Taxing Questions

What do Google, Apple, and Facebook have in common with your enjoyment of a crisp glass of Sancerre? A silky, lithe red Burgundy? A great Bordeaux? If you answered, ‘Uh…nothing?’, you’re not wrong. Except-sadly-you are, because the US government is still considering tariffs of up to 100% on European imports including wine and spirits, in retaliation for a 3% tax the EU has levied on American tech companies. There is also a separate issue involving EU subsidies for Airbus, a European airplane manufacturer.

Although my industry-obviously- has been up in arms about this issue for weeks, most Americans are completely unaware of the proposed tariffs and the impending doom they would spell for importers, distributors, restaurants, and retailers. Or if they are aware, they think the issue was solved by the temporary truce agreed to by President Trump and Emmanuel Macron on January 20th. Unfortunately, a temporary truce is exactly that: temporary. Furthermore, it only applies to Champagne and other French sparkling wines. Everything else is either already under a 25% tariff or being considered for tariffs between 1-100%.

I fail to understand how the proposed tariffs, which would cost thousands of American jobs and drive many small businesses OUT of business, are a reasonable response to a 3% tech tax. I am not saying the tax is right; but I am saying that Facebook, Google, et al, can afford a few million a lot more than a mom-and-pop business can afford to have its supply costs literally double. What happened to negotiation? And how are businesses supposed to function with this uncertainty hanging over our heads? Nobody, from importers to distributors to retailers and restaurateurs, can decide what to order and when.

If you’re thinking, ‘No problem- we can all just drink American’, I have some bad news for you. First of all, as a nation we consume more than we produce. So even if everyone instantly switched from Bordeaux to California Cabernet and Macon to Cali Chardonnay, that doesn’t solve the problem. Secondly, the three tier alcohol distribution system the US has had since the end of Prohibition simply does not work that way. Distributors don’t carry just domestic wines or just imports; they carry a mixed portfolio to best serve their customers’ needs. If those 100% tariffs land, you’re going to have a hard time buying domestic wines, too, because the companies that sell them won’t be able to function selling a mere fraction of their usual catalog. Ask ANY domestic producer-they’re as disturbed about the tariffs as EU producers and importers are.

Our Constitution reserves to Congress the sole right to levy taxes.These tariffs are definitely just taxes by another name, taxes that the American people will pay. Over time, Congress has effectively ceded that authority to the executive branch, but supposedly only in cases of a ‘national security threat’. I am unsure how a wedge of cheese or a glass of wine equates to a national security threat. The tech tax and Airbus subsidies, while not ideal, hardly qualify, either.

Again, I am not saying that the tech tax or the Airbus subsidies are correct. I AM saying that our government’s response seems both out of context and out of proportion. If you agree, please do one thing: write a note to your Congressperson and/or Senator, asking them to vigorously oppose these tariffs. Ask them to reclaim Congress’s proper right to taxation. Ask them to ensure that American jobs are not lost, and American companies not driven out of business.

Then pour yourself a glass of something delicious, and toast to hope. Thank you.