Revenue Estimates for Digital Services Taxes

Following the failure of the EU to agree to a new tax on digital services at the end of 2018, several European countries have moved forward with plans to adopt their own unilateral measures. Though some of these efforts predate last year’s proposal from the European Commission, Austria, Belgium, France, Italy, Spain, and the United Kingdom are each pursuing their own digital taxes. Other EU countries like the Czech Republic and Poland are exploring similar taxes, but the proposals are not yet fully developed. In general, these proposals are designed to tax (mostly) foreign digital companies. Many politicians have made an argument about how much digital firms pay relative to more traditional business models. However, the claim that digital companies pay tax at less than half the rate of traditional businesses is not supported by the cited research. In fact, by some measures, digital companies pay similar rates of tax as traditional businesses. But how much do governments…

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