Tuesday, May 12, 2009

Why is the Obama Administrations clamp-down on multinational tax avoidance not a big story in Ireland?

Only Niall O'Dowd is covering this story, in the Irish Times. In the run-up to the US election, nobody in Ireland seemed to point out that it was McCain who was more in favour of free trade, and would not interfere with the ability of US corporations to avail of low Corporate Tax regimes such as Ireland. However, the Obama team won, and now it is clamping down on something which was a fundamental part of Ireland's growth over the past 10 years. e.g. last year I had dinner with a US software executive who invested European profits (realised in Ireland) in Irish buildings, land, jobs, and research, in order to avoid US tax. Is that good for the US? No. However, it was clearly good for Ireland.

O'Dowd notes:

"This is about much more than the Obama administration. The tax law issues will also be in the purview of key senate and house figures, all of whom will have a major say on the final legislation. It is there, more than with Obama. that the key Irish influence may lie. It is ironic that Ireland’s best friend currently on this issue is right-wing talk show host Rush Limbaugh who has been castigating Obama daily for his attempts to force American corporations to repatriate profit earnings. In the brave new world of Obama’s Washington, Ireland will have to take their friends where they can find them and they will likely not be within this administration on this issue."

It is the Republicans and right-wing radio (which includes many Irish-Americans, let's not forget) who are against this proposal. Though, not for any pro-Irish (or pro-Cayman Islands, pro-Bermuda, etc) reasons, but rather because it actually puts US corporations at a disadvantage against non-US companies which can still take advantages of low corporate tax regimes.

On this one, Ireland can't assume that the Democrats are automatically "friends of Ireland".

No comments: