6 ms·

It's weird that the EU has a monetary union, but so much difference in corporate income tax rates. Great that IE is 12%, but this "competition" is BS in the se

by naskwo 8y ago

It's weird that the EU has a monetary union, but so much difference in corporate income tax rates. Great that IE is 12%, but this "competition" is BS in the sense that they needed the higher-tax countries to bail them out just a few years ago: https://en.wikipedia.org/wiki/Post-2008_Irish_banking_crisis https://en.wikipedia.org/wiki/Post-2008_Irish_banking_crisis It's a leak in the EU system, and it needs to be plugged. Just imagine what a unified income tax rate in the EU would do. (Post-Brexit, although if I were a gambling man, I'd wager that the Brexit will never materialize; A Brexit would sort of be like throwing out your existing post-ww2 source code instead of refactoring. Recipe for disaster). THEN countries would really need to compete on quality of life and infrastructure to attract (US) corporations to establish show. Amsterdam is happy to welcome all the post-Brexit (see comment above) banks and EU-related orgs, as is Frankfurt.

jmickey 8y ago
Agreed, this is something we at http://volteuropa.org http://volteuropa.org are working towards! Unified tax rates would greatly reduce the burden of setting up and running a business in the EU.
- icebraining 8y ago
  It's amazing how little that site actually says. It's just populist talk with a smiley face.
- rorykoehler 8y ago
  Unified tax rates in the eurozone will just make smaller poorer countries uncompetitive funnelling all the money to manufacturing powerhouses with high purchasing power like Germany.
rusk 8y ago
You are correct in saying this is a leak in the EU system. You could say it relates to the fact that what you have is a centralised money system but with a federated reserve. The EU banking system as a whole was very weak. Optimistically configured you might say. When the economy plunged it sent ripples right across the European banking sector which essentially were contained in Ireland, which as a small economy could take the hit without affecting the rest of the continent. If you think about it, there's no way the sums that were lost in the banking crisis could ever have been vested in a small country like Ireland. There were creative financial strategies going on everywhere and Ireland was only a single node in all of this. When you look closer at the whole thing, a lot of the money lost was due to political decisions in the midst of the crisis, rather than purely financial mismanagement in the years before. Here's a few. Ireland being forced to take on payment of "subordinate" bond holders [0]. The bank guarantee [1]. The failure to nationalise (in time) what was effectively a financial time bomb [2] Ireland was a patsy for the failures of the European system. As a weak link in the chain Ireland naturally took the fall, and many were outraged for a time, but now in light of Brexit everyone's quite happy to be such a significant debtor. [0] http://www.thejournal.ie/troika-warned-a-bomb-will-go-off-in-dublin-unless-anglo-bondholders-repaid-334621-Jan2012/ http://www.thejournal.ie/troika-warned-a-bomb-will-go-off-in... [1] https://www.irishtimes.com/business/financial-services/night-of-the-bank-guarantee-big-questions-remain-unanswered-1.2212841 https://www.irishtimes.com/business/financial-services/night... [2] https://www.irishtimes.com/news/government-to-nationalise-anglo-irish-bank-1.834324 https://www.irishtimes.com/news/government-to-nationalise-an...
barrkel 8y ago
Bear in mind that countries like France have even lower rates in practice due to various loopholes for their largest corporations - https://www.irishexaminer.com/business/france-has-lower-effective-tax-rate-than-ireland-study-227320.html https://www.irishexaminer.com/business/france-has-lower-effe... - effective tax rate of 8.2% as of 2013. The leak in the system is consolidated tax base, not different tax rates. That is, booking revenue (especially digital revenue) from sales across the whole of the EU in a single EU country for tax purposes promotes a race to the bottom. The right answer is to tax in proportion to the economic activity per country - https://en.wikipedia.org/wiki/Common_Consolidated_Corporate_Tax_Base https://en.wikipedia.org/wiki/Common_Consolidated_Corporate_... . Unified corporate and income tax rates aren't a smart idea. There's no good reason to force one government to be less efficient than another. Finally, the bailout (and to be clear: loans, not free money, and loans that were paid off early because they had higher interest rate than was available on the market) of Ireland was an indirect support for banks in other countries that had capital surplus for some years, Germany especially. The ECB forced Ireland to prevent bondholders from taking any losses - https://www.irishtimes.com/news/politics/ecb-refusal-on-bondholders-left-public-with-inappropriate-burden-1.2512935 https://www.irishtimes.com/news/politics/ecb-refusal-on-bond...
- lucideer 8y ago
  > Bear in mind that countries like France have even lower rates in practice due to various loopholes for their largest corporations Ireland also has lower rates in practice due to allowances for their largest corporations: Apple's allowance afforded them an effective rate of <1%, hence the $21 billion.
  - ju-st 8y ago
    Ireland is not the only loophole: Luxembourg, Belgium and the Netherlands made "special" deals with large corporations, too. https://www.ft.com/content/7ce5bf96-a83d-11e7-ab55-27219df83c97 https://www.ft.com/content/7ce5bf96-a83d-11e7-ab55-27219df83...
    - lucideer 8y ago
SeanMacConMara 8y ago
