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Wednesday, February 22, 2023
Kim Presents Taxing Digital Platforms Immediately At Northwestern
Younger Ran (Christine) Kim (Cardozo; Google Scholar) presents Taxing Digital Platforms (with Darien Shanske (UC-Davis; Google Scholar)) at Northwestern in the present day as a part of its Superior Subjects in Taxation Colloquium hosted by Gregg Polsky:
Tax techniques have been struggling to adapt to the digitalization of the financial system. On the heart of the struggles is taxing digital platforms, resembling Google or Fb. These immensely worthwhile corporations have a enterprise mannequin that offers away “free” providers, resembling looking the online. The service is just not actually free; it’s paid for by having the customers watch adverts and tender knowledge. Conventional tax techniques should not designed to tax such barter transactions, leaving a spot in taxation.
One response, pioneered in Europe, has been the creation of a completely new tax to focus on digital platforms: The Digital Companies Tax (DST). Although controversial, ten states have entertained imposing a DST, and Maryland truly did so. Maryland’s tax was instantly challenged, with the strongest argument towards the tax being that it’s preempted by the Web Tax Freedom Act.
There may be appreciable consensus that Maryland’s tax is in deep trouble. We contend that this consensus is incorrect and that states mustn’t abandon a promising resolution to a set of urgent issues.
A DST is a tax on consumption from the barter aspect of platforms that isn’t presently taxed. With this coverage aim in thoughts, the primary authorized objections to DSTs seem fairly weak as a result of these claims depend on the notion that the tax is discriminatory towards web exercise. The truth is, there is no such thing as a discrimination; DSTs are only a completely different tax used to seize untaxed digital buy in response to completely different enterprise fashions. We additional provide different normative arguments for DSTs, together with as a way of taxing digital platforms that take pleasure in supranormal returns whereas producing social hurt. Lastly, we reply to coverage objections as to potential tax pyramiding, regressive tax incidence, administrative difficulties, and the usage of gross sales tax and company revenue tax.
https://taxprof.typepad.com/taxprof_blog/2023/02/kim-presents-taxing-digital-platforms-today-at-nothwestern.html
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