Representative Ron Estes (R‑KS) recently introduced House Resolution 1340, opposing foreign digital services taxes (DSTs). It is co-led by Rep. Suzan DelBene (D‑WA) and cosponsored by members of both parties. The resolution comes as the EU again weighs a bloc-wide digital levy of its own, giving political cover to member states to keep, and even expand, their national taxes.
The resolution sets out a number of important principles that DSTs violate: net taxation rather than gross taxation, no double taxation, legal certainty, and taxing rights tied to physical presence.
Opposition to DSTs has been a recurring feature of congressional bipartisanship, and it is shared across administrations. Trump’s trade office opened the first investigation in 2019, which the Biden administration continued. In early 2025, Trump issued an order to renew investigations into a half-dozen additional European DSTs.
Washington’s consensus centers on the discriminatory mechanics of DSTs. They tax gross revenue instead of profit, so it applies even if the company is losing money in the jurisdiction. It reaches firms with no physical presence in the country levying the tax, and the tax is typically designed to catch American platforms while leaving domestic firms untouched.
DSTs are interesting because they are most strongly opposed by American politicians. But their costs fall mostly on consumers. This point came up repeatedly at a Cato webinar I hosted last month with European tax economists. The DST is assessed and remitted by large digital platforms, but the economic incidence falls on consumers in the jurisdiction imposing it.
Digital companies have been transparent about how they handle these levies. Google adds jurisdiction-specific surcharges to advertisers’ invoices that closely follow local DST rates. Apple adjusted developer proceeds in the UK, France, and Italy to reflect DST costs and raised app prices in countries like Turkey, where the combined tax burden was large enough to warrant a price change. Meta had been the holdout, absorbing the cost of DSTs for years. That changes on July 1, 2026, when Meta introduces “location fees” to pass DST costs directly to advertisers across several European countries.
A recent study confirms the same pattern for Amazon, which now charges a standalone Digital Services Fee in countries where it faces a DST. Economists Dominika Langenmayr and Rohit Reddy Muddasani find that third-party sellers pass those higher fees on to consumers. In France, Spain, and the UK, they find that consumers ended up bearing between €/£1.50 and €/£2.50 for every euro or pound the tax actually raised. They find Italy is an exception.
American politicians are still right to push back against these taxes. A tax’s economic damage routinely exceeds the revenue it raises. So even when the cost is fully passed through to consumers, US firms still lose through forgone sales and thinner margins. This is especially true when the tax explicitly exempts their foreign market competitors.
The bigger problem, and the one at the core of the House resolution, is that DSTs erode the international income tax system that has shielded cross-border trade and multinational firms from punitive and duplicative taxes for more than half a century. DSTs are not the only threat to that order. The return of tariffs is a direct threat. The Organisation for Economic Co-operation and Development (OECD) has also spent the better part of the last decade diligently undermining the protections of physical presence and rules against double taxation.
The Rep. Estes resolution’s principles are good: net over gross taxation, no double taxation, certainty, and taxing rights tied to physical presence. They should apply as broadly as possible. The same principles that condemn European DSTs, impugn tariffs, the US’s multiple overlapping corporate minimum taxes, and emerging proposals to tax AI.
Congress should oppose bad taxes wherever they appear. The principles behind Washington’s consensus against DSTs are a good starting point.
