Google Warns Irish Government Against Tax Increase 542
theodp writes "The Irish government has been given a stark warning from some of the biggest American companies in Ireland on the risk of a mass exodus if the country's controversial low corporate tax rate is raised in return for an IMF/EU bailout to shore up the country's beleaguered banking system. According to The Telegraph, a statement signed by senior execs at Microsoft, HP, Bank of America, Merrill Lynch, and Intel points out that although Ireland's tax rate may be low in European terms, it is not when compared with locations such as Singapore, India and China. Separately, the head of Google's 2,000-strong European HQ in Dublin told the Belfast Telegraph, 'anything that impinges on Ireland's competitiveness is going to be a big thing for Google,' adding, 'anything that increases the cost-base of a business is negative for competitiveness.'"
Of course... (Score:5, Insightful)
ireland = end of right wing economics (Score:3, Insightful)
I can't begin to count how many times over the past few years I heard that we needed to emulate the "Celtic Tiger."
Call their bluff (Score:4, Insightful)
If they're actually that big and that well entrenched in Ireland, they won't just pick up their ball and go home that easily
And if they're not, then who gives a fuck if they leave?
Fantastic opportunity for Ireland (Score:5, Insightful)
If only raising taxes in the United States were enough to get rid of J.P. Morgan Chase, Bank of America and Merrill Lynch. Ireland should jump at the chance to jettison these systemically dangerous financial institutions and replace them with sound banks of their own.
Business as usual (Score:4, Insightful)
A corporation serves only its self interest - it cares not about the local area(s) it operates in as long as it can get some sort of special tax treatment etc. They want full use of roadways - airports - water -etc by paying nothing or as little as possible. Yes they hire locals who have to make up the "sweetened tax deals" out of their own earnings.
I say let them move all their crap to crappy nations and see how that works out for them.
Re:Of course... (Score:2, Insightful)
Except they do contribute - indirectly. By exporting goods to other countries, those companies bring money into their host country, where they pay it out as wages, spend it on locally-purchased supplies, etc. The host country then has ample opportunity to obtain tax revenue via personal income, payroll, or consumption taxes.
Let the Ceos settle where they move the companies. (Score:2, Insightful)
This madness has got to stop.
Executives for healthy companies that move a bit too many activities abroad for no good reason should be forced to stand behind their acts and move their ass where they put our money and jobs.
Yeah. Just joking.
Standard reporting income at lowest taxed country (Score:5, Insightful)
Subsidiaries appear to be barely breaking even, and mothercompany reports higher profit.
Re:Of course... (Score:2, Insightful)
They do pay in the form of sales tax to buy things to keep the business running. The people that work for companies pay tax. If you had a business that pays 0 taxes, it will still be contributing to the tax base. The companies that get heavily taxed are at a huge disadvantage to companies which are in countries which don't have much for corporate taxes. Putting taxes on a company just puts a penalty on them in the global market.
Re:ireland = end of right wing economics (Score:5, Insightful)
Meh hardly. Ireland is for a lack of a better term fucked, because it taxes businesses little to not at all, but relies heavily on income and sales tax to fill it's coffers. While this makes it a wonderful tax haven, it's economic death for any country as heavily socialized as they are.
It's not anywhere close to 'right-wing' economics. If you've been paying attention to the news, they're on the brink of defaulting now because of their taxation policies.
Re:Zakaria: Something feels different this time. (Score:4, Insightful)
The difference is, largely, that corporations can have their cake, and eat it too. International law is set up so as to, for example, allow primarily U.S. companies like Google and Microsoft to incorporate in countries with much looser strictures on corporations, while still operating freely in the U.S.
Re:Call their bluff (Score:3, Insightful)
Go ahead, move there. (Score:5, Insightful)
Enjoy state ownership/competition in China and gross incompetence in India that will cost you more in sales and long-term brand recognition than you'd ever pay in actualized taxes.
Now Singapore is a relatively new and untested place for offshoring, which is a risk in itself.
It's also worth noting, of course, that none of these places are in Europe, which was the whole point of opening offices in Ireland to begin with. All these companies already have a presence in Asia, so basically they are threatening to do something that they already did, and they want people to believe that they'll give up their regional presence in Europe in order to effectively gain nothing.