>they needed the higher-tax countries to bail them out just a few years ago: You have that the wrong way around. The Irish taxpayers, unwillingly, covered the massive gambling losses of private individuals and companies(including a group of businesses called "banks") who were playing in the (German-lead US-style) light-touch bank de-regulation "bank-casinos" of Europe. The "casinos" in Ireland had a disproportionate share of that action at approx 40% of the EU total. The total cost to the Irish tax-payer was approx 65 billion euro I've heard. We bailed them out using money we _borrowed_ from them and have paid back in full (recently i think?) with interest. Thats like borrowing money from your loan shark to cover his poker losses.
- pjc50 8y ago
  Quite a lot of that was down to AIB, Sean FitzPatrick and Sean Quinn; at the height of the property boom there was all sorts of extraordinary conduct going on. Much of it on property loans within Ireland to other Irish companies.
- IAmEveryone 8y ago
  I usually don't engage in this sort of trivial nationalism. But I just have to inject that your retelling of this story omits the fact that Irish banks were obviously first in line to go belly-up. It is true that those banks had various lenders in Germany/France/wherever, and that the consequences of an all-out collapse of the Irish economy would have had negative effects in those countries as well. But presenting it as some sort of altruistic sacrifice to allow them to rescue Ireland from a potato-based future is just adding moral bankruptcy to the other.
  - SeanMacConMara 8y ago
    a few points Thanks Nothing about this is trivial. This is not nationalism. There should be no pride in our creation or solution to our portion of this moronic mess. The obvious was ommitted because it was obvious. The banks are only "Irish" in a nominal sense. The people or state as a whole didn't own them. Don't forget they are international commerical businesses and can and should be shut down when they fail like any other business. Obviously they are a critical piece of modern infrastructure and there was already plans in place for their failure such as "deposit protection insurance" schemes etc. The big question is if those plans were/are robust enough in modern countries. We _all_ need to be able to confidentaly able to "cull" bad components of our modern infrastructure without fear of causing wider problems. Nothing about it was altruistic. Fear and panic very obviously gripped the politicians involved on all sides. As an interesting related historic aside, we survived reasonably well without our banks for 6 months previously when we were a much weaker economy. https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%80%9376%29 https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%...
netsharc 8y ago
Yeah, obviously some people are against a tax union, for example Luxembourg profitted from being a tax haven, and guess what the former PM (and before that Fin Min) of that country is doing now: https://en.m.wikipedia.org/wiki/Jean-Claude_Juncker https://en.m.wikipedia.org/wiki/Jean-Claude_Juncker
- naskwo 8y ago
  What did the Panama Papers really unearth? Has there been _any_ effect? Who are the UBOs of these Luxemburg entities? Happy activist investors? Or wealthy family funds who funnel the money to CH and the Caribbean? A leaking bucket. The rules around taxation in a global economy where mainly ideas/IP are shuffled around needs to evolve.
pjc50 8y ago
Monetary union without a fiscal union. It is a slightly odd position, but most countries aren't ready for the sovereignty transfer implied by centralising fiscal policy. The politics of paying for Greek pensions just doesn't work.
- charlesdm 8y ago
  Those politics will likely never work.
  - stephen_g 8y ago
    I think eventually this will lead to the breakup of the Euro... Fixed exchange rates generally don't work long-term without fiscal transfers to balance things out (like the US's federal budget does for the states). I don't think the EU can keep this up for that much longer - at some point they'll either have to consolidate fiscally or break up the monetary union.
- naskwo 8y ago
  10 years ago, the bond spreads of sovereign bonds would have reflected this accurately, where Greece would have a higher YTM than Germany. The idea of the euro is convenient, but since the crisis of 2007-2009 + various (Greek) scares, it's devolved into a "cake and eat it" situation. A country cannot devaluate its currency (Sweden still has this freedom if it so wanted). I'm not sure what the solution is, but to start, I would homogenize corporate tax rates, and discourage tax-shopping inside the EU.
talideon 8y ago
> It's weird that the EU has a monetary union, but so much difference in corporate income tax rates. That's because it's a monetary union, not a fiscal union. > Great that IE is 12%, but this "competition" is BS in the sense that they needed the higher-tax countries to bail them out just a few years ago: That's based on a severe misconception. The Irish headline rate is 12.5%, but the effective rate doesn't differ much from that. Meanwhile, you have countries like France with a much higher headline rate, but an effective rate much lower than the Irish one. So no. Ireland was not bailed out by higher tax countries. Moreover, our corporate tax rate had nothing to the financial crises, whose roots in Ireland can ultimately be traced back to the ECB keeping interest rates artificially low to help with German reunification.
- clu3l355 8y ago
  Moreover, Ireland was the fastest-recovering nation financial crisis, driven undoubtedly in part by its preferential corporate tax rates
  - patrickk 8y ago
