Ron Estes

Rep. Ron Estes’ (R-Kan.) latest proposal to dissuade foreign states from imposing digital services taxes is milder than the “revenge tax” floated by Republicans last year, but the logic is the same: Raise foreign governments’ costs of taxing US digital companies and hope they back down.

The high-level theory seems to be that enough economic pressure will make DSTs disappear. This mistakes the symptom for the problem and short-term results for a long-term solution.

The underlying issue is that the international tax system was built around a world in which earning substantial profits in a country generally required meaningful physical ...