Taming a tax war

The recent trade truce between President Donald Trump and French President Emmanuel Macron did more than spare France’s wine, cheese and lipstick industries from up to 100 percent U.S. tariffs.

It also presents breathing room for an international agreement governing how to tax U.S. tech firms with worldwide reach such as Facebook and Google parent company Alphabet Inc.

France last year said it would impose a 3 percent tax on the revenue of tech companies with more than $832 million in annual sales. Italy and Great Britain have similar taxes set to take effect this year.

The Trump administration has threatened retaliatory tariffs on any nation that imposes such a levy on U.S. tech firms.

The argument for a digital tax is that, without one, companies such as Google and Facebook make money from foreign customers without paying anything to the national governments of those customers. The argument against a tax like France’s digital levy is its reach: it was to apply to all of a U.S. tech giant’s sales revenue.

Macron’s decision to suspend France’s tax should prompt all parties to negotiate an international agreement for dividing up taxes collected on the revenue of tech giants with multinational reach.

While the United States objects to a plan devised by the Organization for Economic Cooperation and Development, Washington supports a way to resolve global tax disputes involving multinational companies.

However far apart Europe and the United States are on taxing giant tech firms, this fight is about more than famous French products. But high-tech revenue is nothing to have a trade war over. For the sake of consumers and producers everywhere, this international dispute should be settled without threats and tariffs.