July 28, 2014

Time to call a halt on tax

Posted in Sunday Business Post · 58 comments ·
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I don’t care if it’s legal – it’s wrong. With these seven simple words, President Barack Obama drove a six-inch nail through the heart of Irish multinational tax policy and the legal jiggery-pokery that allows American companies to ”pretend they are Irish when they are not.

Obama told a Californian audience during the week: ”You don’t get to choose the tax rate you pay. These companies shouldn’t either. Donning the tunic of a patriot, he described these companies as ”corporate deserters.

He added: ”What we are trying to do is to say that, if you simply acquire a small company in Ireland or some other country to take advantage of the low tax rate [and] you start saying, We are now magically an Irish company’, despite the fact that you might have only 100 employees there and you have got 10,000 employees in the US, you are just gaming the system, he said. ”You are an American company.

Gone is all the Moneygall stuff. Gone is the pint of Guinness in Offaly and the sprig of shamrock in the Oval Office on St Patrick’s Day. This is the real deal.

America will no longer tolerate corporate tax avoidance. It has a $130 billion deficit to plug and it wants its tax dollars. In this type of mood, it is only a small jump from here to moving on the commitments made at the G8 last year in Enniskillen, namely that there will be a standardised tax rate for global corporates to prevent funnelling money through places like Ireland to avoid their own tax liabilities.

The problem is that this effective Irish rate of 12.5 per cent cannot be taken at face value, due to the use of intercompany charges by heavyweights such as Google and Microsoft to minimise their reported income.

This so-called ”double Irish method involves shuttling profits in and out of Irish subsidiaries, largely avoiding the 12.5 per cent rate.

For example, Apple paid $713 million in corporation tax on foreign profits of $36.87 billion during the fiscal year of 2012. This corresponds to a mere 1.9 per cent, a solid 10 per cent lower than the effective rate which our government claims.

This is different from the corporate ”inversions to which Obama was directly referring, but it is now all becoming part of the same story.

For the past few years, this column has been arguing that the global tide is turning against the type of ”beggar thy neighbour tax policies which we facilitate.

Ireland’s choice has always either been to do something about this or stick our heads in the sand. We have, up to now, chosen the latter option and sided with the ”corporate deserters.

Rather than see this global change of tune as a threat, we should regard it as an opportunity to rebalance the economy so that we, the Irish people, don’t get the mickey taken out of us in terms of tax.

At the moment, foreign capital is taxed notionally at 12.5 per cent, and the normal workers of the country are facing tax rates that are multiples of that. Is this fair? Is it sensible?

Let’s be clear here. Multinationals in Ireland do not pay 12.5 per cent tax. They pay a lot less than that on profits, and some of them pay in low single figure percentages. This is a joke, and the joke is on you because that which they don’t pay, you do.

One of the reasons why Irish citizens, small businesses and embryonic start-ups are hammered with all sorts of taxation is partly because multinationals don’t pay their fair share.

This stands to reason. If we have a certain bill for running the country (the amount of which we can argue about), and yet one section of the economy is treated differently and more leniently to other parts in terms of what it pays, then the other sectors, by definition, pay more.

The multinationals operate in this country like every other business. Children of their employees go to our schools like the rest of us. Multinational executives drive on our roads, drink our water, use our electricity and get seen in our hospitals like everyone else. Their managers and workers were educated by our state.

These companies are not corporate colonialists living in an economic garrison; they exist as part of a functioning society. And so they should treat us with respect, and pay the modest amount of tax which we – and every country – expects them to.

Reassessing what multinationals pay is not some pseudo-communist idea about taxing capital. It is quite the opposite, and is a legitimate building block of a sensible and entirely reasonable policy where each sector pays its fair share.

In demanding that multinationals actually pay 12.5 per cent – the actual corporate tax rate – Ireland is still one of the most attractive places to invest in the industrialised world. However, the income of the citizens of the country and the returns on foreign investment would at least begin to be treated similarly.

As things stand, the deal that multinationals get in Ireland is phenomenally good for them.

