Ireland feels the Obama heat

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From the Irish Voice this morning:

THE Irish government is preparing an intense lobbying campaign to persuade President-elect Barack Obama to keep almost 100,000 jobs in U.S. multinationals in Ireland. Obama warned during his presidential election campaign that he would help protect the domestic economy by ending tax breaks to American firms who shifted investment to other countries.

That could include 580 U.S. multinationals in Ireland. Intel, Dell, Microsoft, Pfizer, Google and their compatriot firms produce goods and services valued at *47 billion each year and are worth at least *3 billion a year to the Irish Exchequer, according to estimates from the American Chamber of Commerce.

It would be a hammer-blow to Irish industry if they were forced to pull out by Obama's proposed policies.

I've got more than average qualification to speak on this one, being an Irish citizen, having run a company in Ireland for five years in the 1980s that did have advantage of tax breaks (come on, how do you think I learned all thus stuff?) and having helped some of the major journalistic investigations into tax abuse using Ireland over the last few years.

And on the basis of that experience I can tell you this: Ireland deserves to lose this tax break. It is blatantly used by US corporations who set up relatively small (but undoubtedly real) operations with in that state to which they then transfer enormous amounts of their profits, so guaranteeing that they pay vastly less overall in tax than they would otherwise do in any other country in which they operate. So, for example, in 2005 the Wall Street Journal showed that Microsoft recorded most of its profits outside the USA in Ireland. Apple did much the same. But perhaps one of the most extraordinary stories was this:

The Irish subsidiary of a giant US tech company earned a pre-tax profit of almost $5million (€4.2 million) for every Irish employee on its books last year.

The Sunday Business Post has learned that NCR Global Solutions, which employs just 31 people in Ireland, reported pre-tax profits of $152 million on turnover of $1.1 billion.

The accounts also reveal that the Irish company's after-tax profits amounted to $131 million. That is equivalent to almost half the worldwide profits of NCR, which employs 28,000 globally. NCR reported group profits of $285 million last year.

Every government, the world over, is concerned that this flagrant profits laundering into Ireland. The Irish may complain, but when you make it your business to distort the fair allocation of resources in the marketplace, as they do, you will eventually be caught out, and rightly so. The time for this abuse to stop has come.