    Ireland's economy is highly linked to how well the broader global economy is doing. When major US corporations look to expand during good times, Ireland often directly benefits. Ireland's domestic economy is comparatively tiny, but plenty of large industries like tech, pharma and some random ones like global aircraft leasing[1] have a large base in Ireland to support their European and sometimes global operations. [1] https://www.irishtimes.com/business/transport-and-tourism/aircraft-leasing-worth-more-than-500m-to-irish-economy-1.3363070 https://www.irishtimes.com/business/transport-and-tourism/ai...
  - talideon 8y ago
    Again, there's nothing particularly 'preferential' about Ireland's tax rates. Other countries, such as the aforementioned France, had much more preferential effective ones. The difference is that our rate is more transparent because the effective rate isn't all that different from the headline rate. So no, it wasn't.
throwawaymanbot 8y ago
My good man, I think you'll find that the Irish Tax Payer (public funds) was on the hook for that Private debt, In the same way the American Tax payer was. There was no bail out for Ireland. There was for the banks in Ireland by the Citizens. This is a scandal for many reasons. But clearly not what you just wrote that Ireland was bailed out by higher-tax countries in the EU. (Unless you class Irish Tax payers as higher Tax EU Countries?) Ireland's Tax Payers are still paying and will be paying for this scandal for Decades to come.
dogma1138 8y ago
Not any less crazy than being in a monetary union where you do not control your own currency or inflation and where the body who does (ECB) is technically outside of the political system and out of reach of both the national and EU electorates. Essentially because of the above what you call crazy is the only option for those countries to survive. When you can’t make yourself cheaper than Germany because of the Euro the only way of making yourself appear cheaper is through tax breaks.
- Angostura 8y ago
  Why is that odder than the Bank of England, which sets interest rates and is also technically outside of the political system.
  - dogma1138 8y ago
    Because the Bank of England controls the pound and everyone one who works for it are answerable to the electorate in one way or another. On the other hand a Eurozone member cannot set it's own interest rates, inflation, can't restructure it's own debt, doesn't control it's exchange rates etc. It takes away nearly all the financial tools a country has. Do you know why you need to bail out Ireland? because it doesn't have access to these tools, It can't restructure it's own debt and it can't control it's own currency and exchange rates to settle it and any changes to the Euro which might be a net positive to Ireland would be global and could often result in a net negative to other Eurozone members like Germany. Lets take exchange rates for or example. They have the same exchange rate which means that if Ireland and Germany want to export potatoes they both get paid at the same rate in their local currency. This is a huge deal because it prevents one country from being more competitive than another as it would lose too much on the exchange rates. This essentially takes away an important tool that countries have which is being competitive on export by reducing their prices but maintaining a good local revenue through favorable exchange rates. And while it might appear "fair" it's not because fixed exchange rates favor larger economies like Germany which can be competitive more competitive due to simply their sheer production capacity. Next you have imports again the exchange rate is fixed, also the import taxes are fixed so importing goods into Ireland would cost as much as to Germany excluding other marginal costs which again is a problem because Germany is a larger market, it's closer to the Netherlands which is the major port into the EU, it's on the mainland which give it easier access to the med as well as a land route to Russia, Turkey and beyond. Now lets look at another example debt restructuring. Lets look at both "internal" and "external" debt, in this regard internal means in your own local currency and external means in a foreign currency. Internal debt you can repay by well simply "printing more money", sure you can't go wild with that but this is something all countries do all the time they play with interest rates and many other levers and reduce their debt at the expense of higher short term inflation. External debt again if you control the exchange rates and control the supply of your own currency you have much better tools for debt restructuring. And these are just the most crude and basic examples there are benefits to the Eurozone but you do take away most of not all of the tools countries have of managing their own financial and monetary policy. You also cannot make adjustments that you could make otherwise because you now have to set a unified policy across all member countries.
rorykoehler 8y ago
Ireland's tax rate has nothing to do with the bail out. It's intellectually dishonest to link the two.
conistonwater 8y ago
> Great that IE is 12%, but this "competition" is BS in the sense that they needed the higher-tax countries to bail them out just a few years ago The two are not related, things just don't work that way. The size of the Irish government's assumed liabilities and the bailout was relative to the size of capital inflows into Ireland primarily from the continent, it was quite large relative to the size of the Irish economy whether counting or foreign corporations or not. It's not a good idea to just put those two things next to each other and just sort of imply that they are related.

