News & Analysis
Ireland Hammered to Raise Corporate Tax
German Finance Minister Wolfgang Schaeuble (left) and EU economic affairs chief Olli Rehn urged Ireland Tuesday to be realistic and drop opposition to raising a corporate tax rate critics say is unfairly low. "If Ireland wants something additional from us, then we can raise that issue," said Schaeuble of Dublin's demand for the interest rate on its EU and IMF bailout to be reduced, in line with the easier terms granted to Greece last Friday. The German minister was recalling a clash between Irish Prime Minister Enda Kenny and French President Nicolas Sarkozy on the issue at last week's eurozone summit that is sure to be revisited at a full European Union summit next week. – AgencyFrancePress
Dominant Social Theme: These kind of tax breaks must cease. They are radical, insubordinate and impractical.
Free-Market Analysis: "This can't stay like this," says German Finance Minister Wolfgang Schaeuble, speaking of Ireland's fairly low 12.5-percent corporate rate. According to Agency France Press (see article excerpt above) Schaeuble claimed that US Treasury Secretary Timothy Geithner had also brought up the issue recently, worrying that too many American companies were choosing to base themselves in Ireland for tax reasons.
"Solidarity is not a one-way-road," Schaeuble is quoted as saying. And EU Economic Affairs head Olli Rehn agreed, reportedly urging new Irish leader Enda Kenny to support an upcoming EU strategy to set up a unified business taxation regime throughout the EU. EU's taxation commissioner Algirdas Semeta is about go public with the new EU-wide tax proposals.
The linkage between Ireland's supposedly low tax rate and its 67.5-billion-euro international bailout is not explicit. But at last week's EU summit, Ireland's request for a 100-basis point haircut on its loan package was rejected even though Greece received a reduction. Press reports made it clear that EU leaders wanted to see flexibility on the issue from Ireland. Rehn is quoted as acknowledging "some relation" between the corporate tax rate and the EU's rejection of Ireland's request for slightly better terms.
For Rehn, tax coordination, as he calls it, is increasingly important to EU strategy and policy. He believes proposals for a Common Consolidated Corporate Tax Base are both "reasonable" and gradual. "I would only encourage a constructive approach by Ireland on policies related to taxation, especially the commission's proposals on CCCTB."
The plan has been gestating for nearly a decade now and is intended to provide multinationals with a single, coordinated tax rate rather than a series of idiosyncratic national systems. For Ireland, the coordinated tax coming on top of its current sovereign debt crisis will provide a kind of deliberate death-blow. One wonders what the top Eurocrats are thinking. Ireland is not going to be able to pay for the debts its banks have accrued anyway; a higher tax rate will eviscerate its international software and pharmaceutical industries. Companies arrived as a result of the low tax burden; they will depart if it is raised.
None of this matters to Brussels. The claim is that the average corporate tax rate in the Eurozone is 25.7 percent or double that of Ireland. France's rate, alone, is 34.4 percent; though critics point out these rates are wildly inflated as a result of "give backs" and that France's all-in corporate tax rate for the larger multinationals actually ends up near eight percent – lower than Ireland's.
Again, none of this matters in Brussels. The Irish tax rate seems to pose some kind of personal affront. It comes up again and again; and now it has been brought front and center due to the EU's rejection of slightly better terms for the Irish bailout unless Ireland surrenders. One wonders what the Irish must think now of their "yes" vote – the second time round – agreeing to the Lisbon Treaty that provided the EU with expanded powers. It is those powers, now, that are being wielded to force Ireland into line with the rest of the EU.
The pressure that Ireland is under is giving rise to all sorts of editorial pathologies. Recently, the Irish Independent proposed in an editorial that Ireland rejoin the British Commonwealth. The suggestion was made within the context of an upcoming visit of Queen Elizabeth to Ireland. The Independent reckons she will be received enthusiastically and proposes that a substantive portion of the Irish population now regrets they ever left.
"I'd stake a decent wager," writes the editorialist, "that a correctly formulated question on returning to the British economic fraternity, Commonwealth and parliament would elicit a positive response. Supposing, in my fantasy, Britain agreed to underwrite Ireland's crippling debt in return for assuming sovereign power and changing the colour of the postboxes back to red, what would the response be? Positive, is my hunch."
This is an astonishing turn of events, given the bloody decades that finally resulted in Ireland's freedom. But perhaps it has much to do with Irish politics as it does with Irish post-partum regrets. The New Statesman recently carried an article blasting Fine Gael's Enda Kenny who just took over as Taoiseach in time to be rebuffed at the recent EU summit. What does the New Statesman think of Kenny?