It's a poor bluff.
Re:Of course... (Score:5, Insightful)
Well, Microsoft isn't avoiding taxes in Washington by "selling" from Nevada. Oh, right, they are.
Are interstate commerce excise taxes somewhat proportional to international tariffs? I'd like corporations to feel a pinch of pain when they export, just like what I feel with my small business. Then again, corporations have less personal liability.
Re:ireland = end of right wing economics (Score:5, Insightful)
Ireland is discovering the dark side of a bribe based economy.
Many states are also stuck in this same "incentive" sinkhole right now. The businesses that are there came thanks to bribes and now are threatening to leave for someone offering a better bribe.
Re:Of course... (Score:1, Insightful)
This is standard whiny nonsense from the Corporations. Ireland should slap them with a tax bill and threaten to freeze any assets they have in Ireland if they threaten to leave.
These f***ing Corporations are parasites.
They're registered in Ireland where not only do they not have to pay the 'going rate' of tax but also don't have to publish detailed accounts. Microsoft's initial deal was a 0% tax rate in exchange for using Ireland as the gateway to Europe. Now that the Irish economy has inevitably failed the same Corporations that have taken advantage now threaten to leave.
With friends like this who needs enemies?
Re:Of course... (Score:5, Insightful)
A lovely theory, however, right now Ireland is going tits up, so this sort of trickle down economics won't get them back up soon enough. It's Ireland's fault, and probably in part because of very low corporate tax rates to attract companies like Google.
Re:Of course... (Score:5, Insightful)
Imagine if corporations actually paid taxes based on where their clients reside, not where they choose to set up a tax chop-shop.
Google is an American company, founded by Americans, with the majority of its operational offices in America, listed on the American stock markets, with board members and officers who are American citizens living and working in America, offering services to Americans. So what if they expanded globally? Good for them, but they are clearly still an American company - pay the American taxes or go get EU citizenship and move your corporate arses!
Re:Curious... (Score:3, Insightful)
It's not a bullshit comparison. You see, the companies are not interested in running the government, they are interested in running their own business which means that if it is cheaper in China or India or with the same results, then that's where they can run their business for less.
The comparison here isn't about what government provides it's citizens or the citizen's expected lifestyle, the comparison is on where the company can be run the most effectively for the least amount of expense.
Personally, I think they should do away with corporate taxes altogether. All money corporations make either go to the share holder by way of dividend, or is invested into expanding the company. Expansion of the company means more commerce which means more sales and more taxes on sales but it also means more jobs and more services and products that people can afford. Going to the share holder means income which means more income taxes and all perceived lost revenue outside of that which would go to foreign investors, could be captured by simple progressive income taxes with a small increase on income from dividends.
Re:Of course... (Score:5, Insightful)
After the Irish raise their corporate tax rates, and all of those large, international businesses pull their facilities out, how many jobs will be lost? Thousands? Tens of thousands? How many businesses besides Google, Microsoft, HP, Bank of America, Merril Lynch and Intel will leave? How many businesses will close their doors, because much of their income was based on the spending and consumption of those businesses, and their employees?
A raise in tax rates can result in lower tax revenue. Higher taxes cause a decrease in in the rate of taxable transactions. At a certain point, the ratio of tax rate to taxable transactions produces a maximum possible tax revenue. Any attempt to increase tax revenues beyond that limit, is futile.
Re:Of course... (Score:3, Insightful)
Re:Fantastic opportunity for Ireland (Score:1, Insightful)
How do you figure?
In the most simplistic case, a bank holds money for depositors. It uses part of that to provide loans to people who will use that money to invest in their business (say a farmer buying a tractor)...
I believe the "thin air" part comes from allowing banks to lend far more than they have actual deposits on hand.
Re:Fantastic opportunity for Ireland (Score:3, Insightful)
Taxation is the issue (Score:2, Insightful)
Ireland is part of the EU. Therefore it can export to the rest of the EU with impunity, no extra tax. Ireland leeches off the rest of the EU. Exporting from Singapore would have huge tax issues.
Re:If you hear competitiveness, reach for your gun (Score:3, Insightful)
If they want to leave, make it hurt badly(if not something that outright kills the company). Then make the company an example of how things can go wrong in a robbery
And then no company will want to set up shop in your country again. Why would they, when the risk is driven up that high?
Re:Business as usual (Score:4, Insightful)
Google does care about the local area it operates in, the area that nurtured it and that it relied on for much of its talent: the Bay Area.
Ireland, on the other hand, is just a place that offered itself cheaply a few years ago. If it's not cheap anymore, it's time to pack up and leave. It's unreasonable for Ireland to expect loyalty given how Google ended up there in the first place.
Re:Of course... (Score:1, Insightful)
bullshit, bullshit.
The income and payroll taxes, as well as all the rules and regulations are turning the once productive societies into the third world countries, by creating huge disincentives for people to produce, by moving capital out because societies with gigantic tax rates and so called 'social obligations' have produced entirely unsustainable parasitic governments of enormous size that are strangling the host economy.
The correct answer is to reduce the gov't to a tiny subset of what it is, to stop pretending there are such things as social obligations, to stop robbing the producers by taxing their income (all income and payroll taxes must be abolished) it is the worst idea ever to tax income. Taxing income first, takes away your capital that you can reinvest. Taxing income is not taxing consumption, taxing income means taxing work. How dare anybody tax work of anybody? That's just pure serfdom and slavery. Taxing consumption is the correct thing to do to run a gov't, if indeed gov't is needed at all.
Gov't IS consumption, it's NOT production, so gov't must be supported only through the money that is used for consumption, because then it will clearly represent a fraction of the money that is diverted by the productive members of society towards consumption, it will keep the gov't in check in terms of its ability to affect society and to destroy economy by growing and reducing the competitive nature of the economy.
Gov't is not a producer, it doesn't have and cannot create wealth. It can only take wealth away. However gov't is also a luxury. It is a luxury, which is, like any other luxury, must be controlled by the willingness of the people to SPEND money.
When people control their spending, they are creating savings. Savings is the only true way to raise capital. Not borrowing, not money printing - savings.
Currently the gov'ts of the countries that are unproductive, are only exacerbating the economic woes that their societies are facing by destroying the ability of the society to raise capital.
The gov'ts do it in these ways:
1. Inflation - expanding the monetary supply.
2. Taxes - taking away money that is not even allocated for consumption.
3. Borrowing - taxing society in the future, with interest on top of that - pushing the problem to the future generations.
4. Setting 0% or near 0% interest rates.
Gov't shouldn't be doing any of these things. It shouldn't even be allowed to do any of these things. By doing these things the gov't is punishing the savers through taking away their money they worked for either directly (taxes) or indirectly (inflation + borrowing, which is also taxes and interest).
A normal household has only 2 choices to increase the purchasing power:
1. Increase income.
2. Reduce spending.
That is what people HAVE to do to get through tough times.
Gov't doesn't have anything they can qualify as income, all the money its taking in is not something gov't earned through any productive means.
So gov't has only 1 choice: reduce spending.
But it won't do that. Gov't doesn't see it even possible to reduce its spending, gov't is a system that cannot be reduced through any normal means. It's like a black hole, no matter how much you throw at it, it'll take it and than will take every single other thing you can throw at it.
--
Google is doing the right thing. European Union was an interesting idea when it started, but only politically, it should never have allowed the weakest links to be in the same money as the strongest players, so Germany and Ireland or Greece are NOT in the same economic position, they shouldn't have the same currency. Switzerland has figured this out and did the right thing - stayed in Swiss Franks, so those went up by 5 times over the years and Euro is consistently going down.
Re:Of course... (Score:2, Insightful)
This is lovely. I feel like I'm back in the 2000 election cycle with the fuzzy math floating around and a magic lock box with the key to the lock box that was going to hide where no one, not even he, could find.
Please tell me something, is 12 minus 7 percent of $100k more or less then 12 percent of $0? Is 20% of $50k times three more or less then 25% of 0 times 0? You see, I'm confused because the government is making more by discounting tax revenue by means of tax breaks then they would be making by not having anything to tax at all, so how are they going broke and how would they not go broke without them?
No, the problem with Ireland getting hit so hard isn't because of tax breaks, it's because they primarily attracted services oriented companies which do not create wealth in the portion of enterprise located in their country. At best, service companies consume wealth as they are primarily a middle man. When capitol becomes in short supply, those companies get hit first and the worst. This cascades down which also effects jobs and other tax revenues.
In 2001, corporate taxes was just ~15% of Ireland's income taxable. In contrast, in 2008, the 2009 budget was 65 billion Euro in deficit at almost 10% of GDP. This means tax breaks for corporations is not what caused this problem and getting rid of them is not going to solve it. What will solve it is getting inflation under control and making sure the banks in Ireland are solvent to capitol flow remains possible. Again, taking money from corporations is not going to fix either of those and most likely would retard most efforts in it.
Re:Of course... (Score:5, Insightful)
Hmmm, nice theory. Let's see how the facts support it. On one hand we have Ireland, that has low tax rate, which has given the incetive for the people to produce. You would expect it to be rich and prosperous society, but somehow it is on the verge of bankrupcy and the only way out that they have is a bailout that is going to be paid for mostly by Germany and France. Now, Germany and France are as you so eloquently put it "...societies with gigantic tax rates and so called 'social obligations...'" that "have produced entirely unsustainable parasitic governments of enormous size that are strangling the host economy.", yet somehow they are the "productive societies" and Ireland is the "third world country" in the example that we are discussing. Do you see why I am tempted to call your argument " bulshit, bulshit".
Wrong (Score:4, Insightful)
When a private corporation attempts to dictate to a sovereign state which policies the state should adopt, there is something terribly wrong with the world.
Ireland just needs to boil the frog (Score:5, Insightful)
Everyone knows why they are in Ireland to begin with. If they raise the rate just a little at a time, they will not feel the need to leave. Companies like that almost never follow through on threats like that just because they said they would. All they have to do is raise the rates just enough that they won't leave and also get enough of an increase to make a difference for Ireland.
Re:Of course... (Score:3, Insightful)
Re:Wrong (Score:1, Insightful)
When a private corporation attempts to dictate to a sovereign state which policies the state should adopt, there is something terribly wrong with the world.
Shhht, don't let the Congress lobbyists hear you.
Re:Of course... (Score:3, Insightful)
his argument is not as bullshit as you think. Germany has its productivity in place and is somewhat able to support all the social obligations though it's entirely possible it would be better without them (they already started to introduce unpopular reforms to cut costs of welfare). Ireland on the other hand experienced unmatched growth with low taxes in last 2 decades which was definitely ok for them but the problem is that they felt too rich and simply overconsumed basing everything on rosy projections. They are now loaded with debt they can't pay back.
The only viable long term strategy to have a healthy economy is to live within your means, no exceptions. Deficit spending is very dangerous and it shouldn't be done - economy adjusts to it, shitloads of people become dependent on govt money and when economy contracts for whatever reason, deficits become HUGE and rapidly fuel national debt with no way to stop it.
If you want to call bullshit, please compare apples to apples - show examples of Germany-like countries with and without social burdens and examples of Ireland-like countries with and without.
Re:Of course... (Score:2, Insightful)
what kind of fairy tale world do you live in?
governments can't ever generate wealth? governments sell things for a profit all the time (usually using said profit to fund some other operation that makes a "loss", like military spending or basic infrastructure).
if governments can't generate wealth, then neither can corporations. of course, in reality neither generates wealth, it is the workers that generate wealth, and whether they work for the government or a corporation or themselves makes no difference to that. you seem to think that governments don't actually employ people to do work, and that things like a road network are just pure spending and don't generate trillions for the country in the long term
Re:Curious... (Score:3, Insightful)
Except that Google and many other tech companies don't pay out dividends at all.
Corporate tax is the equivalent of income tax for corporations. So if everyone has to pay their income tax, why should corporations be exempt of that?
You seem to have a strangely optimistic fate that the corporations will do good with the money, but fail to present a good reason why they should do so.
Employees are just assets/liabilities of them, but don't really belong in the same bucket with the obligations of their income.
Re:Of course... (Score:3, Insightful)
Growth isn't a direct measure for economic health. Ireland did experience unprecedented growth and wage increases, but that was also because they were so far behind in the first place.
The goal is a sustainable growth in the economy. The thing is much of the Irish growth was self-referential, such as the boom in the construction industry.