by naskwo 8y ago

jmickey 8y ago

Agreed, this is something we at http://volteuropa.org http://volteuropa.org are working towards! Unified tax rates would greatly reduce the burden of setting up and running a business in the EU.

icebraining 8y ago
It's amazing how little that site actually says. It's just populist talk with a smiley face.
rorykoehler 8y ago
Unified tax rates in the eurozone will just make smaller poorer countries uncompetitive funnelling all the money to manufacturing powerhouses with high purchasing power like Germany.

rusk 8y ago

You are correct in saying this is a leak in the EU system. You could say it relates to the fact that what you have is a centralised money system but with a federated reserve. The EU banking system as a whole was very weak. Optimistically configured you might say. When the economy plunged it sent ripples right across the European banking sector which essentially were contained in Ireland, which as a small economy could take the hit without affecting the rest of the continent. If you think about it, there's no way the sums that were lost in the banking crisis could ever have been vested in a small country like Ireland. There were creative financial strategies going on everywhere and Ireland was only a single node in all of this. When you look closer at the whole thing, a lot of the money lost was due to political decisions in the midst of the crisis, rather than purely financial mismanagement in the years before. Here's a few. Ireland being forced to take on payment of "subordinate" bond holders [0]. The bank guarantee [1]. The failure to nationalise (in time) what was effectively a financial time bomb [2] Ireland was a patsy for the failures of the European system. As a weak link in the chain Ireland naturally took the fall, and many were outraged for a time, but now in light of Brexit everyone's quite happy to be such a significant debtor. [0] http://www.thejournal.ie/troika-warned-a-bomb-will-go-off-in-dublin-unless-anglo-bondholders-repaid-334621-Jan2012/ http://www.thejournal.ie/troika-warned-a-bomb-will-go-off-in... [1] https://www.irishtimes.com/business/financial-services/night-of-the-bank-guarantee-big-questions-remain-unanswered-1.2212841 https://www.irishtimes.com/business/financial-services/night... [2] https://www.irishtimes.com/news/government-to-nationalise-anglo-irish-bank-1.834324 https://www.irishtimes.com/news/government-to-nationalise-an...

