Italian Lawmakers Are Not Stupid

Say what you want about the Italian Government and their proposal for a “Google tax”, but I find it very unlikely that they are stupid.Google Italia

I recently read an article on the Forbes website entitled “Italy Proposes an Entirely Illegal Google Tax”. Normally, I wouldn’t have thought twice about legislative malfeasance in Italy, but this was from Forbes, the corporate cheerleading, Europe bashing publication that manages to survive only because of its silly annual list of rich people. As suspected, the story of the Google tax is a bit more complicated.

Italy, like many other European countries, are trying to figure out a way to collect taxes from large companies that operate in one European country but do business in the others. As the article points out, there is a problem with this in that the direct collection of taxes violates the single market principle. This is why some articles refer to this revenue collection as a “tax” with quotations.

Companies like Google have found a way to avoid paying national taxes by setting up subsidiaries and shell corporations wherever the taxes are the lowest while at the same having access to the large European market. Many consider this a tax loophole, so Italy’s Partito Democratico is proposing a loophole of its own. In order to advertise in Italy, a company must go through a registered Italian ad agency. The Italian companies would therefore see an increase in revenue which would increase the amount taxed by the government.

Can this work? Probably not. Is it legal? Probably not. So then the Forbes article is right? Absolutely not.

Italy does not exist in a vacuum. It is not the only country upset about the tax loopholes exploited by tech companies. France, which is where the idea of the Google tax was born, is calling for a Europe-wide Google tax. Surely this would satisfy critics who claim that national Google taxes are illegal. The point is, even if the law gets passed, and eventually struck down, it can have an effect on public sentiment throughout the continent.

The proposed Italian law is said to be able to raise €1 billion in tax revenue. This is nothing – about one tenth of one percent of the government’s budget. In other words, Italian lawmakers are testing out the waters and seeing how much leeway they have within the existing European structure.

Criticizing continental European economic policies is a favorite pastime for American and British conservatives who wish to parody that which they disagree with. But to say that Italian lawmakers don’t understand their basic laws is ludicrous. Which explanation seems more plausible?

  1. Italians are stupid and don’t understand their own laws.
  2. Italian lawmakers understand that they are in a difficult situation in terms of national interests and regional law and are pushing the envelope so as to establish new precedents and/or provide exposure for a new regional tax policy.

To call Italian lawmakers stupid is lazy and teaches us nothing about the situation.


Europe’s Enlargement Fail

European leaders prove once again that they have no clue on how to proceed with enlargement, integration and overall identity.

What is America? Who is an American? These are difficult questions that demand a certain level of nuance and a willingness to listen to people with whom you disagree. We often don’t agree, but something tells me that everything will be OK in the long run. When I think of Europe, I’m not so sure. I’ve recently come across two advertisements that have been in the news, both of which capture a certain mood and cultural outlook.

The first is the Chrysler spot entitled “Halftime in America” that ran during the Super Bowl. It features Clint Eastwood (life-long Republican) arguing that even though “division, discord, and blame made it hard to see what lies ahead…after those trials, we all rallied around what was right, and acted as one”. The commercial, in spite of its cheesiness and aggressiveness, has been well received – some Republicans have come out against the ad, claiming that it gives credit to the Obama administration’s auto industry bailout. Also, you can’t get much cooler than Clint Eastwood. Halftime was created by the same company (Wieden+Kennedy) that made a similar and equally famous ad with Eminem for last year’s Super Bowl. 

That brings up our next ad, called “Growing Together”, which was released by the European Commission (EC). The ad was taken down almost as quick as it was put up. See if you can spot why. 

Where to begin? Did they all make up in the end? Did she defeat them? Does it matter that it’s a woman and a bunch of aggressive non-white men? Are the men foreigners or immigrants? Is the EC rallying support for an invasion of China and India? Does Quentin Tarantino know about this? Is it OK that I find it ridiculously hilarious?

My initial feeling was that it was a hoax, but according to this official statement on the EC’s website, it’s the real deal. Part of me still doesn’t believe that the ad could be real, but assuming that it is, it unintentionally captures the anxiety and awkwardness of European identity as it expands, in spite of it’s already shaky foundation. It’s halftime in America, and in Europe, it’s the halftime show – zing!

