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Google Warns Irish Government Against Tax Increase

Posted by timothy on from the shame-if-anything-was-to-happen dept.

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.'"

20 of 542 comments (clear)

  1. Of course... by Serenissima · · Score: 5, Insightful

    God forbid any company would actually contribute taxes to the infrastructure of the countries in which they operate. I mean, that would just make too much sense.

    --
    Give a man a fire and he'll be warm for a day. But light a man on fire and he'll be warm for the rest of his life.
    1. Re:Of course... by Lumbre · · 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.

    2. Re:Of course... by MightyMartian · · Score: 4, 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.

      --
      The world's burning. Moped Jesus spotted on I50. Details at 11.
    3. Re:Of course... by alphatel · · Score: 4, 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!

      --
      When the foot seeks the place of the head, the line is crossed. Know your place. Keep your place. Be a shoe.
    4. Re:Of course... by VanGarrett · · 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.

      --
      Learning about brewing beer, by brewing beer.
    5. Re:Of course... by pesho · · 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".

    6. Re:Of course... by turbidostato · · Score: 4, 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?

    7. Re:Of course... by Znork · · 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.

    8. Re:Of course... by Dan667 · · Score: 4, Insightful

      Ireland did everything that conservatives wanted regarding their finance policies. Why is Ireland cratering if they are suppose to be sooooo good? And Ireland already has high unemployment as a result of these policies and it will get worse either way. They should recognize they don't work and start moving to polices that do as there will be no getting out of a painful correction or if they don't change a full depression.

    9. Re:Of course... by camg188 · · Score: 4, Insightful

      Corporations don't decide that they want a margin of % percent.

      That's what competition does.

  2. Call their bluff by Anonymous Coward · · 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?

  3. Fantastic opportunity for Ireland by Christian+Marks · · 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.

  4. Standard reporting income at lowest taxed country by Keruo · · Score: 4, Insightful

    Google is using the standard "report income where tax is lowest" strategy in EU. Google has subsidiaries in multiple countries, and they can avoid paying more taxes by moving their income around as internal expenses.
    Subsidiaries appear to be barely breaking even, and mothercompany reports higher profit.

    --
    There are no atheists when recovering from tape backup.
  5. Re:ireland = end of right wing economics by Mashiki · · 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.

    --
    Om, nomnomnom...
  6. Go ahead, move there. by Anonymous Coward · · 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.

  7. Re:ireland = end of right wing economics by im_thatoneguy · · 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.

  8. Re:Business as usual by t2t10 · · 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.

  9. Wrong by happyhamster · · 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.

    1. Re:Wrong by Aquitaine · · 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.

  10. Ireland just needs to boil the frog by erroneus · · Score: 4, 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.