barrkel 8y ago

Bear in mind that countries like France have even lower rates in practice due to various loopholes for their largest corporations - https://www.irishexaminer.com/business/france-has-lower-effective-tax-rate-than-ireland-study-227320.html https://www.irishexaminer.com/business/france-has-lower-effe... - effective tax rate of 8.2% as of 2013. The leak in the system is consolidated tax base, not different tax rates. That is, booking revenue (especially digital revenue) from sales across the whole of the EU in a single EU country for tax purposes promotes a race to the bottom. The right answer is to tax in proportion to the economic activity per country - https://en.wikipedia.org/wiki/Common_Consolidated_Corporate_Tax_Base https://en.wikipedia.org/wiki/Common_Consolidated_Corporate_... . Unified corporate and income tax rates aren't a smart idea. There's no good reason to force one government to be less efficient than another. Finally, the bailout (and to be clear: loans, not free money, and loans that were paid off early because they had higher interest rate than was available on the market) of Ireland was an indirect support for banks in other countries that had capital surplus for some years, Germany especially. The ECB forced Ireland to prevent bondholders from taking any losses - https://www.irishtimes.com/news/politics/ecb-refusal-on-bondholders-left-public-with-inappropriate-burden-1.2512935 https://www.irishtimes.com/news/politics/ecb-refusal-on-bond...

lucideer 8y ago
> Bear in mind that countries like France have even lower rates in practice due to various loopholes for their largest corporations Ireland also has lower rates in practice due to allowances for their largest corporations: Apple's allowance afforded them an effective rate of <1%, hence the $21 billion.
- ju-st 8y ago
  Ireland is not the only loophole: Luxembourg, Belgium and the Netherlands made "special" deals with large corporations, too. https://www.ft.com/content/7ce5bf96-a83d-11e7-ab55-27219df83c97 https://www.ft.com/content/7ce5bf96-a83d-11e7-ab55-27219df83...
  - lucideer 8y ago

SeanMacConMara 8y ago

>they needed the higher-tax countries to bail them out just a few years ago: You have that the wrong way around. The Irish taxpayers, unwillingly, covered the massive gambling losses of private individuals and companies(including a group of businesses called "banks") who were playing in the (German-lead US-style) light-touch bank de-regulation "bank-casinos" of Europe. The "casinos" in Ireland had a disproportionate share of that action at approx 40% of the EU total. The total cost to the Irish tax-payer was approx 65 billion euro I've heard. We bailed them out using money we _borrowed_ from them and have paid back in full (recently i think?) with interest. Thats like borrowing money from your loan shark to cover his poker losses.

