The Irish Times notes:
About 20 multinational companies have relocated their corporate headquarters to Ireland over the past year because they are able to pay “little or no tax” here, according to the Revenue Commissioners.
The firms, which are mostly US- and UK-owned, have been moving their main holding companies away from places like Bermuda and the Cayman Islands because of plans by a number of governments to clamp down on tax havens.
Internal briefing material drawn up by Revenue officials shows there has been a significant rise in firms transferring the residence of their main holding companies to Ireland or considering doing so. The very limited amount of tax paid by some of these firms indicates they do not have any meaningful presence here in terms of investment or jobs.
So Ireland is a classic tax haven, although (I accept) not always a perfect secrecy jurisdiction* for a parent company (it’s different for subsidiaries, where it’s a classic secrecy jurisdiction).
But why is it doing this? The whole logic of its tax structure was to bring work to Ireland. But now it offers companies what is, in effect a zero tax environment and asks for no jobs in exchange.
The net contribution of this policy to Ireland is tantamount to nothing.
The cost to the world is considerable.
Why in that case is it doing it? Isn’t this neo-liberal dogma gone mad? And the myth of the Celtic Tiger considerably outliving its usefulness?
There’s little chance of Ireland recovering until this tax policy is changed. All it’s doing now is contributing to a hollowed out economy – and that’s a disaster for Ireland and the rest of us.
* Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction. They do in addition create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
25 Responses to “Ireland’s failed business model”
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In the old pre oomputer days going to a tax haven entailed employed people there whether local or expat’. Now that the techie side has become decidedly fancy and money can be batted around with a minimum number of people in one place the tax haven no longer gets the numbers of people either working or living there with money to spend. The result is increasingly poverty stricken populations with gang cultures and lame duck governments. They may look pretty scenically but they are not pretty to live in. I hope Ireland escapes this fate but they are going to have to do some real thinking about how to avoid it.
“The cost to the world is considerable.”
A sweeping statement that crumbles under some basic scrutiny.
Because every Dollar that companies save through tax-efficient arrangements is a Dollar that flows into your, my, even Richard Murphy’s 401K account.
If the outcome of US corporations’ usage of low-tax jurisdiction is that more Dollars are in the retirement accounts of American workers rather with the tax authorities of Italy, Nigeria or Mr. Chavez’ Venezuela, this is a “cost” that is well worth paying.
@Ted G.
And why is a dollar in your 401K worth more than a dollar spent on health care, education, the relief of poverty, new social infrastructure etc etc?
In the US or Italy, or elsewhere come to that?
Please prove your case
Because a Dollar in my (or YOUR) 401K is a Dollar that is at no (or limited) risk of being wasted on corrupt officials, inefficent administration, etc., etc.
and since they are our Dollars to start with, I really do not see why I would have to prove the case. Italians (or whoever intends to tax them) should do that.
@Ted G.
You call that proof?
That’s just ludicrous tittle tattle
Now deal with the economics
And – by the way – explain how the dollar was yours in the first place when the income you earned had attached to it the obligation to pay the tax
Let’s be clear here. The assumption in this case is that the tax was reduced by entirely legal means. My understanding is that all US companies based in Ireland or other low-tax jurisdictions conduct their tax affairs in full compliance with all applicable laws.
In that case, there is no obligation to pay tax, and the Dollars are ours (mine and YOURS).
@Ted G.
Impossible to reconcile with your earlier comment
As ever – utterly inconsistent and ranting
And you have also utterly ducked the question
Answer the economic question – why is a $ in your 401K worth more than a $ spent by government
And prove it
@Richard Murphy
Thank you for the constructive reply.
Here is not the place to write high school essays (or phd dissertations) about the benefits of government-funded “health care, education, the relief of poverty, new social infrastructure etc etc”.
To borrow one of your favorite expressions, we live in the real world. And in the real world, people worry about paying for the mortgage, obtaining health care, funding the kids’ college fund, going on holidays once in a while, AND about their retirement accounts.
