World Could Joe Biden's tax plan hit Ireland’s economy?
Progressives say Biden’s foreign policy is the same as Trump’s. They’re wrong.
Sure, there are some similarities. But Biden’s foreign policy is very, very different from Trump’s.It goes something like this: Two months into his administration, Biden is pursuing many of the same objectives as his predecessor. Sure, the tone has changed — namely, talk of rebuilding alliances and defending democracy and human rights — but much of the substance remains the same.
Wander around Dublin's Grand Canal Quay and you get a sense of how successful the Republic of Ireland has been in attracting US technology companies.
Google has its international headquarters across a campus of offices and will soon have more space nearby at the Boland's Mill development.
Just across the canal, Facebook has its international HQ with Tripadvisor and AirBnB close by.
Stripe, the United States-based payments firm, could soon be in the area.
Last month its Irish founders said they're planning about 1,000 new jobs in Ireland.
Republicans Keep Worshipping at This Zealot’s No-Tax Altar
Grover Norquist, the high priest of Republican tax-cutting, may not be as prominent as he was in the 1990s, but he is the reason that Joe Biden can’t afford to lose a single senator or more than a handful of House members without losing his entire economic agenda. Norquist, who once said his goal is to starve the government down to the size “where we can drown it in the bathtub,” has been remarkably successful at shaping a political environment that makes it hard to even talk about, let alone succeed in, raising taxes. He’s in a tight corner now, but it would be dangerous to write him off as old news. When President George H.W.
The head of the country's inward investment agency, Martin Shanahan, described the Stripe investment
But there's now a risk that the pipeline of investment from the US could dry up if President Joe Biden can lead a major change to global tax rules.
Irish tax advantage under threat
In among those tech company HQs in Dublin's docklands, you will also find the offices of the lawyers and accountants who help US firms use Ireland's tax system to reduce their global tax bills.
For the last 20 years Ireland has had a simple message: invest here and you will pay just 12.5% tax on your Irish profits.
That compares favourably to headline corporation tax rates of 19% in the UK, 30% in Germany and 26.5% in Canada.
Joe Biden's Approval Rating Weighed Down by Border Crisis, Gun Policy
Despite a positive overall job approval, a majority of Americans have an unfavorable view of the president's handling of immigration and firearms legislation.According to an AP-NORC poll, 56 percent of people disapprove of Biden's stance on immigration, with 55 percent disapproving on the current border situation—the two worst readings of the issues included.
It is an article of faith in Irish politics that the 12.5% rate has been vital to attracting US investment.
But that tax advantage could be seriously undermined if President Biden gets his way.
The most striking of his proposals - and the one of most consequence for Ireland - is for a global minimum corporate tax rate.
The US Treasury Secretary Janet Yellen has suggested a 21% minimum rate.
"We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom," she said in a speech last week.
"Together we can use a global minimum tax to make sure the global economy
What would it mean for Ireland's economy?
Essentially that would mean if a company paid tax at the lower Irish rate, then the US (or other countries) could top up that company's tax in their jurisdiction to get it to the global minimum.
Longtime tax target Amazon now leads charge for reform
A longtime lightning rod for critics of corporate tax avoidance, Amazon now wants to lead the way on reform. Amazon chief executive Jeff Bezos this week endorsed a higher corporate tax to help fund infrastructure as part of a "balanced solution that maintains or enhances US competitiveness." The move by Amazon comes after years of criticism by activists who claim it pays little or no corporate taxes. According to the Institute on Taxation andAmazon chief executive Jeff Bezos this week endorsed a higher corporate tax to help fund infrastructure as part of a "balanced solution that maintains or enhances US competitiveness.
So if a US company had a presence in Ireland primarily for the tax advantage, that advantage would disappear.
This is a matter of urgency for the Biden administration because it is planning to raise corporate taxes at home and would prefer not to see more tax revenues leaking to other countries.
Peter Vale, tax partner with accounting firm Grant Thornton in Dublin, thinks a global minimum rate is now an inevitability.
"If you'd asked me six months ago I'd have been quite sceptical, there was a lot of opposition," he said.
"But it's now moving by the day and, with the US behind it with its plans, I think we're going to arrive at some sort of global consensus."
He said the key issue for Ireland becomes the level at which the rate is set.
