October 8, 2021 - 4:12pm
The Irish political establishment loves to mock Britain for leaving the EU, and especially its desire to ‘take back control’. But in reality, Ireland doesn’t have much control over its own destiny either.
We are used to being pushed around by bigger powers, but one significant vestige of sovereignty we managed to hold onto over the years has been our low rate of corporation tax, which helped entice US technology giants like Dell, Microsoft, Apple and Facebook to set up major offices in Ireland.
The 12.5% rate was the red line we would allow no-one to cross, with the finance minister declaring in 2015 that the rate “never has been and never will be up for discussion”.
It was the hill on which we were willing to die, until suddenly it wasn’t.
Yesterday, we agreed to sign up to a new OECD agreement which commits all 140 signatory countries to introduce a corporate tax rate of at least 15%.
Those words “at least” do not appear in the agreement, thanks largely to Irish efforts, but obviously many countries will have a rate above 15%, so it is a minimum.
What happened? The chief answer is Joe Biden. EU countries like the French always resented our low corporate tax rate, but Ireland managed to resist pressure to increase the level. That is because the US multinationals are ultimately more important to us than Brussels.
Biden loves to talk about his Irish roots, but it turns out we were far better off with Donald Trump in the White House. This is deeply ironic. In Ireland, we are second-to-none in our hatred of Trump. We despise the Republicans in general because historically the Democrats have been the party of Irish-Americans. Trump, for us, was simply the very worst kind of Republican.
But unlike Biden, Trump wanted to lower America’s corporate tax rate, not force other countries, including Ireland, to raise theirs.
Biden has huge spending plans, and they must be financed. One way to do that is by eroding the tax competitiveness of countries like Ireland, which is why he threw his weight behind the OECD agreement.
We are now hoping that we will not be forced in the future to retreat from our new red line of 15%. If the rate goes much higher in years to come, all those Irish-based tech companies might start to look elsewhere. This will have disastrous implications for the economy.
Hundreds of thousands of jobs could go overseas along with billions in annual corporate tax revenue. Of course, this is exactly the aim of both Biden and the EU. They want those taxes and jobs. As a result, we would sink from being one of the richest EU countries per capita to mid-table at best.
Ireland believes it has friends all over the world, not least in America, but when we can’t even count on an Irish-American like Joe Biden, who can we depend on?
From our point of view Biden is the worst White House incumbent in decades, not that we will ever admit it. His corporate tax policy is a dagger aimed straight at the heart of Irish economic strategy.
This has been a brutal lesson in realpolitik for Ireland. The shock from an Irish point of view is that a Democratic president served it.
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SubscribeIt’s not a shock from the point of view of this Irishman, but in fairness to David Quinn, it took me decades to lose the blinkers. The Democrats were always grifters, but most Irish people — like me — didn’t see it because we benefited from the grift. When the Democrats were keeping the blacks on the plantations, we didn’t complain because we benefited. When they were passing the Jim Crow laws, we didn’t complain because we benefited. Even when they started peddling the BS that “the parties switched” in the 60s, we chose to swallow it because we benefited. Now it seems to be our turn in the Democrats’ barrel. Let’s see how we benefit from that.
Based on this author’s comments I’d say the Irish lean too heavily on their connection with the Irish American community, including Joe Biden. Just as the Brits tend to rely too heavily on their ‘special relationship’ with the US.
Ireland is a friend of the US and is in much better standing than many/most countries. But Biden is currently pushing through one of the biggest spending programs in US history while trying to placate a strained Democratic coalition. The effect of his revenue-generating policies on the Irish economy is probably about number 200 down his list of priorities.
And don’t forget America is a profoundly troubled and divided nation that is likely losing its place as the world’s leading power. It’s a wounded giant and wounded animals tend to be unpredictable and dangerous.
Despite my sentimental feelings for Ireland, this would be a deserved comeuppance. Irish politics is a degenerate, toxic mix of cultural wokeness and savage neoliberalism. During my last visit to Ireland, I found the country very changed. People talked of nothing but property prices and US-style tacky materialism was everywhere. And their political obsessions seem so very dated (abortion, “Palestine”, the Catholic Church, etc..). Maybe they need to be shocked back to reality.
‘You’ll like doing business with us; we have a fine set of principles and if you don’t like them we have another set.’
– Groucho Marks
Any economy that relies on any form of protectionism is vulnerable to other countries eroding it. Ireland has done well for a long time but being easied out of that particular niche gently is probably best for it in the long run.
