Low Corporate Tax Rates & Attracting Foreign Investment: Is Ireland’s Greatest Asset Its Willingness To Be Controlled By Outsiders

In a recent post about land “ownership, I remarked that in a country with few resources, Ireland’s land may be its greatest asset. Since that post I’ve questioned that assumption, and done a great deal of thinking about what Ireland, this country that I really have grown to love, has to offer.

And as anyone who has read this blog for a while knows, I’ve been promising a post about corporate taxes abroad and the “Con Artistry of Luring Foreign Investment” for nearly a year. Although it’s perpetually in the news here, and often on my mind, it’s a subject that I find both troubling and hard to get a handle on, particularly in Ireland.

First, I refer to foreign investment and lowering corporate tax rates to attract big multi-nationals as “con artistry” because, well, it is exactly that. These companies are not here to “invest” in Ireland (or anywhere else they may go) in any meaningful way. They’ve come to plunder, and, when it’s advantageous, move on. Period.

They don’t give a damn about Ireland or the Irish. They’re in Ireland because it’s cheaper to cool their server rooms here than it is in India, we speak better English than the average tech worker in Mumbai, and because the families of the executives would rather travel in, and be relocated to, Ireland than India (or wherever the next Third World tech-sploitation hub asserts itself). And the Irish politicians know this. But the only way they can sell the notion of a 12% corporate tax rate (with an effective rate of 2-5%) in the midst of a huge downturn is by promising that it will bring jobs.

And it does bring jobs, for a while. But at what cost? Those favorable corporate tax rates can never be raised, or all of the multi-national “partners” that they’ve attracted will simply pack their carpetbags and move on. And once they’re here, these companies want more and more every year. Witness the scam and corporate welfare of the Irish Jobs Bridge program that, while a good idea on the surface, has been bent to provide big companies with mostly free labor, and not really retrained the unemployed in new areas of work.

Ireland, and countries like her, have bent over to accommodate these companies, and sacrificed an entire generation in the name of corporate servitude. What’s next? This all strikes me as just another era of Irish colonization.

Now, I’m not Irish, so I’m sure I’m totally full of it, and missing something here. But please, someone enlighten me. Again, as I said about Ireland and the EU, I just don’t understand why a country that fought long and hard to break with its colonial masters (England, and the church) is so keen to shoulder the yoke of corporate control. Yes, I know Ireland is skint, and Apple keeps the lights on.   But will Apple always be here, and, unless it starts selling something that others genuinely value, how will Ireland avoid always being broke?

Well, how about pouring our resources into promoting ourselves? The entrepreneurial spirit and food products coming out of Cork, the Wild Atlantic Way tourist initiative along the West Coast, and the dozens of film, music, and craft festivals held every year are all Irish products. And what about keeping the corporate tax rates low, but insisting that these companies invest in infrastructure projects that not only improve the companies’ ability to do their work while they’re here, but simultaneously deliver long-term benefits to Ireland? These might include nation wide fiber optic service, and improving the water infrastructure (pipes, etc.). There has to be a cost of doing business. Otherwise, why bother collecting taxes at all?

If we don’t value ourselves enough to value our work, no one else will. This is the same pervasive, low self-esteem, “poor me” attitude I spoke of when discussing the effects of alcohol on Irish society.

And what of the migrant (emigrant/immigrant) who relocates based on the promises of a multinational job contract. Are their promises worth the paper they’re printed (or, more often these days not printed) on? For migrants, the loyalty and commitment of multinationals is a huge concern.

If you relocate to a country based on the word of an employer, or based on the turning economic fortunes of a country that has pinned its hopes to the promises of particular companies, what happens when those companies move to a more “favorable” tax haven? Will they move you? How will your kids readjust to yet another set of schools? How will your bank account handle yet another international move (even if the company agrees to pay “all” of your expenses)?

Yes, foreign investment from multinationals brings in money. But that’s the easy part. The real spadework that nobody, particularly here in Ireland, seems willing to engage in is getting the country to stand on its own two feet. That involves a commitment that extends well beyond election cycles, and, sadly, far beyond the attention span of elected officials.

Reducing corporate tax rates seems like a quick and easy fix, but it creates an unstable future that should be deeply concerning to both emigrants/immigrants and locals. How much is Ireland (or any other country) willing to pay for the privilege of someone giving it money?

Things to look forward to in upcoming posts:

* Renting Abroad, Home Maintenance and Property Management in a Foreign Country

About Glenn Kaufmann

I'm an American freelance writer, photographer, and web publisher. I specialize in writing about travel, food, arts, and culture. I also write dramatic scripts for stage and screen. I'm based in Ireland.
This entry was posted in Bureaucracy, Immigration & Emigration, International Moving, Irish Economy, Irish Life & Society, Politics and tagged , , , , , , , , , . Bookmark the permalink.

4 Responses to Low Corporate Tax Rates & Attracting Foreign Investment: Is Ireland’s Greatest Asset Its Willingness To Be Controlled By Outsiders

  1. Mairitn says:

    really enjoy your posts. Friend of mine is an exec in Google. He told me all the talk about the craic, and the Guinness, and the great irish attitude etc. if the tax is raised to 15% Google are off to Poland in the morning. And I agree with the ‘poor me ‘ attitude, for years Irish people were told they were poor because of partition, not because of their inept politicians stifling creativity. Well done !

  2. Thomas says:

    It’s all about a sustainable long term domestic Irish owned economy that supplies a decent living. First off I’m not an economist and I definitely don’t have a monopoly on wisdom. Ireland could double it’s GDP spend on education relative to the OECD average, by cross political agreement and lock it in via legislation. This would remove the temptation to cut back in an economic cynical downturn. Crucial to get double the output from double the input. Finland and South Korea have done very well from this approach. (Entrepreneurialism as a compulsory/optional secondary school subject would help IMO)

  3. Thomas says:

    On a ‘local economy’ level I don’t see any reason why one of the smaller/medium counties can’t convert wholesale over to organic farming, which is one of the fastest growing sectors in agribusiness. Any increase in overheads would be more than offset by the premium margin that organic produce returns. Ireland is already associated with verdant to synergise that with organic seems a no brainer to me. We have 500 million free trade/single market Europeans on our doorstep. For the customer to associate a whole geographic entity i.e. a county with organic produce speaks for its self.

    It’s possible to take it a step level up, a medium sized wind farm (county level) and an incentivised electrical vehicle scheme (county level) could take the county to 80% carbon neutral status.

    P.S – Ireland already sells excellent organic produce, which I enjoy on a weekly basis. The concentration/economy of scale on county level would open up vast commercial opportunities that an ad hoc approach can’t.

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