"I don't think 21% is where it will land, I suspect it will be somewhere in the teens."
Other details will be important too: "Exactly how will you work out what the rate is a company is paying in Ireland and what does that mean in terms of any top up? The detail becomes pretty critical."
Biden walks tightrope in talks on $2 trillion infrastructure bill
President Joe Biden holds a rare meeting Monday with opposition Republican lawmakers, as well as Democratic allies, to push his more than $2 trillion infrastructure bill -- a daring bid to rebuild the United States and cement his place in history. The White House meeting between Biden and eight members of Congress is being stage managed to show that the new president has made good on his promise to end the divisiveness that turned Washington into a permanent dog fight under Donald Trump. Four senators and four members of the House of Representatives were invited -- half of them from each party.
The Biden proposals have reinvigorated work which is being led by the OECD (Organisation for Economic Co-operation and Development), an intergovernmental economic organisation.
It began a project known as Base Erosion and Profit Shifting (BEPS) in 2013, which aims to mitigate tax loopholes which currently allow companies to shift profits from higher tax countries to lower tax countries like Ireland.
'Intention to target Ireland'
Perhaps ironically Ireland appears to have been a major beneficiary of some of the early outcomes of the BEPS project.
The country's corporation tax receipts have soared from about €4bn (£3.5bn) in 2013 to around €12bn (£10.5bn) in 2020.
Seamus Coffey, an expert in Irish corporation tax,
That is the principle that companies should declare their profits in the location where they have real operations or activities.
"Countries like Ireland have been a huge winner from BEPS mark one," he said.
"The objective was to align profit with substance and we actually are one of the countries where these companies have substance, whether it be pharmaceuticals, computer chips, medical devices and the ICT companies.
"I think when countries in the G7 looked at this they thought 'that's not quite what we wanted' - maybe the intention was to target countries like Ireland, not benefit them."
Brexit is causing growing tensions in Northern Ireland
Changing political dynamics in Northern Ireland are causing anxiety in unionist communities. Brexit has thus brought the return of a familiar, and for many unwelcome, form of “identity politics” to Northern Ireland, one that has proved extremely unsettling to a still-fragile political and constitutional order. Where the Good Friday Agreement accommodated both British and Irish identities within a broader consociational political framework, Brexit has encouraged a revival of identity polarisation, interpreted as a zero-sum game where a “win” for nationalists is perceived as a “loss” for unionists.
When could we see an impact?
In the next round of BEPS, with the US on board, those other rich countries are more likely to get what they want at Ireland's expense.
But even if President Biden can agree the reforms at home and abroad, how quickly would that have an impact in Ireland?
Mr Coffey thinks any negative effects would not be instant because tax is not everything.
"Are the ICT companies likely to head off around the world, scattering their headquarters to various different cities?" he said.
"There are benefits to being co-located. At least in the medium term we are not likely to see a huge shock."
That is echoed by the IDA (Industrial Development Authority), the inward investment agency, which points to Ireland's workforce and significant clusters of specialisation in areas like medical technology and pharmaceuticals.
The IDA also sees the Brexit angle, pointing out that Ireland, unlike its UK neighbour, is part of the EU's single market.
In a statement, it said: "Ireland is at the heart of Europe. Ireland's continued commitment to the EU is a core part of Ireland's value proposition to foreign investors, offering a base to access the European Single Market and to grow their business.
"Ireland also benefits from free movement of people within the EU, giving businesses located in Ireland access to a European labour market."
The Irish government has been engaged in the BEPS process, though in a speech last year the Finance Minister, Pascal Donohoe, said he
This week a government spokesman said: "Ireland is aware of the US proposals.
"We are constructively engaging in these discussions, and will consider any proposals carefully noting that political level discussions on these issues have not yet taken place with the 139 countries involved in this process."
China Warns Biden Focus on Beijing Challenges Reflects 'Sinister,' 'Deep-Seated Cold War' Mentality .
In withdrawing troops from Afghanistan, Biden said the U.S. needs to focus on challenges that are "in front of us," including China.While former President Donald Trump tried to build a new relationship between the U.S. and China, tensions mounted during his final year in office. Biden taking over has done little to temper heightened emotions and China's regularly issuing warnings to the United States that their rhetoric and actions have consequences.