4 ms·

Why Tax Competition Is a Good Thing

21 points by andrenth 10y ago

tmaly 10y ago
I made this same point the other day and got down voted for suggesting that Ireland may leave the EU over this.
- deleted 10y ago
  [deleted]
- silvestrov 10y ago
  If Ireland leaves EU then Ireland is no longer interesting for Apple (and other tech companies). Ireland is an entry to the full EU market. Ireland itself is a very small market compared to EU.
- deleted 10y ago
  [deleted]
- Oletros 10y ago
  Perhaps you got down voted because even if it has been explained a lot of times, the EC has no problem with Ireland competing with low tax rates. The case is not about low tax rates, the case is about an state (previously was Belgium and 35 EU companies) that give private and ad-hoc deals to some companies distorting the competition between companies And perhaps you got downvoted because saying that Ireland should leave the EU means that you have a poor knowledge of EU countries economies.
  - vixen99 10y ago
    Alleged private and ad-hoc deals. Let's wait for the detailed facts to emerge.
    - Oletros 10y ago
      Alleged? It has been a ruling already
- soneil 10y ago
  That's incredibly unlikely, really. Firstly, and most notably, the EU is overwhelmingly popular in Ireland. (in the most recent eurobarometer I've seen, 2nd highest for "positive image of the EU" - http://ec.europa.eu/public_opinion/archives/eb/eb83/eb83_first_en.pdf http://ec.europa.eu/public_opinion/archives/eb/eb83/eb83_fir... ) Second, Ireland is a net recipient within the EU - we receive more than we give. And that doesn't even take the bailout into account. We honestly can't afford to turn that away. Third, the whole USP of Ireland's corporate-friendly approach is to give multinationals a "cheap, friendly foothold" in the EU. Instead taxing them heavily, we rely on attracting enough of them to balance it out (quantity vs quality). So the people don't want to leave the EU, and wouldn't benefit from it. The state don't want to, and wouldn't benefit from it. And the MNCs such a move would pretend to defend, don't want to and wouldn't benefit from it.
mhw 10y ago
"Obviously, without considering state organizations for what they are — i.e., parasitic organizations" Well, that's one perspective. People will disagree on this point, and it's useful to know the basic position on which the rest of the article is based.
- paulgb 10y ago
  Yes, the thesis of this seems to be "tax is bad, tax competition will lead to a race to the bottom, so tax competition is good". Which is fine, but I was hoping for an argument that didn't rely on those assumptions.
steenreem 10y ago
This article is highly subjective: "Since the 2009 crisis, Ireland has systematically been designated as the official scapegoat of every politician, witch-hunter, and other demagogue trying to avoid any discussion about the real problem: the explosion of unproductive and anti-competitive government expenditures."
herge 10y ago
One other benefit that Ireland offers than just a low tax rate is more 'pliable' business laws, in that say you are an American company trying to set up a subsidiary in the Euro zone. You can read up in length on either French, Germany or Italian corporate law to best figure out how to do business there, or 'simply' set up in Ireland where laws on purpose have been made to emulate american corporate structures, positions, titles, etc, and yet benefit from free trade and pan-european laws and standards provided by the EU.
lumberjack 10y ago
Lots of completely irrelevant arguments that don't actually address the case in question which is very simply that EU can get $X billion out of Apple in tax and therefore they will because they can, period. There is nothing for the EU to gain from leaving those billions in Apple's pockets. Apple is not employing that many people nor is it contributing to the EU economy in any significant ways and if they pull out altogether it will only allow EU competitors to gain some market share. Moreover, unlike Facebook, Google and Microsoft, Apple does not provide any infrastructure critical services to any EU entities.
- RobertoG 10y ago
  I doubt the EU can get $X billion out of Apple. I bet they would like that, but, the fact is they tax in €. The European Central Bank, it's the issuer of €, they can, and they do, create the desire quantity of €X billion literally from nothing. The EU can't never be short of Euros. That's a fact. So, necessarily, taxing, and, in this case, sanctions, have other purposes.
- spoonie 10y ago
  You could probably argue that their resellers are earning money from Apple products' popularity. Resellers and broken screen repairers actually!
- vixen99 10y ago
  Purely as a matter of fact: given Apple's prices, why don't people buy those EU competitors' products then? Apple products contribute to Europeans' lives to the extent precisely measured by how much they're prepared to pay for them. Quite a lot it seems. You could say that the $14 billion or so represent votes for Apple: i.e., it's derived from money freely handed to Apple for something considered of value by the purchasers who have already paid 20% in VAT taxes. Worth pointing out that no detailed evidence or methodology on the Apple case has yet been made public by the EU. The courts will decide.
Oletros 10y ago
Taking into account that the EC ruling is not about tax competition, the Mises article is moot
dogwalksme 10y ago
This is an opinion piece, and mostly rubbish at that. Why is this here?
british_india 10y ago
The world will never lose its supply of capitalists looking to externalize their costs.
tnzn 10y ago
Let's word it in a truer way : corporations that milk the people using their workforce to make billiond
jacknews 10y ago
It seems mises are surprised by the fact the European UNION aims to harmonise tax laws. That is one of the main points of the organisation. Of course that prevents individual countries from "racing to the bottom" with their own tax, environmental, and other laws, which seems to be mises real problem with the EU.

