The Latest From Rick O'Shea
Our man in Ireland (writing, I remind you, under his chosen pseudonym) on the latest wrinkle in the bailout of the Emerald Isle: corporate tax rates. Eire wants to keep them low. The rest of Europe is huffing and puffing with indignation.
It seems that the hate that dare not speak its name is now openly proclaimed: the hostility in certain political quarters in Europe to Ireland's low corporation tax rate of 12.5%.
Let's be clear from the start: there are no indications that any European member state - Germany, France, the UK - or the European Commission is seeking to force Ireland to increase it’s low corporation tax rate as a condition of the loan. So, it won't happen. It would be self-defeating economically. The potential benefit to any one country would be negligible, the damage to Ireland very large.
The obvious point is made - why would a lender make it a condition of a loan to undermine the borrower's ability to repay? And this seems to be enough to satisfy reasonable public or political opinion in European countries.
But there is something interesting at work here all the same.
Some strands of political opinion don't like Ireland's corporation tax rate because it demonstrates Ireland actually competes for mobile international business using Government policies. Is a country not supposed to compete? Indeed, to compete using instruments of public policy? Should we not compete on tourism for example - an industry worth 6bn euro to the Irish economy?
In an effort to resolve this conundrum, or perhaps, to put it unkindly, to paper over it, EU member states agreed at least a decade ago that they are all against harmful tax competition between each other. And lo and behold, Ireland's corporation tax rate has consistently been accepted as not in the harmful category.
To change this now would not only look like kicking Ireland when its down. It would raise a more fundamental question as to the circumstances, any circumstances, in which any EU member state may actually compete for business, trade, investment, jobs. Think of the same question in relation to the 50 states in America. There has to be competition, surely.
Indeed there does.
And while Eire insists on retaining a corporate tax rate of 12.5 percent, it's worth noting, the corporate tax rate here in the United States stands at 35 percent, almost three times higher.
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Comments :
Jun '10
Re: The Latest From Rick O'Shea
Considering we have the largest economy in the world, wouldn't most global corporations want to base here if our tax rate were competitve, 17 to 20 percent, and our dollar were stable? Don't these corporations bring hundreds of thousands, even more perhaps, jobs? These are generally well paying jobs with good benefits. People are working, buying things, enjoying life instead of collecting unemployment. Why is this so difficult?
Re: The Latest From Rick O'Shea
Why indeed.
Aug '10
Re: The Latest From Rick O'Shea
Like Medieval churchmen with stock incantations for curing leprosy, Statist/Progressives of all varieties - not just of the E.U. stripe - cling to the faith that high tax rates are good, no matter what, because it's only fair.
http://www.realclearpolitics.com/articles/2008/08/the_galbraith_effect.html
Aug '10
Re: The Latest From Rick O'Shea
Ireland by virtue of it's geography labours under severe disadvantages relative to most EU countries in attracting manufacturing industry, so it has used the low corporate tax rate as a key component of the strategy to counteract those disadvantages. Take our low tax rates away and suddenly the logistical consequences of manufacturing on an island loom larger.Maybe they (our irate "partners") think we can survive as a giant theme park that does a little fishing and farming on the side to supplement our income from tourism.
Jul '10
Re: The Latest From Rick O'Shea
The Dems know that low employment, shattered families, and widespread despair are the knitting needles of the omnipotent state. High taxes and the redirection of resources from natural avenues as occurs in a free market to crony capitalists who require them so much more than the man in the street. Don't we all feel better about ourselves when we know that, through some indefinable but tingly process, our misfortune has meant a bit more for great men like George Soros and Warren Buffett.
And we must not leave out the Goldman Sachs, or they might relocate to Ireland.
Where did I leave my tea this time?
Nov '10
Re: The Latest From Rick O'Shea
I wonder what the EU states who are against harmful tax competition say to businesses in the same industry who are against harmful price competition?
Would it be impolite to point out that tax competition is only harmful to the politicians and bureaucrats but is actually quite beneficial to citizens?
Oh, I forgot, there are no citizens in the EU countries. Only subjects.
As we are becoming.
Sep '10
Re: The Latest From Rick O'Shea
This just in (Sunday, Nov 21): Ireland is now asking for a bailout. I wish they had been able to hold out, but the problems to which Mr. O'Shea referred were just too big.
The Irish government says that it will maintain the 12% corporate tax rate in spite of the EU's insistence that it is "unfair."
Aug '10
Re: The Latest From Rick O'Shea
There's near- hysteria here in Ireland/Eire tonight with talk of food hampers and the like on national television.But still a proposed cut in the minimum wage is seen as an attack on the poor rather than a sensible adjustment.To me the most urgent question is whether we will "do a California" and elect a leftist government that will compound our problems (accepting with great pain that the centrist/populist party I have always supported has not done it's job). In reality,our rescuers will determine the ethos of our polity for the next several years. Whether that is entirely a bad thing remains to be seen?