At the end of the day though, these are just two commercials. Europe’s road ahead is much more challenging than America’s because the latter is already a politically integrated entity. It’s unfair to use these commercials, or any others as exemplars of American or European culture. On the one hand, it’s easy and fun to jokingly poke across the Atlantic, but on the other, I think a bigger and more integrated Europe is in everyone’s interest – if only the EC could figure out better ways to market it.

When Anchor Babies Attack

The Constitution of the United States guarantees citizenship to any person born within its territories. Fear of immigration is threatening this fundamental aspect of our national character.

Having grown up in the United States, I simply assumed that being born in a country was enough to earn citizenship. It turns out that the world is starkly divided in how it grants citizenship. Almost the entire “New World” (i.e., North and South America) gives citizenship to anyone born in their country – a system known as jus soli (soil juice). Almost the entire rest of the world requires some form of lineage or blood line to establish citizenship – jus sanguinis (blood juice).

The blue countries grant citizenship to anyone born there. The grey countries care who your mom and dad were.

The long-held tradition of jus soli has recently been revisited in the United States because some Americans feel that the system of citizenship is being exploited by those unfit to be American. The latest nativist fear-mongering centers around the supposedly popular practice of immigrants giving birth to a child in the US so as to facilitate their own legitimate immigration. What they fail to mention is that such a child would not be permitted to sponsor any parents for immigration until they reach the age of 21. Furthermore, immigrants having children in the US and establishing long-term roots is not new – the only thing different now is that the immigrants are coming from Latin America, Africa and Asia, and not from Europe.

Conservatives no longer feel that being born in the US is good enough. They are not scared of anchor babies, but using them them as an excuse to spew bigoted rhetoric. What they are really scared of is a non-White America. The same people who argue for the trumpeting of American exceptionalism are the ones who are advocating for the repeal one of our most fundamentally exceptional laws and traditions. The same people who complain that Obama is making American more like Europe are the ones who wish to revive an archaic (by American standards) practice.

I understand why Europeans maintain the jus sanguinis principle. Immigration poses more challenges for smaller European countries than it does for the US, where large-scale immigration predates the founding of the country. Places like Denmark and Switzerland feel much more threatened by the hordes of outsiders, armed with Schengen visas and strange languages. But as my Republican brethren repeatedly remind us, the US is not Europe and we should not abandon a principle that has enriched the country for over a century (and with the huge exception of the slave population and their descendants, since the writing of the nation’s constitution).

Anchor babies are not the problem, xenophobia is. Birth-right citizenship is not a universal truth that should be applied in every country. The United States, however, is in a unique position to posit the belief that a country can be built upon values rather than an idea of race or bloodline.

Blame Germany Too!

Everyone is blaming Greece and the rest of the PIGS but let’s take a look at who benefited the most from the formation of a currency club that was supposedly too large to begin with.

The Euro has depreciated against the US Dollar by about 15% since it’s 2011 peak of almost 1.5 Dollars for every Euro. Many have argued that the Euro was overvalued for years and that currency markets are merely correcting for past discrepancies. Even during the Euro’s heyday, the imbalances between Europe’s rich north and “poor” south benefited the likes of Germany who were effectively working with an undervalued currency, whereas Greece had to deal with an overvalued currency. This was a boon for German exports in that they artificially deflated the price of German goods on the international market.

Now, as the Euro has lost some of its value, and the rest of the Eurozone considers kicking Greece out of the club, Germany stands to gain the most once again. As long as Germany is entwined to its poorer neighbors, its currency will be valued lower than it otherwise would have been – the more poor the country, the more likely that the Euro would be undervalued. Any depreciation in the exchange rate benefits the Deutsche economy. Germany is already the second largest exporter in the world and has recently held the top spot if only for a few months.

Furthermore, the capital rich countries of Europe’s economic core were more than eager to lend money to the peripheral countries at high interest rates – fuel to the fire! For years, Germany has been riding the wave of an undervalued currency and cheap markets for their surplus capital; and when the problems began to emerge, all fingers started to point towards the south. It seems like another case of a drug dealer blaming the user.

Germany, more than any other country, has benefited from the Eurozone’s premature expansion and subsequent fall. They should be the last to complain.