On March 16th Americans for Tax Reform and the Tholos Foundation hosted a Capitol Hill event to present a major new report on the growing threat of Digital Services Taxes (DSTs) to American businesses and taxpayers. The event, held at the U.S. Capitol Visitor Center, featured ATR President Grover Norquist, Rep. Ron Estes, Dr. Barbara Kolm of Austria’s Freedom Party, Fred De Fossard of the UK’s Prosperity Institute, and study author Professor Sinclair Davidson of RMIT University.
The report — Taxation Without Representation: How Digital Services Taxes Violate the Principles of Taxation and Threaten American Commerce — makes a comprehensive and damning case: DSTs are not legitimate tax policy. They are targeted extraction dressed up in fiscal language, designed from the outset to fall on American companies while shielding domestic competitors.
The Numbers Are Stark
The report estimates that U.S. firms currently pay $2.96 billion annually in digital services taxes. That figure is expected to nearly double to $6 billion by 2030 — and under a high-contagion scenario in which more countries pile on, could reach $9.6 billion. Over the next decade, the cumulative cost to American companies could be as high as $117 billion.
These aren’t hypothetical projections. DSTs are already being collected today across Austria, France, Italy, Spain, Turkey, and the United Kingdom — and the list of adopting countries is growing.
Built to Target American Companies
The discriminatory design of DSTs isn’t a side effect — it’s the point. Davidson’s report documents what USTR Section 301 investigations have already confirmed across multiple jurisdictions: these taxes were engineered to fall on a narrow group of U.S.-headquartered firms while leaving domestic competitors untouched.
The data tells the story clearly. In Spain, 64% of liable firms are American while fewer than 5% are Spanish. In Turkey, 69% are U.S. companies — and zero are Turkish. In India, 72% of liable firms are American, with none being Indian. In the United Kingdom, five foreign companies — all of them American — paid more than 90% of DST revenue in the first year of the tax.
Legislative debates in Europe leave no doubt about intent. Austrian officials described their DST as targeting “digital giants from Silicon Valley.” French ministers repeatedly referenced “GAFA” firms. Turkish legislators stated explicitly that domestic companies would not be exposed. This is not neutral tax policy — it is fiscal discrimination, confirmed by the governments imposing it.
The Hidden Cost to American Small Businesses
While the statutory burden falls on large American tech companies, the economic burden gets passed directly to domestic businesses and consumers. When the UK DST took effect, Amazon raised marketplace fees for UK sellers by 2%, Google raised advertising charges by 2%, and Apple adjusted App Store commissions — each explicitly citing the DST.
For a small business with thin margins advertising on Google or selling through Amazon, a 2% fee increase driven by DST pass-through can wipe out a significant portion of profit. The tax is framed as hitting foreign tech giants, but it functions as a hidden levy on domestic commerce.
A Constitutional Failure, Not Just a Trade Problem
Professor Davidson frames DSTs not merely as unfair trade policy but as a violation of foundational taxation principles rooted in Adam Smith, Friedrich Hayek, and James Buchanan. Legitimate taxation requires reciprocity — states may tax what they protect. DSTs assert taxing rights over revenue generated by intellectual property built and owned in the United States. France provides none of the institutional infrastructure that makes Google’s products possible, yet taxes Google’s revenue because French users type queries into a browser. That isn’t taxation — it’s appropriation.
The parallel to America’s founding principle is direct and intentional: taxation without representation. U.S. companies have no vote, no voice, and no political standing in the legislatures imposing these taxes. The constitutional safeguard that those who bear the tax burden should have a say in setting it is deliberately bypassed.
The Moment for Action Is Now
Section 301 investigations are already done and many more are on the way and the findings are clear. The Administration has the authority to act. As more countries adopt participation-based taxes and as OECD negotiations remain stalled, the window for preventing normalization is closing.
The report calls on the United States to use every available tool — bilateral pressure, trade instruments, treaty modifications, and domestic legislation — to impose real costs on jurisdictions maintaining DSTs and to establish that participation-based taxation is incompatible with the international tax order the United States will support.
Every year DSTs remain in place, they become harder to reverse. The time to act is now.
Read the full report by Professor Sinclair Davidson, published by the Tholos Foundation and Americans for Tax Reform here.