Re:Of course... (Score:3, Insightful)
Re:Of course... (Score:3, Insightful)
Re:ireland = end of right wing economics (Score:4, Insightful)
Meh hardly. Ireland is for a lack of a better term fucked, because it taxes businesses little to not at all, but relies heavily on income and sales tax to fill it's coffers.
Incorrect. Its in trouble because the government guaranteed huge amounts of speculator debt.
Re:Of course... (Score:3, Insightful)
They suggested leaving to India, China or Singapore, I don't think they're actually going to go through with that. Those countries may be cheap but they come with a laundry list of disadvantages, e.g. the Chinese totalitarian government.
Re:Of course... (Score:2, Insightful)
Saying that Scandinavian economies are STRONGEST in the world is exactly what you are failing to see as dogma.
Greece is not Scandinavia, but only 20 years ago you could make the same argument about it, yet it cooked its books to get accepted into the European Union and everybody seems to know today that Greece is only able to function as a borrower, who is not productive at all and all of its social obligations are killing it.
The Scandinavian economies are going to go the way of Greece eventually, they are living today on the borrowed time and money.
However USA is living on the borrowed time and money as well, and the problems of Scandinavian countries are paling in the face of the challenges that USA is facing with its levels of spending, borrowing and printing.
USA may be not directly taxing as much as Sweden (however this is actually questionable) but USA is taxing by printing more than most of the countries in the world today, and so far it was able to do so because of the status of its currency, which is the reserve and which was the reason until now that USA was able to live on borrowed time by exporting its huge levels of inflation to other countries, who are absorbing the enormous US inflation and lowering their own standard of living by taking away purchasing power of its citizens, inflating their own monetary supply in order to export the goods they produce to USA, thus subsidizing the US standard of living.
Well, that kind of life will not last and the more US depends on the imports the more painful the fall is going to be.
You are calling my comments dogma, yet they are my opinion not based on any actual ideology, but rather on looking at economics and understanding that economy is in production, not in consumption, borrowing and spending. It is the /. moderators who are following the dogmatic practice of moderating comments as 'Troll', when the most I can think of my comments as being to some people as a possible Flame, simply because to them my way of looking at economy makes their brains burn with ideological anger.
If you base your thinking about economics on moral/socialistic/Marxist ideology, then you may view my comments as flamebaiting, but if you divorce your thinking from magic, you'll see that I am only talking about optimization of economic pressures. I am talking about living within your means. I am talking about the real economy, which is the economy of production.
There is no such thing as economy of consumption and services, there is only economy of production and the history is showing it and the current events are showing it again. Unless people stop thinking about economy as of some magic, which is a 'struggle' of the poor and the rich, as if there is this magic wealth, that is hidden from them by the rich, and until people start understanding that economy is about production first of all and that consumption is only a consequence of production, that you cannot consume more than you produce, that money is not paper, money is value that you create, until that time these people will keep making the same mistakes and will cause their societies to fall by expecting something for nothing and by becoming uncompetitive and by losing what makes production possible - capital.
Re:Of course... (Score:3, Insightful)
Ireland is on the verge of Bankruptcy for one reason only, the bank grantees. In orders to protect the banks there the PM foolishly backed the entire face value of bank securities there. They also guaranteed the entire deposit in not just savings accounts but investments like money markets. Ireland had a perfectly solid fiscal situation until they put themselves on the hook for an unknowable amount. Turns out the Irish real estate situation, and the situation around MBS and CDO obligation was pretty much the same as here in the States.
Now because the Irish use the Euro and its not the reserve currency they can't just use quantitative easing or play games where their central bank buys assets with funny money, no they have actually acquire revenue from taxation or bond sales when they dump free money into their commercial banks in the form of bailouts.
The problem now is the bond holders are getting nervous that the Irish government won't be able to repay the bonds and are not allowing the debt to be rolled over at affordable interest rates. The problem here is the irresponsible bank bailouts, not the tax and spending policy in general which appeared to be working. Had they come up with some temporary plan to offer people retirement security and took care of the citizens by standing behind only savings accounts, instead of rescuing the F'ing bankers; they could have solved the problem much more cheaply and allowed capitalism to work. The ill behaving banks would have folded and new banks run by responsible people could have pop up. The same is true in this country. The problem is the socialization of loss while allowing these robber barons to keep their private gains. I am all for free markets, but that means mister commercial when you screw up and bankrupt yourself people like me with savings get to the privilege of buying your assets cheaply at auction so you can pay off your bond holders. It also means the currency deflates and my savings grow in value. That is how it is supposed to work. These bailouts were sort of immoral behavior you would have expected from China or Soviet era Russia. Its not the sort of thing that is supposed to happen in the free world.
