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The new tax havens

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Re: The new tax havens

#11

Post by arethuza »

yummyfajitas wrote: post #10
rmc wrote: post #9

"Almost everybody is in Ireland," Sullivan said. "All the pharmaceutical companies, all the high tech companies. You're stupid if you're not in Ireland," he replied. And this is why it doesn't change These big companies are telling everyone, the US public, the Irish public, the Irish government that the low tax rate works . The goal of the low Irish corportion tax is exactly this. Create job in Ireland, bring compani…

It sounds like the Irish government is behaving quite responsibly. Many other governments would be tempted to try to take a bigger piece of the pie from their corporations in order to get reelected, not realizing that they might be killing the goose that laid the golden egg. It sounds like the Irish have their collective heads on straight.

I would strongly suggest learning more about the Irish financial crisis:

http://en.wikipedia.org/wiki/2008%E2%80%932011_Irish_financi...

http://www.amazon.com/Ship-Fools-Stupidity-Corruption-Celtic...

There were staggering levels of corruption and mismanagement both in the Irish government and within the Irish financial industry.

I don't think you can look at the corporate tax rate independently from all of the other utterly crazy things that were going on there.

Re: The new tax havens

#12

Post by ajtaylor »

yummyfajitas wrote: post #10
rmc wrote: post #9

"Almost everybody is in Ireland," Sullivan said. "All the pharmaceutical companies, all the high tech companies. You're stupid if you're not in Ireland," he replied. And this is why it doesn't change These big companies are telling everyone, the US public, the Irish public, the Irish government that the low tax rate works . The goal of the low Irish corportion tax is exactly this. Create job in Ireland, bring compani…

It sounds like the Irish government is behaving quite responsibly. Many other governments would be tempted to try to take a bigger piece of the pie from their corporations in order to get reelected, not realizing that they might be killing the goose that laid the golden egg. It sounds like the Irish have their collective heads on straight.

They may be right about keeping the corporate tax rate steady, as partly evidenced by the fact that nearly every other large EU country wants Ireland to raise the corporate tax rate.

But the reason the country is in its current state is precisely because the politicians DIDN'T have their heads on straight. They were pointed directly at the gravy train. The Celtic Tiger was IMHO just one big bubble that the Irish didn't see coming until it was way too late.

(Disclaimer: I only lived in Ireland for the last 3.5 years but had many Irish friends there who had been through it all.)

Re: The new tax havens

#13

Post by dalke »

jacques_chester wrote: post #4

Well there's a few things here. 1. Company directors have a duty to maximise profits. 2. Companies have no obligation to maximise, and every right to minimise, their taxes. 3. The USA has one of the highest corporate tax rates in the world, including double taxation of repatriated earnings. Is it any wonder companies are voting with their feet? The more you rely on US exceptionalism, the more you place it at risk. If…

Regarding 3: The US also has a bunch of tax breaks and loopholes which most other countries do not have, leaving the _effective_ tax rate about the same as other industrialized countries.

Which leads to US companies as being the best in how to avoid paying taxes. That's how GE managed to pay no US corporate taxes last year on $5.1 billion of US profit. (Rather, 7.4 percent but those are stored overseas and won't be taxed until "repatriated." And odds are they are holding out for another tax holiday where they can repatriate for free.)

Re: The new tax havens

#14

Post by Atropos »

DanielBMarkham wrote: post #7

There is a lot of loaded language in that report, and I got the feeling that the reporter should have taken an economics class before doing it. It was like watching a ignorant economics student get lectured about reality and she not wanting to accept any of it. So, instead of pulling down a bunch of theory from the shelf and going over it, I'll just point out the obvious flaw: she believes that the country "owns" all…

I agree with your view of what the realities are. But I don't see why should applaud them: What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome? They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relies heavily on hiring doctors from Germany.

If companies cannot compete, in the long term they goe bankrupt and disappear. But how would a country disappear? It's not like every citizen could simply move somewhere else.

Also the correlation/causality is not entirely clear to me. Possibly countries are more succesful, because they have lower taxes. But at some point it could also be true that only countries that are already succesful are able to lower their rax rates so much.

