5 ms·

It’s always been like that, hasn’t it? I seem to recall it being one of the reasons why liberalism has had such staying power. It was how the Dutch became a po

by jaabe 7y ago

It’s always been like that, hasn’t it? I seem to recall it being one of the reasons why liberalism has had such staying power. It was how the Dutch became a powerhouse on the line of Spain, England and France in the colonial age. Because they let their people be, and didn’t take their wealth, it became an attractive haven for rich families who then did business. I’m not sure the latter is as beneficial as it was then, as you can now turn money into more money without investing in local business, but the former is going to remain true forever. People who have the means to do so, will always chose the freer country.

adventured 7y ago
It's still true. Alluring taxation approaches rapidly turned Hong Kong, Singapore and Ireland into very wealthy nations. All three used very low tax systems to draw wealth and investment to their shores in various ways. Works very well for small, stable nations. It loses effectiveness with increasing population scale. The approach is better to the extent you have a population to tax system benefit imbalance (Ireland having < 5 million people and drawing hundred billion dollar companies to invest). Ireland went from being an always-underdog to Britain, to having nearly twice their GDP per capita. Finland and Sweden in 1990 had a GDP per capita 100% higher than Ireland; now Ireland is ~50%-60% higher. It took only 30 years to transform Ireland into a far wealthier nation and it was mostly due to the very attractive tax structure for large corporations. It made them very well positioned to ride the globalism economic boom.
- mikhailfranco 7y ago
  Another significant factor in Ireland's rise was joining the EEC-EU. Ireland benefited with infrastructure gifted from the Regional Fund, and farming subsidies from the protectionist Common Agricultural Policy (CAP).
  - barry-cotter 7y ago
    No one doubts that helped but it wasn’t necessary. As soon as economic management went from import substitution to export promotion Ireland started growing a lot faster. You can’t turn around 50 years of idiocy immediately but EU membership isn’t a panacea either, look at Greece. Countries outside trading blocs in vaguely similar situations have made similar gains. Singapore has about the same number of people and a similar lack of natural resources with an educated populace and went from grinding poverty to the first world. New Zealand shows that agricultural nations can do fine trading on world terms too. Once we stopped punching ourselves in the face growth was going to come.
- walterbell 7y ago
  Do you happen to know who/what lead that policy change in Irish government, and why it was not opposed by neighboring EU countries?
  - pjc50 7y ago
    The history section on Wikipedia is good; https://en.m.wikipedia.org/wiki/Corporation_tax_in_the_Republic_of_Ireland https://en.m.wikipedia.org/wiki/Corporation_tax_in_the_Repub... It seems to have got started in the early 80s, when Ireland was still a very poor country. The major changes were in 1995. Tax policy is still mostly a reserved matter in the EU and there is a taboo on trying to dictate rates, but this is changing - in part due to the obvious huge tax avoidance problem.
  - barry-cotter 7y ago
    The EU is a collective organisation of sovereign states, legally equal, not a Franco-German empire, so they can’t dictate the details of tax policy to other member states for their benefit.
- deleted 7y ago
  [deleted]
- mikhailfranco 7y ago
  You should use GNI not GDP for Ireland, as most of the pass-through untaxed corporate profits do not affect the local people, so measures like GDP per capita are meaningless: https://en.wikipedia.org/wiki/Modified_gross_national_income https://en.wikipedia.org/wiki/Modified_gross_national_income
  - barry-cotter 7y ago
    You should use Gross National Product or Gross National Income for all of these comparisons to correct for the distortions you mention. Small countries that are well governed and regulated enough to have a large financial sector look even better using GDP per capita than GNI per capita but Luxembourg, Hong Kong, Ireland, Singapore etc. do very well even on a GNI basis. https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)... Average individual consumption is a better measure of the standard of living though unfortunately all we have reliably is household final consumption. Again, the rankings are quite similar. https://en.wikipedia.org/wiki/List_of_countries_by_household_final_consumption_expenditure_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_household...

by jaabe 7y ago

adventured 7y ago

It's still true. Alluring taxation approaches rapidly turned Hong Kong, Singapore and Ireland into very wealthy nations. All three used very low tax systems to draw wealth and investment to their shores in various ways. Works very well for small, stable nations. It loses effectiveness with increasing population scale. The approach is better to the extent you have a population to tax system benefit imbalance (Ireland having < 5 million people and drawing hundred billion dollar companies to invest). Ireland went from being an always-underdog to Britain, to having nearly twice their GDP per capita. Finland and Sweden in 1990 had a GDP per capita 100% higher than Ireland; now Ireland is ~50%-60% higher. It took only 30 years to transform Ireland into a far wealthier nation and it was mostly due to the very attractive tax structure for large corporations. It made them very well positioned to ride the globalism economic boom.

mikhailfranco 7y ago
Another significant factor in Ireland's rise was joining the EEC-EU. Ireland benefited with infrastructure gifted from the Regional Fund, and farming subsidies from the protectionist Common Agricultural Policy (CAP).
- barry-cotter 7y ago
  No one doubts that helped but it wasn’t necessary. As soon as economic management went from import substitution to export promotion Ireland started growing a lot faster. You can’t turn around 50 years of idiocy immediately but EU membership isn’t a panacea either, look at Greece. Countries outside trading blocs in vaguely similar situations have made similar gains. Singapore has about the same number of people and a similar lack of natural resources with an educated populace and went from grinding poverty to the first world. New Zealand shows that agricultural nations can do fine trading on world terms too. Once we stopped punching ourselves in the face growth was going to come.
walterbell 7y ago
Do you happen to know who/what lead that policy change in Irish government, and why it was not opposed by neighboring EU countries?
- pjc50 7y ago
  The history section on Wikipedia is good; https://en.m.wikipedia.org/wiki/Corporation_tax_in_the_Republic_of_Ireland https://en.m.wikipedia.org/wiki/Corporation_tax_in_the_Repub... It seems to have got started in the early 80s, when Ireland was still a very poor country. The major changes were in 1995. Tax policy is still mostly a reserved matter in the EU and there is a taboo on trying to dictate rates, but this is changing - in part due to the obvious huge tax avoidance problem.
- barry-cotter 7y ago
  The EU is a collective organisation of sovereign states, legally equal, not a Franco-German empire, so they can’t dictate the details of tax policy to other member states for their benefit.
deleted 7y ago
[deleted]
mikhailfranco 7y ago
You should use GNI not GDP for Ireland, as most of the pass-through untaxed corporate profits do not affect the local people, so measures like GDP per capita are meaningless: https://en.wikipedia.org/wiki/Modified_gross_national_income https://en.wikipedia.org/wiki/Modified_gross_national_income
- barry-cotter 7y ago
  You should use Gross National Product or Gross National Income for all of these comparisons to correct for the distortions you mention. Small countries that are well governed and regulated enough to have a large financial sector look even better using GDP per capita than GNI per capita but Luxembourg, Hong Kong, Ireland, Singapore etc. do very well even on a GNI basis. https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)... Average individual consumption is a better measure of the standard of living though unfortunately all we have reliably is household final consumption. Again, the rankings are quite similar. https://en.wikipedia.org/wiki/List_of_countries_by_household_final_consumption_expenditure_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_household...