[He] is a decent enough skin, a man you could have no serious objection to if he was about to take the reins of your local under-14 hurling team. However, by some strange trick of fate, he is the leader of Fine Gael, the party that has been the principal rival of Haughey and Ahern's Fianna Fail party since Ireland's hobbled independence in 1922. He was only ever meant to be a stop gap, but somehow he has hung on because the real heavyweights in the party can't agree among themselves who should be leader.
And what does the New Statesman think of Fine Gael and Irish politics in general?
Beyond the spelling of their names, there are all sorts of subtle differences between the Fine Gael and Fianna Fail that foreigners, particularly English people, could never hope to understand. But suffice to say Fine Gael is not as good at corruption and clientelism as Fianna Fail, and so it has not been elected as often or for as long as Fianna Fail. When it has, this has usually only been with the help of Labour, a party that exists solely to frustrate and demoralise all those deluded, overeducated individuals who think all this must change. Then of course there's Sinn Fein, which is a kind of cross between Fianna Fail and the Catholic Church, but with extra guns, paedophiles and front businesses. That's all you really need to know about Irish politics.
Ireland is being pushed to very brink by Brussels. Without a lower corporate tax it will lose the industrial base it painfully amassed over the past several decades. It has already lost its banking system to incompetence and EU cronyism, and thanks to austerity, its citizens will be in hock for decades to come. The political system and the changing of the guard from Fianna Fail to Fine Gael is not going to do much good.
After he was elected, Kenny's very first statement was that he'd been on the phone to unnamed EU leaders to inform them that Ireland needed a rate reduction. Only a week or so later, he received his answer ... nothing. Kenny also stated publicly that the one non-negotiable item was Ireland's tax rate. How did the EU respond? It was the single item on the EU agenda during last weekend's get together.
There seems no doubt that Ireland is being pushed deliberately. The Irish people were harried into voting twice on the Lisbon Treaty giving the EU more powers and now the Irish are literally being shoved a meter at a time toward an economic precipice. Either the Eurocrats in their arrogance believe the Irish – beleaguered and increasingly impoverished – will never push back or they are in some sense courting Irish civil unrest.
Why the EU would want to see an Irish civil explosion is a puzzle. But as we pointed out yesterday, if the EU keeps on its current course, there will likely be significant outbreaks of violence, not just in Ireland we imagine but in Portugal and elsewhere as well. Violent protests have steadily escalated in Greece, which like Ireland has come under increasing pressure of late. The EU's insistence that Greek privatization and divestiture go from five-billion euros to 50 billion has not sat well with PASOK – Greek's ruling socialist party which has thus far rammed through every austerity item that the Eurocrats have requested. It never seems to be enough.
Conclusion: As noted yesterday, Germany is now firmly in charge of the EU's austerity process and much of what the "Iron Chancellor" Angela Merkel is demanding is likely intended to palliate her own critics at home. She is, in fact, under extraordinary pressure to ensure that German euros do not flow out to pay for the "mistakes" of EU's profligate Southern PIGS. Perhaps this is the simplest explanation: that the EU is now being driven by Merkel's domestic agenda. It may be a serious miscalculation.
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Posted by Michael on 04/09/11 03:24 PM
Walter Schaueble should be told again – corporate tax is off the table. It has nothing to do with the German Finance Minister. Is it not enough for the Irish tax payer to bail out Irish private companies and settle their debts with the French, German and British banks and support European bondholders into the bargain.
After World War I Germany was crippled with war reparations.
After World War II Germany was by and large forgiven war reparations except payments to Israel – If Germany had paid damages on the scale of damage done and lives lost – they would be in the salt mines. Britain only recently paid off its debts to the USA in respect of borrowings to fund the war against Nazi Germany. Does anyone see the irony here ?
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Posted by Wayne on 03/19/11 12:19 AM
@Vauung
"If Stalin was killed by his own people (as I also think), then his case is irrelevant to the argument here, which is about the comparative security of leaders from FOREIGN assassins. (A distant development from speculations about transnational PE manipulations, and the credibility of associated threats.)"
Who said the assassins were foreigners?
I said the controllers are foreigners from other territories, and or, families.
Forget the James Bond movies here!