21 points by andrenth 10y ago

tmaly 10y ago

I made this same point the other day and got down voted for suggesting that Ireland may leave the EU over this.

deleted 10y ago
[deleted]
silvestrov 10y ago
If Ireland leaves EU then Ireland is no longer interesting for Apple (and other tech companies). Ireland is an entry to the full EU market. Ireland itself is a very small market compared to EU.
deleted 10y ago
[deleted]
Oletros 10y ago
Perhaps you got down voted because even if it has been explained a lot of times, the EC has no problem with Ireland competing with low tax rates. The case is not about low tax rates, the case is about an state (previously was Belgium and 35 EU companies) that give private and ad-hoc deals to some companies distorting the competition between companies And perhaps you got downvoted because saying that Ireland should leave the EU means that you have a poor knowledge of EU countries economies.
- vixen99 10y ago
  Alleged private and ad-hoc deals. Let's wait for the detailed facts to emerge.
  - Oletros 10y ago
    Alleged? It has been a ruling already
soneil 10y ago
That's incredibly unlikely, really. Firstly, and most notably, the EU is overwhelmingly popular in Ireland. (in the most recent eurobarometer I've seen, 2nd highest for "positive image of the EU" - http://ec.europa.eu/public_opinion/archives/eb/eb83/eb83_first_en.pdf http://ec.europa.eu/public_opinion/archives/eb/eb83/eb83_fir... ) Second, Ireland is a net recipient within the EU - we receive more than we give. And that doesn't even take the bailout into account. We honestly can't afford to turn that away. Third, the whole USP of Ireland's corporate-friendly approach is to give multinationals a "cheap, friendly foothold" in the EU. Instead taxing them heavily, we rely on attracting enough of them to balance it out (quantity vs quality). So the people don't want to leave the EU, and wouldn't benefit from it. The state don't want to, and wouldn't benefit from it. And the MNCs such a move would pretend to defend, don't want to and wouldn't benefit from it.

mhw 10y ago

"Obviously, without considering state organizations for what they are — i.e., parasitic organizations" Well, that's one perspective. People will disagree on this point, and it's useful to know the basic position on which the rest of the article is based.

paulgb 10y ago
Yes, the thesis of this seems to be "tax is bad, tax competition will lead to a race to the bottom, so tax competition is good". Which is fine, but I was hoping for an argument that didn't rely on those assumptions.

steenreem 10y ago

This article is highly subjective: "Since the 2009 crisis, Ireland has systematically been designated as the official scapegoat of every politician, witch-hunter, and other demagogue trying to avoid any discussion about the real problem: the explosion of unproductive and anti-competitive government expenditures."

herge 10y ago

One other benefit that Ireland offers than just a low tax rate is more 'pliable' business laws, in that say you are an American company trying to set up a subsidiary in the Euro zone. You can read up in length on either French, Germany or Italian corporate law to best figure out how to do business there, or 'simply' set up in Ireland where laws on purpose have been made to emulate american corporate structures, positions, titles, etc, and yet benefit from free trade and pan-european laws and standards provided by the EU.

lumberjack 10y ago

Lots of completely irrelevant arguments that don't actually address the case in question which is very simply that EU can get $X billion out of Apple in tax and therefore they will because they can, period. There is nothing for the EU to gain from leaving those billions in Apple's pockets. Apple is not employing that many people nor is it contributing to the EU economy in any significant ways and if they pull out altogether it will only allow EU competitors to gain some market share. Moreover, unlike Facebook, Google and Microsoft, Apple does not provide any infrastructure critical services to any EU entities.

RobertoG 10y ago
I doubt the EU can get $X billion out of Apple. I bet they would like that, but, the fact is they tax in €. The European Central Bank, it's the issuer of €, they can, and they do, create the desire quantity of €X billion literally from nothing. The EU can't never be short of Euros. That's a fact. So, necessarily, taxing, and, in this case, sanctions, have other purposes.
spoonie 10y ago
You could probably argue that their resellers are earning money from Apple products' popularity. Resellers and broken screen repairers actually!
vixen99 10y ago
Purely as a matter of fact: given Apple's prices, why don't people buy those EU competitors' products then? Apple products contribute to Europeans' lives to the extent precisely measured by how much they're prepared to pay for them. Quite a lot it seems. You could say that the $14 billion or so represent votes for Apple: i.e., it's derived from money freely handed to Apple for something considered of value by the purchasers who have already paid 20% in VAT taxes. Worth pointing out that no detailed evidence or methodology on the Apple case has yet been made public by the EU. The courts will decide.

Oletros 10y ago

Taking into account that the EC ruling is not about tax competition, the Mises article is moot

dogwalksme 10y ago

This is an opinion piece, and mostly rubbish at that. Why is this here?

british_india 10y ago

The world will never lose its supply of capitalists looking to externalize their costs.

tnzn 10y ago

Let's word it in a truer way : corporations that milk the people using their workforce to make billiond

jacknews 10y ago

It seems mises are surprised by the fact the European UNION aims to harmonise tax laws. That is one of the main points of the organisation. Of course that prevents individual countries from "racing to the bottom" with their own tax, environmental, and other laws, which seems to be mises real problem with the EU.