I’d like to nominate David Quinn for crybaby of the year.
There are plenty of things wrong with Biden’s priorities and policies, but his attempt to level the corporate tax playing field isn’t one of them. Rather, I see it as a salutary blow against neoliberal globalization.
Biden wants Zuckerberg, Bezos etc to pay their company taxes in the country that raised and educated them, the country that gave them so many opportunities in life. Biden’s primary obligations are naturally to the American people, not to a much-romanticized island on the other side of the Atlantic.
Ireland might just have to grow its own industries, like the Scandinavian countries have somehow managed despite having much higher corporate tax rates than Ireland.
BTW, I believe Biden also has English and French ancestry – does that mean he owes the Brits and the Frenchies special favours too?
I think Quinn was taking aim more at his fellow Irishmen and women than at Biden as such. And he’s right.
True, maybe, but a depressing example, nonetheless, of how Irish political culture has shrunk. Once- I know it was along time ago- we were proud to see ourselves as a nation among the nations of the world, with a responsibility to make the world a better place. Pretentious, no doubt, for a tiny nation, but we did participate in The United Nations exerting an influence for the good above our weight.
Today, corporations can escape the tethers that once bound them to nation-states and so make practically no returns to the societies whose infrastructures enable their wealth. Who could deny that this is a problem that demands a solution? Who could deny that it must be a global solution? The Irish, it seems.
“Trump,for us, was simply the very worst kind of Republican.” Because of his Scottish ancestry?
A welcome observer to the fray David, glad to see your input on an open and honest platform. As I see it Pots McPotus is probably not someone we should be relying on for our nations economic stability. That 12.5% corporation tax rate was the only economic saving grace we had managed to hold onto up to now. The term ‘captured’ doesn’t even begin to encapsulate the Irish demise..I won’t be moving home. Unfortunately
Every day, especially on UnHerd, I read scathing comments about China; sometimes about Russia. But most seem to see the USA as a sort of benign, loveable giant, just fumbling its way about the world. Very few people see the USA as plain evil.
The article above shows how the USA can have a real effect on a small country like Ireland. A couple of days ago we saw that US students were taking over St Andrews University with their BLM – type rules. Why are we so fat in the UK? Because we have followed US food fads. Which country will find itself losing the future economic battles and will generate a reason to fire its missiles at Korea?
Why is it so important to continue to serve the USA? Is it really worse than China?
Nope.
The Chinese had rather a long history of ‘puppet emperors’, Sons of Heaven who were too young, or too old, or too mad to rule effectively – or who just couldn’t be bothered. Generally, they signalled the overthrow of the dynasty, and its replacement with either another dynasty, a foreign power or in the latest example, a ( slightly) different political system.
So now the USA has a puppet Emperor , and it seems, a puppet second in command as well. Just as in China, the governing classes conspired to maintain the status quo – until someone saw a golden opportunity. Hmmmm…..
What a silly comment. The US government is not forcing people in Britain to be fat, or forcing St Andrews University to introduce silly rules. The Chinese government on the other hand, like the Russian government, is directly doing many majorly-horrible things, like torturing Uighurs, stealing IP, threatening to invade Taiwan. Nobody I know thinks the US government is a benign lovable giant, but on the other hand nobody I know thinks that on a scale of “plain evil” the US government is anyway near as bad as the Chinese and Russian governments. Democracy may have something to do with that.
Macron – “We will never abandon Ireland or the Irish people, no matter what happens, because this solidarity is the very purpose of the European project”. Looks like the answer to this problem is greater solidarity on Ireland’s part.
But Ireland will surely remain hugely attractive to US Tech companies? English speaking, emotional ties that won’t break easily if it came down to a straight argument over operating and staffing costs (vs India, for example), and easier travel between the countries than most, at least pre-covid, with US pre-clearance and the CTA with the UK.
I don’t know what the Universities are like these days but back in the day UK certainly benefited from some very bright young Irish graduates.
One risk for Ireland I guess is that “ever closer union” could mean ever closer Corporate Tax rates, but as long as they are competitive vs. UK I don’t really see massive change.
It has always been Britain which has been Ireland’s most reliable friend. The problem is that the Irish government’s anglophobia during the Brexit process, and over the Northern Ireland Protocol, have turned Irish ministers into Sinn Fein’s useful idiots.