills, spirits and other traditional companies are increasingly owned by Finnish companies. Oh, and the right wing populist party with an agenda based on discontent are now the second largest in the polls. Soon enough they will gut public service media like in Denmark.
These are not the traits of a well funded state prepared for the future. People just aren't paying attention.
"In general Swedes accept taxes" overlooks some rather important facts.
Firstly, "in general" is very vague. There are famous cases of rich Swedes who don't want to pay Swedish taxes and successfully avoid doing so. IKEA's tax structure is legendary isn't it?
Secondly, Sweden has cut taxes in the recent past:
'The median voter is a woman who works for the public sector, and around two-thirds of the electorate draw most of their income from the state, either because they work in the public sector or draw benefits from it.'
So yes the average Swede is a net recipient of tax money and is thus going to think taxes are awesome. Obviously in a world where a minority are forced to pay for the living costs of the majority, "in general" the population will believe it's a good system. But is a good idea or sustainable over the long term, let alone moral?
That isn't really how the Swedish tax system works. A lot of that is paying yourself in one form or another.
The problem in Sweden is that if you for example you get $500k from you parents, buy an apartment that appreciates, go study for five years, have a kid and take parental leave for another two years you pay maybe 10-20% tax overall (on the appreciation mostly) and nothing for health care or education for yourself or your kids, which might go to semi private school.
While the average person who don't have rich parents, or maybe kids, and are trying to work their way up are paying 40-50% or more on their income and not getting much in return. And on top of that are paying for some of the highest property values and general prices in Europe.
Stockholm built the most expensive hospital in the world, yet has one of the lowest tax rates in the country.
I don't mind paying taxes, but I want them to be put to good use and not be some sort of discount system for those who are already well off so they can take more vacations. (I do realize that their is a lot of history behind that, but it is now getting warped into some form of crony capitalism).
"Do you like paying taxes?", is question politicians abuse frequently because it is an easy question for your system 1 to answer and creates an emotional response.
"Do you think that taxes are being used properly?" is a better question, since having roads to drive on or unemployment if you get let go from a job are quite useful; both are taxes. This is a harder question to answer and reduces the emotional response they are looking for.
That is not even a dive into economic inequality; Person A having 10 personal homes in three different countries while Person B lives out of their car pay-check by pay-check.
It's true that in the US, the average person sees very little benefit to federal taxes. Most real, helpful things such as police, roads, schools and such are perceived to be only from local or possibly state taxes. This is not entirely true of course since Federal taxes do help for education and roads notably, but I would say that most people don't really think about it that way.
There's also a very strong individualism in the US, which tends to make people overlook outside factors when evaluating success, the "if you work hard and believe in yourself anything is possible" kinda thing.
Finally there's a general belief in the corruption and incompetence of big government, the idea that this money taken will just be wasted.
So taxes, especially Federal taxes, are seen as a burden, a form of robbery even. And by a bunch of incompetents no less.
In France, people do see direct benefits of paying taxes in their daily lives, mainly related to the medical system.
There is also a history of things like trains, the post office, ferries, electricity, telephone service, being handled by the central government (this is before the privatizations starting the 1990s), and crucially, people associating the involvement of the state in what were in some cases world class services.
And the French don't generally see a problem in letting the government handle these sorts of things. As an example there is now a petition going around in France to keep the Paris airports under government control.
So, paying taxes in France is seen more as a necessary burden to having a functional society rather than highway robbery.
What does piss off the French is not everyone paying their fair share, which these new taxes are helping to compensate. Even if not much at all in terms of actual revenue for the state, it's more of a symbolic gesture to appease the population.
>It's true that in the US, the average person sees very little benefit to federal taxes.
I disagree with this. The US’s civil service organizations have immeasurably improved the quality of lives of everyone. Organizations like FDA/FAA/CDC/FCC/NASA/research at universities/Civil Engineering Corp/Transportation/judiciary/etc are crucial to advancing society and most importantly, the people in these organizations are by and large not corrupted, which is a very under appreciated assets and once lost, will be extremely hard to earn back. Obviously there are and will be a few bad actors, but the reason people don’t have to worry about bribing/violence/etc is that there is a higher level of trust in society and not everyone is out to get theirs before someone else takes it.
Once that attitude changes for most people, I don’t see how it will be possible to get it back.
I completely agree, my wording was perhaps ambiguous.
What I meant was that the average person doesn't perceive it as such, IOW they don't see the benefits of the Federal government, which is not to say that there are no benefits for the average person.
This is probably because there is a lack of publicity about how these types of programs improve people's daily lives.
Instead we get a lot of politicians talking about how wasteful these are, or how it's part of the nanny state, or stifling growth by taxes.
And the media doesn't generally oppose this viewpoint... As a example, I remember during the Democrat debate in Miami where Sanders was not asked how his healthcare would help people, but whether it would raise taxes.
Hard to say, this is matter of political option so it changes regularly :) my easy guess is that most people like benefits paid thanks to the taxes but do not like paying them :D
Win-win, until you realize that this action is pretty much the opening shot of a trade war, precisely because it helps local businesses. Imagine if the US responded in kind and tailored some new rules that targeted European businesses in US markets with similar taxation.
A company might raise prices to pay for an increased dividend. Companies have threatened the very existence of the company, or made a loss to pay increasing dividend.