The assassin might just be your best friend, or a jealous relative
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Posted by Vauung on 03/18/11 03:01 AM
@ Bob
If Stalin was killed by his own people (as I also think), then his case is irrelevant to the argument here, which is about the comparative security of leaders from FOREIGN assassins. (A distant development from speculations about transnational PE manipulations, and the credibility of associated threats.)
The idea that Castro is a US puppet should be attributed to Wayne (with DN applause). I was merely 'hmmming' it. The Cuban Missile Crisis is just one of many reasons to doubt that Castro serves Anglosphere interests, among which the socialist destruction of the Cuban economy must surely be included.
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Posted by Bob on 03/18/11 12:25 AM
Vauung wrote that "The idea that Stalin was killed by foreign agents is fairly speculative'.
No, Stalin was killed by his inner circle. His blood analyses showed that he was poisoned.
One year before his death, Stalin was preparing a major reorganization of Soviet political & economic system as well as a major transformation of the Soviet society. At least 50% of his politburo members could lose their lives. Even V. Molotov, an old and very close Stalin associate, said: " If Stalin lived another year, I am not sure I would be alive".
Consequently, the Soviet Czar had too many domestic enemies.
PS: Was Castro a US asset? Do you remember the Cuban nuclear crises when Khrushchev came close to starting a WW III to protect Castro?
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Posted by Wayne on 03/17/11 10:08 PM
@Vauung
"It has to be admitted that things here can get out quite a long way beyond the shoreline of solid evidence at times ...'
Do you need a smoking gun to show you man's true nature? Man is a master liar, so he is clever at hiding his deeds.
Take a retired Homicide Detective to dinner, and ask him to describe the sum of his experiences.
And read "War is a Racket" by Smedley Butler see link
Click to view link
Illusions, and failure to act at the right moment, are suicide in this game.
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Posted by Vauung on 03/17/11 09:52 PM
It has to be admitted that things here can get out quite a long way beyond the shoreline of solid evidence at times ...
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Posted by Vauung on 03/17/11 09:48 PM
@ Bob
The idea that Stalin was killed by foreign agents is fairly speculative, as I'm sure you'd admit, and the Poles died outside Poland (which makes things much easier to execute, but perhaps more difficult to hide). Still, provocative examples.
@ Wayne
Castro a CIA asset? I guess anything's possible ...
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Posted by Bob on 03/17/11 07:59 PM
" "So controlling an individual,or a small group, is easy!"
Not when they're well-protected leaders of a rival superpower."
Stalin was an indisputable & unchallenged dictator of the Soviet Union. He liked to be called "the Master".
He always was surrounded by his personal bodyguards even being in a company of his Communist Party Politburo members. Only he and his bodyguards could carry weapons in his present, and nobody else.
But, one day, Stalin has been poisoned. And nobody knew by whom. His death has changed the USSR and led to USSR distraction.
Just recently Russian liquidated the entire entire Polish leadership and nobody made any noise.
Conclusion
Anybody can be liquidated (as Stalin used to say).
PS: British were good. They killed the Russian Czar Pavel I, and involved Russia in a war with Napoleon. Prior to it, Russia was a Napoleon ally. It was a huge plot with the huge historic consequences.
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Posted by Ol' Grey Ghost on 03/17/11 06:07 PM
@ Wayne
"I may understand you better than you think I do."
On first thought that sounds very scary if not downright terrorizing. ;) Ah, yes, Mr. Reed. I catch him every time he pops up over at LRC.
On to the next topic...
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Posted by Wayne on 03/17/11 04:33 PM
@Ol' Grey Ghost
"You may have missed my point. I'm not interested in defending the U.S. as much as I am interested in defending my property as it might be the U.S. that comes after it. What were the British soldiers after on that fateful day? A clue is that they got some of what they were after but not in the fashion they would have preferred to have taken it..."
I may understand you better than you think I do.
Fred is one of mine, and most of what he says expresses my viewpoint prefectly.
see link
Click to view link
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Posted by Homogermanicus on 03/17/11 12:48 PM
Thanx for this interesting point of view. Nevertheless I must in return question why anyone for instance in germany struggeling to pay his own daily bills should take over a single cent of irelands debts.
Especially if he might loose his own work because of threatening tax reductions attracting businesses to move over to the green island? It could as well be a serious miscalculation to overestimate the german patience to function as paymaster of the union. My tax burden is already damned high (as far as I know much higher than in ireland) and I'm supposed to work until the age of 67 (or even longer if inflation will eat up my savings).
As long as this financial system rewards privat capital not beeing fed back into the circles we'll see social disruptions and outbreaks of violence. Maybe it's time to think of solutions beyond bailouts and taxbreaks.
