Joe Biden is the chief reason for my country's corporate tax hike
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.
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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.