Assume we asked Americans (or Brits, French, Japanese, Aliens) whether they would rather see Dollars fund domestic or foreign government-run “social” programs, or flow into their retirement accounts as a result of the perfectly legal tax planning of their 401K portfolio companies. I am willing to take some very big bets that the latter choice will win.
That is the real world we live in.
The rest is for the high school kids.
@Ted G.
All your answer says is you are neoliberal
Selfish
Indifferent to others
Amoral
Lacking empathy
And presuming all see the world your way
You’re wrong, of course
If you weren’t society would have collapsed long ago
It hasn’t despite the best efforts of your likes
And I continue to note you have not, and presumably cannot answer the question I posed
Unless you do don’t waste more of my time
Actually I do not presume that all see my way, but a comfortable majority does.
This is why your country elected a government with a mandate precisely to live in the real world I describe. And this is also why the Republicans will regain Congress in November.
And in case you have not noticed, every country in the Western World is governed by like-minded elected government: (USA, Canada, UK, France, Germany, Italy). The only exception is Spain, and that says it all.
That is enough proof that I am right, and you are wrong.
@Richard Murphy
And actually, as an aside, could you define the various terms that come out during the various episodes of verbal abuse incontinence. What is?
- a neoliberal
- a libertarian
- an anarcho-capitalist
- a banker
This would help to understand to what extent one should feel insulted.
@Ted G.
What did your last slave die of?
You can search wikipedia like anyone else
Even Martin Wolf refers to it in the FT
@Ted G.
The cuts haven’t hit yet
Wait till they do
Then these parties are toast – as Mervyn King said – out of office for a generation
I’m quite looking forward to that
You are so wrong, of course.
We heard this about the Republicans after the 2008 election.
Now, look who is going to win the mid-terms! People are fed up with big government spending (healthcare, stimulus, bailouts).
And the same applies to people in your country.
@Ted G
90% of US citizens have not had an increase in real incomes since 1973 (source: FT). But your countrymen are happy with the policies which maintain this situation. I do wonder how long this ‘contentment’ will last.
@Carol Wilcox
I had not seen this statistic. Could you please point out out the source/link. Thank you.
Well after 37 years maybe they are content after all!
Carol Wilcox:
Since 90% of the US citizens cuurently alive were not born in 1973 (or alternatively, most of the US citizens in 1973 have now passed away), it seems doubtful that the FT was referring to the growth in their real income.
But, following on Ted’s comment, it would be very interesting to read what is actually talke about in the FT article.
Would you be kind enough to post it.
Very true, but the hard-left don’t wish to believe that.
@Jason
I got it slightly wrong. Here’s the quote from 30th July:
The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the ¬?multiple is above 300.
@Greg
How do you translate Tea Party in British?
Not that I would wish the Tea Party n*tcases on anybody.
@Carol Wilcox
To your earlier comment below:
Two comments of my own:
1. The United States are an aspirational society. As long as Americans can see an opportunity (through access to education and hard work) to migrate from lower wealth and income deciles into higher deciles, they will be happy. America remains the most mobile society in the world (upwards and downwards). Russian immigrants go on to create Google and a Chinese student/refugee is about to take over Bershire Hataway. If you look at the origins of most corporate and political leaders in America (except Bush 43), you will see that their origins are quite modest.
2. There is no consensus among Americans that “neo-liberal” policies would explain median wage stagnation. In fact, many (most likely a majority) Americans believe that it is the result of excessive government involvement in the economy, especially through the welfare system, which discourages enterprise.
I’m not really sure the Tea Party movement could exist in the UK, and (as you allude to) this is a good thing.
However I firmly believe that the majority of the UK is fed up of big government, and whilst Richard and his allies believe this will change over the course of a somewhat bumpy time for the economy in the next 5 years, I’m not so sure.
Carol, thank you for posting.
The article really feels like an op-ed piece rather than reporting material. Am I right?
@Ted G.
Myth is not fact