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Posted by Ol' Grey Ghost on 03/17/11 11:10 AM
@ Wayne
You may have missed my point. I'm not interested in defending the U.S. as much as I am interested in defending my property as it might be the U.S. that comes after it. What were the British soldiers after on that fateful day? A clue is that they got some of what they were after but not in the fashion they would have preferred to have taken it...
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Posted by Wayne on 03/17/11 06:27 AM
@DB
"The wealthiest Chinese families supposedly self-identify as Jewish."
Hmmm.
Interesting, but Jews from what origin? Surely you know that there are many kinds of Jews! Silly label actually, but we are stuck with it.
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Posted by Wayne on 03/17/11 06:08 AM
@Vauung
"Almost nothing can stop a professional assassin!"
Hmmm ... How come Castro still has a carbon footprint (despite all the exploding cigars)?
The examples you offer are overwhelmingly domestic (from Caesar to JFK).'
Don't be too sure that Castro is not an American puppet
Do you really believe that Castro could have lasted this long being located right next to a US Naval base if we really wanted him out?
If we could hunt Che Guevara down, Castro would have been out in 1 week if we wanted to get rid of him. The Castro deal relates to Casinos, which also implies illicit drugs. That bring us back to Vietnam, and Ho Che Min. And that is another tar baby, because you cannot discuss Vietnam with out dealing with the main export of the Golden Triangle.
Click to view link
Reply from The Daily Bell
You are doing very well!
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Posted by Wayne on 03/17/11 05:48 AM
@Timur The Lame
"That there may have been families in his clique that had such contacts or that in post Mao times the ruling clique has been compromised is possible but I will still contend that the Chinese play a game that the Occidental mind cannot comprehend.
Mao's guerilla tactics adapted to the ecomomic war perhaps."
I agree completely that what we call the Western mind has difficulty reading the intention of the East.
But we are talking about the PE here.
What if it real power behind the PE were originally Lebanese Jews, or Muslims?
One must admit that whoever this group is, they have not yet encounter a people, or culture that has been immune to their influence that we know of.
We must avoid being doctrinaire here, because we are certainly dealing with people well beyond normal skills and abilities.
To say that the Chinese are beyond their power is to imply that we know who they are. And that is the real question that we are attempting to discuss here. "Just Who is #1" to quote Patrick McGoohan in "The Prisoner"
see link
Click to view link
Reply from The Daily Bell
The wealthiest Chinese families supposedly self-identify as Jewish.
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Posted by Vauung on 03/17/11 05:43 AM
@ Wayne
"Up to now the Chinese have followed that pattern ... If they have succeeded in this attempt, Collectivism is almost invincible."
Now you're being WAY too pessimistic. The Great Leap Forward imploded into mass starvation and economic ruin within two years, effectively ending the Maoist experiment by the beginning of the 1960s. Mao's attempted political comeback in the Great Proletarian Cultural Revolution was a fiasco of such magnitude that even the Communist Party has unconditionally denounced it (whilst attempting to downplay Mao's role). The market has been openly embraced since late 1978.
When collectivism is tried seriously it fails catastrophically and unambiguously. You don't need to worry about its future -- it doesn't have one.
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Posted by Vauung on 03/17/11 05:34 AM
@ Wayne
"Almost nothing can stop a professional assassin!"
Hmmm ... How come Castro still has a carbon footprint (despite all the exploding cigars)?
The examples you offer are overwhelmingly domestic (from Caesar to JFK). Besides, I can't imagine the PE are over fond of this assassination-of-leaders stuff, it levels the playing field too much. Better to restrict massacre to the plebs and stick to polite negotiations between princes.
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Posted by Wayne on 03/17/11 05:33 AM
@Vauung
"Agreed, but in this respect the total unorthodoxy of Maoism is displayed. Maoists throttle urbanization in order to create a neo-agricultural order, based on collectivization, complete destruction of property rights, slave labor, and the elimination of geographical specialization. See the Great Leap Forward and the Cambodian experiment under Pol Pot for examples of Maoist policy in action."
Up to now the Chinese have followed that pattern, but their remake of a nations' character might be complete based on their current massive expansion in infrastructure.
I suspect that they have completely rewritten history in the minds of the young Chinese by now. The Chinese were undoubtedly the tough test of mental control/reconditioning principles ever attempted. Look at what happened to Tibet!
If they have succeeded in this attempt,Collectivism is almost invincible. God help our youth!
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