Re:Of course... (Score:3, Insightful)
Re:Of course... (Score:5, Insightful)
"Those countries may be cheap but they come with a laundry list of disadvantages, e.g. the Chinese totalitarian government."
Which is a problem for a big corporation exactly how?
Re:Of course... (Score:3, Insightful)
"Berlin wants to - if you'll pardon the expression - unionize Europe more to prevent countries undercutting each other (and them) so much."
Yes. And that's a good thing, I should add. Macroeconomics at the country level (aggregated demand and offer, the imbalances between production and debt, taxes, etc.) are quite well known now. But countries are struggling because while they can control internally themselves, there's no global control worldwide. Taking tax heavens to an end would be an overall benefit for the whole world, but there's no one able to really do it because as long as just one country that doesn't work for the team, it would be in hugh advantage as would do those that took advantage of it existance.
Globalization should mean world-wide leveling of the playground but it means playing to the cheapest bastard. That would be good if it only affected the financial realm, but it works at the human level too (they are not cheaper because the are more effective but because they retain people just a bit above slavery). It must disappear. The sooner the people understands this, the faster we'll can go after worldwide stability.
Re:Of course... (Score:5, Insightful)
The bank itself wouldn't lend money; the banks customers would explicitly need to deposit money into bond funds (if they wanted any returns). It's not that far from what's done today, the difference in function is mainly in what guarantees are made, what time frames on withdrawals you have, and who gets to eat the losses.
The systemic difference would be more significant however. As money supply would no longer expand to accommodate asset bubbles, the interest rate a saver would get would rise as demand rose for money (for example, for investment in the bubble) and the bubbles would get cooled off/liquidated much faster and in a far earlier phase.
There are potential drawbacks, of course, like the higher interest rates in general (that reflect the actual value of risk and liquidity preference) and the requirement that the economy as a whole carry balanced loans and savings, but compared to the drawbacks of bubble/implosion economics, it's a whole lot fairer as someone has to pay either way. There'd also be the issue of deflation, as prices would fall as production improves, but that's already true across vast segments of the economy, indicating that the theory that inflation (as measured in wage-related prices) is necessary or even desirable may be deeply flawed.
Re:Zakaria: Something feels different this time. (Score:4, Insightful)
I tend to agree that it's different this time, but not necessarily for the same reasons Zakaria is pointing to. (Didn't read the Time article, just what the parent was quoting.)
Labour is less mobile than capital and technology, but that's not the problem. Labour's basic problem is that it's value is decreasing globally. You can't found a business on labour any more, because you can't produce stuff that people want for long. Our economy has become so productive and skill-based that labour can't keep up. Any skill that labour has will become redundant in a decade or so. This is a big problem, and as society and economy we really don't have any tools to cope with this.
Another development that disadvantages labour is that people, especially young people, tend to value things that are post-scarcity. They don't want big house that they can fill with designer furniture, they want an address with a broadband connection that they can fill with music, comedy and games.
Developing world labour has a competitive advantage right now, but that won't last for more than decade or two. They will caught in the same bind.
I think we need seriously start to think how to bring about sustainable labour.
Re:doubtful (Score:3, Insightful)
Re:Of course... (Score:5, Insightful)
Re:Of course... (Score:4, Insightful)
A raise in tax rates can result in lower tax revenue
You are refering to the Laffer Curve [wikipedia.org]. What most people who do refer to it often ignore, is that the curve is described as a parabole, so you can lose taxation either by overtaxing or by undertaxing.
Giving that Ireland is going bankrupt and the rates are low... are you suggesting that they lower them yet more?
Note also that some of the examples of maximum revenue are in the 30% bracket...
Now, if you have data (any kind of data) showing that the trouble with Ireland is that they are taxing too much, please tell me. It will be more interesting than repeating the mantra of "if the government does not tax then it will suddenly have a lot of money".
