Daily Austerity Watch: The United States of Ireland

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from 24/7WallStreet:




Daily Austerity Watch: The United States of Ireland
Posted: April 14, 2011 at 10:50 am


Let’s close our eyes and pretend we live in a country where taxes so low that companies are beating down the door to set up shop there. Readers of Daily Austerity Watch may ask whether this is some Tea Party fantasy, but no Ireland is a real place. Thanks to its insanely short-sited fiscal policies, the country is a basket case.

Ireland’s corporate tax rate is 12.5%, which makes it attractive to scads of American businesses looking to lessen the amount they owe to the IRS. There is even a tax avoidance strategy called “The Double Irish” for that reason. Though the U.S. tax rate is 39% though many large corporations pay far less than that thanks to a plethora of loopholes. Ireland has the second lowest overall tax rate in Europe at 26.5%, trailing only Luxemburg’s rate of 21%.

For a while, Ireland’s policy worked like charm.

Dubbed the Celtic Tiger, Ireland’s GDP expanded on average by 6% between 1995 and 2007, according to The CIA’s World Factbook. Irish people who had moved overseas returned to their homeland because there were plenty of jobs. The country entered into its first recession in 2008 and GDP fell more than 3%. A year later, the economy shrank nearly 8% and it declined 1% in 2010. With unemployment topping 14% for the first time since 1994, emigration from Ireland is soaring. The economy sank the most in the fourth quarter of 2010, the third year in a row it has shrunk. Modest growth is expected to return in 2011. .........(more)

The complete piece is at: http://247wallst.com/2011/04/14/daily-austerity-watch-the-united-states-of-ireland/#ixzz1JVmOzIK0