Re: The new tax havens

#15

Post by roel_v »

rmc wrote: post #9

"Almost everybody is in Ireland," Sullivan said. "All the pharmaceutical companies, all the high tech companies. You're stupid if you're not in Ireland," he replied. And this is why it doesn't change These big companies are telling everyone, the US public, the Irish public, the Irish government that the low tax rate works . The goal of the low Irish corportion tax is exactly this. Create job in Ireland, bring compani…

Ireland won't be getting any EU bailout money without raising its corporate tax rate. It'll be convenient for the Irish politicians because they'll get to shift blame onto the other Member States.

Re: The new tax havens

#17

Post by jacques_chester »

dalke wrote: post #13
jacques_chester wrote: post #4

Well there's a few things here. 1. Company directors have a duty to maximise profits. 2. Companies have no obligation to maximise, and every right to minimise, their taxes. 3. The USA has one of the highest corporate tax rates in the world, including double taxation of repatriated earnings. Is it any wonder companies are voting with their feet? The more you rely on US exceptionalism, the more you place it at risk. If…

Regarding 3: The US also has a bunch of tax breaks and loopholes which most other countries do not have, leaving the _effective_ tax rate about the same as other industrialized countries. Which leads to US companies as being the best in how to avoid paying taxes. That's how GE managed to pay no US corporate taxes last year on $5.1 billion of US profit. (Rather, 7.4 percent but those are stored overseas and won't be t…

Mate, let me tell you, the USA does not have a monopoly on rent-seeking behaviour.

That said, you have weak party discipline in Congress, which makes horse-trading inevitable. That and the separation of powers means that there is no incentive to run a sensible budget and every incentive to pork-barrel.

I don't blame Americans. The US Constitution was state of the art when it was written. Australia has been lucky in that we got to see how it worked in practice before we wrote ours.

Re: The new tax havens

#18

Post by jacques_chester »

Atropos wrote: post #14
DanielBMarkham wrote: post #7

There is a lot of loaded language in that report, and I got the feeling that the reporter should have taken an economics class before doing it. It was like watching a ignorant economics student get lectured about reality and she not wanting to accept any of it. So, instead of pulling down a bunch of theory from the shelf and going over it, I'll just point out the obvious flaw: she believes that the country "owns" all…

I agree with your view of what the realities are. But I don't see why should applaud them: What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome? They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relie…

> What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome?

You may find the theory of absolute and comparative advantage to be enlightening in its detail; but the broad conclusion is that even if country A is better than country B at everything, it will still make sense for A to focus on some things and B on other things.

Re: The new tax havens

#19

Post by temphn »

DanielBMarkham wrote: post #7

There is a lot of loaded language in that report, and I got the feeling that the reporter should have taken an economics class before doing it. It was like watching a ignorant economics student get lectured about reality and she not wanting to accept any of it. So, instead of pulling down a bunch of theory from the shelf and going over it, I'll just point out the obvious flaw: she believes that the country "owns" all…

Excellent points. To add to this:

a) Taxes are used to pay for a whole host of things that large majorities find highly undesirable, including bombing Libya, harassing air travellers, and bailing out Wall Street. Whether you are on the left or right, you can add a slew of other programs that are of dubious or negative value.

b) Taxes are also extracted involuntarily, literally at the point of a gun if one thinks about the limit case of tax resistance. Try protesting the war(s) by not paying your taxes, and soon enough the IRS will come with guns and throw you in jail.

There are some government programs each person will agree with. But it's the lump sum, involuntary nature of taxes that make them a highly inefficient way to fund said programs.

Re: The new tax havens

#20

Post by Atropos »

jacques_chester wrote: post #18
Atropos wrote: post #14

Earlier quoted context omitted.

I agree with your view of what the realities are. But I don't see why should applaud them: What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome? They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relie…

> What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome? You may find the theory of absolute and comparative advantage to be enlightening in its detail; but the broad conclusion is that even if country A is better than country B at everything, it will still make sense for A to focus on some things and B on other things.

I know comparative advantage, but does it really apply to competition with tax rates?

For example inside the European Union it doesn't matter in which country a company is based, you have basically freedom of trade for goods and services. In Germany the medium age is 45 years, in Ireland it is 35 years; Population > 65 years is 20,6% vs.11,6%. Even if all other regulation in Germany + Ireland was identical, it seems unrealistic that Germany could sustain as low a tax rate, since the government has bigger expenses due to demographic issues alone. (Retirement benefits, medical)

If every company moved to Ireland because of the lower tax rate, what should be done with the old people in Germany?

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