Re:Of course... (Score:3, Insightful)
Are Google, Microsoft, etc. telling Ireland they should tax the way India and China do so that the citizens of Ireland can have the same wonderful living conditions?
Re:Of course... (Score:4, Insightful)
Sounds like it is high time for a global tax treaty. No tax havens, not B$ tax rates where only the profits and none of the production is shifted, multi-national corporations need to be forced to 'PAY THEIR TAXES' at the location where the profits were made, not some bullshit offshore location. Don't want to pay the taxes at the location where the money was earned the bugger off and work else where.
Basically Ireland pretty much deserved the hole they are now in, they had special low taxes for licensed content distribution (copyright), so they could effectively cheat other countries out of the taxable income generated at the point sale.
So the real question is let them go and pay the full price or help them, meh, let em burn in their debt they don't deserve any better.
Re:Wrong (Score:2, Insightful)
They are treating Ireland like another banana republic. This is something you see very often in countries in Latin America. A recent example is with tobacco companies in Mexico a few weeks ago, they threated to leave if legislators approved a new bill increasing tax to cigarettes.
Re:Wrong (Score:5, Insightful)
I wish I had an 'overrated' mod point.
'If you raise taxes, I will move' is hardly 'attempting to dictate.' It is the prerogative of any private person or entity to move for whatever reason they like, whether or not it is a good idea. This happens all the time -- look at the number of businesses moving out of California and to places like Texas.
I'm astounded at the number of posts claiming that all of Ireland's problems are due primarily to its low corporate tax rate, as if those were the only two things that foreigners know about Ireland and so therefore one must have caused the other.
Re:Wrong (Score:2, Insightful)
Actually the problem of what government policies are best for the economy is complex to unsolvable, nobody knows the answers. You have the right to express what your position is, "tax the hell out of the corporations." Why shouldn't Google be able to say, "tax the hell out of us and we'll move somewhere else?"
Re:Of course... (Score:2, Insightful)
But it doesn't make sense. To the companies I mean.
Mod parent up, please.
I get so sick and tired of people beating up on companies for doing what is in their best financial interest. Businesses do not exist for philanthropic reasons. They exist to do one thing: make money. If they can't make money, they can't exist. Trashing them is not going to change that, it's only going to make you sound like you don't understand basic economics.
Re:Of course... (Score:5, Insightful)
That's what competition does.
Re:Of course... (Score:3, Insightful)
Since the thirties, taxes on wages have crept up and up and taxes on the capitalists have gone down to almost nothing. In the 50's it was about a 50/50 split, now it's more like a 90/10 split. I do consider that the breadth of the government budget has significantly expanded due to previously non-existent social programs, but these are less than half of the total. Overall (today) it's a big net loss for the labor class and a big win for the capitalists.
If I understand your POV correctly, you are saying now that this shift in burden is so complete, you want to get rid of all the social programs and dramatically reduce the size (here I'm assuming you mean budget) of government, yet still keep the burden of payment on the labor class.
Fuck.That.Shit. I'm not paying for everything to get nothing in return. You want to go back to the days when we didn't have social programs? Okay then, when I trade $20 of labor for $20 I must not be taxed on that since I did not make any real income. In other words, the capitalists have to again foot the bill for everything. You have to pick one way or the other, you don't get to pick the best of two sides.
Secondly, not everything is best motivated by profit. I'm assuming that you're okay with socialized fire departments and socialized policing of your neighborhood? So then you agree that profit motive and "the Free Market" are not the ideal solutions to all problems right? Some things are a question of morals and ethics and not profit.
Third, the word struggle is inappropriately in quotes in your post. It is in fact a struggle in that, unchecked, the rich and powerful of the world would make slaves or serfs of the rest of us. It has been this way for the entirety of human history and it is only the acceptance (finally) that society as a whole does have obligations that has enabled a middle class to exist. What you are missing is the fact that if the world were they way you say it should be, you would be down here in the brick pits with the rest of us.
Finally, you are missing that these social programs that allow a middle class to exist are part of the equation. Without a middle class the world much less wealthy then it is today, the richest in the world would actually have less. By killing the social programs that created this economy you will ultimately kill the economy. These things are connected. If I only preach only about moral obligation, then yes I am being dogmatic, ideological. But if you preach only about production and consumption then you are too.