pjc50 8y ago
Quite a lot of that was down to AIB, Sean FitzPatrick and Sean Quinn; at the height of the property boom there was all sorts of extraordinary conduct going on. Much of it on property loans within Ireland to other Irish companies.
IAmEveryone 8y ago
I usually don't engage in this sort of trivial nationalism. But I just have to inject that your retelling of this story omits the fact that Irish banks were obviously first in line to go belly-up. It is true that those banks had various lenders in Germany/France/wherever, and that the consequences of an all-out collapse of the Irish economy would have had negative effects in those countries as well. But presenting it as some sort of altruistic sacrifice to allow them to rescue Ireland from a potato-based future is just adding moral bankruptcy to the other.
- SeanMacConMara 8y ago
  a few points Thanks Nothing about this is trivial. This is not nationalism. There should be no pride in our creation or solution to our portion of this moronic mess. The obvious was ommitted because it was obvious. The banks are only "Irish" in a nominal sense. The people or state as a whole didn't own them. Don't forget they are international commerical businesses and can and should be shut down when they fail like any other business. Obviously they are a critical piece of modern infrastructure and there was already plans in place for their failure such as "deposit protection insurance" schemes etc. The big question is if those plans were/are robust enough in modern countries. We _all_ need to be able to confidentaly able to "cull" bad components of our modern infrastructure without fear of causing wider problems. Nothing about it was altruistic. Fear and panic very obviously gripped the politicians involved on all sides. As an interesting related historic aside, we survived reasonably well without our banks for 6 months previously when we were a much weaker economy. https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%80%9376%29 https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%...

netsharc 8y ago

Yeah, obviously some people are against a tax union, for example Luxembourg profitted from being a tax haven, and guess what the former PM (and before that Fin Min) of that country is doing now: https://en.m.wikipedia.org/wiki/Jean-Claude_Juncker https://en.m.wikipedia.org/wiki/Jean-Claude_Juncker

naskwo 8y ago
What did the Panama Papers really unearth? Has there been _any_ effect? Who are the UBOs of these Luxemburg entities? Happy activist investors? Or wealthy family funds who funnel the money to CH and the Caribbean? A leaking bucket. The rules around taxation in a global economy where mainly ideas/IP are shuffled around needs to evolve.

pjc50 8y ago

Monetary union without a fiscal union. It is a slightly odd position, but most countries aren't ready for the sovereignty transfer implied by centralising fiscal policy. The politics of paying for Greek pensions just doesn't work.

charlesdm 8y ago
Those politics will likely never work.
- stephen_g 8y ago
  I think eventually this will lead to the breakup of the Euro... Fixed exchange rates generally don't work long-term without fiscal transfers to balance things out (like the US's federal budget does for the states). I don't think the EU can keep this up for that much longer - at some point they'll either have to consolidate fiscally or break up the monetary union.
naskwo 8y ago
10 years ago, the bond spreads of sovereign bonds would have reflected this accurately, where Greece would have a higher YTM than Germany. The idea of the euro is convenient, but since the crisis of 2007-2009 + various (Greek) scares, it's devolved into a "cake and eat it" situation. A country cannot devaluate its currency (Sweden still has this freedom if it so wanted). I'm not sure what the solution is, but to start, I would homogenize corporate tax rates, and discourage tax-shopping inside the EU.

talideon 8y ago

> It's weird that the EU has a monetary union, but so much difference in corporate income tax rates. That's because it's a monetary union, not a fiscal union. > Great that IE is 12%, but this "competition" is BS in the sense that they needed the higher-tax countries to bail them out just a few years ago: That's based on a severe misconception. The Irish headline rate is 12.5%, but the effective rate doesn't differ much from that. Meanwhile, you have countries like France with a much higher headline rate, but an effective rate much lower than the Irish one. So no. Ireland was not bailed out by higher tax countries. Moreover, our corporate tax rate had nothing to the financial crises, whose roots in Ireland can ultimately be traced back to the ECB keeping interest rates artificially low to help with German reunification.

clu3l355 8y ago
Moreover, Ireland was the fastest-recovering nation financial crisis, driven undoubtedly in part by its preferential corporate tax rates
- patrickk 8y ago
  Ireland's economy is highly linked to how well the broader global economy is doing. When major US corporations look to expand during good times, Ireland often directly benefits. Ireland's domestic economy is comparatively tiny, but plenty of large industries like tech, pharma and some random ones like global aircraft leasing[1] have a large base in Ireland to support their European and sometimes global operations. [1] https://www.irishtimes.com/business/transport-and-tourism/aircraft-leasing-worth-more-than-500m-to-irish-economy-1.3363070 https://www.irishtimes.com/business/transport-and-tourism/ai...
- talideon 8y ago
  Again, there's nothing particularly 'preferential' about Ireland's tax rates. Other countries, such as the aforementioned France, had much more preferential effective ones. The difference is that our rate is more transparent because the effective rate isn't all that different from the headline rate. So no, it wasn't.