Re:Of course... (Score:2, Insightful)
I get so sick and tired of people beating up on people for wanting to close tax loopholes. Ireland's taxes do not exist for corporate reasons. They exist to do one thing: make money. If they can't make money, they can't exist. Trashing them is not going to change that, it's only going to make you sound like you don't understand basic economics.
FTFY
Re:Of course... (Score:2, Insightful)
Don't bother explaining them. You know, geeks are loving simplicity -- simple is beautiful. They like to perceive the world as simple as possible. Even if their models are so simple that they have nothing to do with reality anymore. Those equations are so elegant! They must be right as well!
Comment removed (Score:4, Insightful)
Re:Of course... (Score:3, Insightful)
If having all those corporations in the country tax-free is so good, then WHY is Ireland going bankrupt?
Because they are not related. The country is going bankrupt because the government gave guarantees to a large commercial bank and a number of commercial/consumer banks that had lended heavily to support a ridiculous property bubble. They didn't do proper due dilligence on the guarantees, were lied to by the bankers about the size of the hole they were in and now the tax payer is now faced with a debt so large that the 'real' economy can't possibly generate enough revenue to repay.
There's a decent explanation here: http://finance.yahoo.com/news/Why-the-Irish-Crisis-is-Going-usnews-4028366968.html?x=0 [yahoo.com]
Hm. I'm an American, and that sounds eerily familiar.
Re:Of course... (Score:2, Insightful)
Re:Of course... (Score:3, Insightful)
It's not bad for Ireland, but it's not great, either. The arrangement doesn't give them any benefits other than the tax revenue; and this revenue will vanish the moment the companies find a better tax shelter in some other country.
Re:Of course... (Score:2, Insightful)
I get so sick and tired of people beating up on people for wanting to close tax loopholes. Ireland's taxes do not exist for corporate reasons. They exist to do one thing: make money. If they can't make money, they can't exist. Trashing them is not going to change that, it's only going to make you sound like you don't understand basic economics.
The problem is that "tax loopholes" exist for a reason. They're intentional -- it's how legislators create a de facto low corporate tax rate without getting crucified for voting for a bill that lowers the corporate tax rate.
Governments really have three options: They can have a high corporate tax rate with loopholes, a high corporate tax rate with no loopholes, or a low corporate tax rate. The first is what we have now: In theory corporations pay taxes, in practice they don't. The problem with "making" them pay is that we can't actually make them -- if you can't have an operation in California which reports its profits in Ireland or Asia in order to avoid high California taxes, companies will stop building operations in California. You lose more tax revenue through capital flight than you gain through closing the loopholes.
So closing the loopholes doesn't help. The real problem is that leaving them is also stupid: If you have a 10% tax rate and some other place has a 1% tax rate, a corporation is going to report 100% of its profits in the place where it pays 1% instead of 10%. If you instead lower the tax rate to 1% then you become the destination for profit reporting and you get 1% of hundreds of billions of dollars instead of 10% of nothing.
Of course, then you run the risk of race to the bottom where the most competitive place has a 0% tax rate. But maybe that's not so bad: A lot of other countries are stupid enough to maintain higher tax rates than you. If you can attract companies and jobs with low taxes and in so doing achieve the same tax revenue from payroll and sales tax than they achieve from payroll, sales and corporate tax, you still come out ahead, do you not?
Re:Of course... (Score:3, Insightful)
Well, I think you have somehow missed the point. After all, if the world worked as you propose, there would be no deficit to begin with.
The issue in the thread is that Ireland lowered taxes to get corps happy. Now Ireland needs money. One of the measures is to increase revenues (taxes). But, in the Internet, everytime you talk about the need to raise taxes, someone else raises the issue of the Laffer curve and says "but raising taxes lowers revenues". Of course, these posts usually forget to mention that:
So, back to your post, the Laffer curve just predicts the maximum available income. If you thing the curve is a good model then, ideally, the government would chose which services it must provide (that depends of your political opinion), sees the cost of providing them and sets the taxes in the point of the curve that brings that revenue (no more, no less). Of course, IRL things are not that easy.