throwawaymanbot 8y ago

My good man, I think you'll find that the Irish Tax Payer (public funds) was on the hook for that Private debt, In the same way the American Tax payer was. There was no bail out for Ireland. There was for the banks in Ireland by the Citizens. This is a scandal for many reasons. But clearly not what you just wrote that Ireland was bailed out by higher-tax countries in the EU. (Unless you class Irish Tax payers as higher Tax EU Countries?) Ireland's Tax Payers are still paying and will be paying for this scandal for Decades to come.

dogma1138 8y ago

Not any less crazy than being in a monetary union where you do not control your own currency or inflation and where the body who does (ECB) is technically outside of the political system and out of reach of both the national and EU electorates. Essentially because of the above what you call crazy is the only option for those countries to survive. When you can’t make yourself cheaper than Germany because of the Euro the only way of making yourself appear cheaper is through tax breaks.

Angostura 8y ago
Why is that odder than the Bank of England, which sets interest rates and is also technically outside of the political system.
- dogma1138 8y ago
  Because the Bank of England controls the pound and everyone one who works for it are answerable to the electorate in one way or another. On the other hand a Eurozone member cannot set it's own interest rates, inflation, can't restructure it's own debt, doesn't control it's exchange rates etc. It takes away nearly all the financial tools a country has. Do you know why you need to bail out Ireland? because it doesn't have access to these tools, It can't restructure it's own debt and it can't control it's own currency and exchange rates to settle it and any changes to the Euro which might be a net positive to Ireland would be global and could often result in a net negative to other Eurozone members like Germany. Lets take exchange rates for or example. They have the same exchange rate which means that if Ireland and Germany want to export potatoes they both get paid at the same rate in their local currency. This is a huge deal because it prevents one country from being more competitive than another as it would lose too much on the exchange rates. This essentially takes away an important tool that countries have which is being competitive on export by reducing their prices but maintaining a good local revenue through favorable exchange rates. And while it might appear "fair" it's not because fixed exchange rates favor larger economies like Germany which can be competitive more competitive due to simply their sheer production capacity. Next you have imports again the exchange rate is fixed, also the import taxes are fixed so importing goods into Ireland would cost as much as to Germany excluding other marginal costs which again is a problem because Germany is a larger market, it's closer to the Netherlands which is the major port into the EU, it's on the mainland which give it easier access to the med as well as a land route to Russia, Turkey and beyond. Now lets look at another example debt restructuring. Lets look at both "internal" and "external" debt, in this regard internal means in your own local currency and external means in a foreign currency. Internal debt you can repay by well simply "printing more money", sure you can't go wild with that but this is something all countries do all the time they play with interest rates and many other levers and reduce their debt at the expense of higher short term inflation. External debt again if you control the exchange rates and control the supply of your own currency you have much better tools for debt restructuring. And these are just the most crude and basic examples there are benefits to the Eurozone but you do take away most of not all of the tools countries have of managing their own financial and monetary policy. You also cannot make adjustments that you could make otherwise because you now have to set a unified policy across all member countries.

rorykoehler 8y ago

Ireland's tax rate has nothing to do with the bail out. It's intellectually dishonest to link the two.

conistonwater 8y ago

> Great that IE is 12%, but this "competition" is BS in the sense that they needed the higher-tax countries to bail them out just a few years ago The two are not related, things just don't work that way. The size of the Irish government's assumed liabilities and the bailout was relative to the size of capital inflows into Ireland primarily from the continent, it was quite large relative to the size of the Irish economy whether counting or foreign corporations or not. It's not a good idea to just put those two things next to each other and just sort of imply that they are related.