Latest US tax figures indicate that profits per employee at US-owned companies in Ireland are at $970,000, whereas the corporate tax paid in Ireland per employee is just under $26,000. This is a deal like no other for the multinationals.

According to the US Bureau of Economic Analysis, US multinationals in Ireland reported net income of $95.6 billion. These firms employ 98,500 people here, which gives profits per employee of the aforementioned $970,000. In contrast, according to the IDA, tax paid per employee of multinationals to the Irish exchequer was €19,000, or $25,840 at today’s exchange rate.

The American data revealed that ”taxes other than income and payroll taxes payable in Ireland in 2010 amounted to €2.4 billion, giving an effective rate of tax of 2.5 per cent – far below the official headline rate of 12.5 per cent.

If these companies were even to deign to pay tax at the very low (by international standards) rate of 12.5 per cent, the exchequer would net €12 billion in corporation tax per year. €12 billion! No doubt some other jurisdictions would claim they should have a share of this, and some companies might up and leave, but if we phased it in gradually, the gain to Ireland could be huge. The budget deficit would be eliminated immediately, and the country would run a surplus.

The multinationals would still be making over €800,000 profit per employee here, so they could hardly complain. Ireland would remain one of the most profitable locations in the world for US multinationals.

The global tax debate has begun, and we should make our own constructive proposals to influence the outcome, rather than stick our heads in the sand and have a solution foisted on us. Obama couldn’t have been clearer. Let’s listen up.


  1. Patrick

    Does Enda read this?

    • woodsey

      ‘Twasn’t Enda who started it! Ireland’s been on this ‘fix’ since it was introduced in the 1950′s as the ‘First Programme for Economic Expansion’ by economist and Secretary of the Department of Finance, T K Whitaker (still living!) and accepted by Fianna Fáil’s Sean Lemass. Then it was sold as a great short-term provider of jobs, with the idea that the locals employed would learn the trade and, helped by Irish state-provided subsidies, would set up equivalent Irish companies. Now, the attitude of ‘what was good enough for me father, is good enough for me’ and, failing any further radical or even intelligent input, it’s has been allowed to drift towards a ‘too big to fail’ dependency on a foreign-based system. Squeezed between European-based tax harmonisation and American reform, I feel another crisis looming?!

      • EugeneN

        I am glad you weren’t in charge when this policy was decided upon. We tried autarky and indigenous industry ( semi-states etc). The policy worked, for the most part. Whiny begrudgery of the bar stool pundits aside.

  2. CorkPlasticPaddy

    @ Patrick.

    ‘Enda couldn’t get out of his own way’!

    David, couldn’t agree more with what you had to say!!!

  3. As we all know as we’re paying the cost of our banking fiasco: politics by design is reactive. Our politicians will react and adjust our 12.5% corporate tax just as Obama’s patriotic, moral call on US multi-national tax avoidance is equally reactive. Apple is the epitome of US Corporate multi-nationalism…. Anyone bought an Apple product recently? In the last two years? The words “Designed by Apple in California” are placed up front and centre in recent products and the latest Mac Pro is “Manufactured in the USA”, with Tim Cook’s long term agenda of ‘bringing it all back home’. Would this be just for tax purposes or is there an argument that maybe the gap in wages between ‘Special Economic Zone’s’ like Shenzen in China and middle America’s Austin Texas (where the Pro is manufactured) is not that wide anymore or certainly narrowing year on year?

  4. VincentH

    Since 08 the Irish economic situation has been scrutinised by member states of the EU and outside to see just what the dickens is going on. I suspect France Germany and the US have been shocked with the sheer incompetence. Where the idiotic venal scrots have designed a system to provide gain to themselves.
    Can you imaging the briefing documents handed to Obama or the Chancellor on any aspect of this polity. Nothing is as it seems. We have Waterford and Limerick without an ounce of employment prospect from native enterprise. Nary a bit of real investment. But still, the hinterland has income to match the very best in Europe.
    On the subject of Tax. Who didn’t see this coming. Who when they began moaning about the EU Constitution and got a rider inserted protecting the notion of tax sovereignty that they were sitting on a bastion about to collapse under them. Oh yeah, a bunch of professional/civil servant idiots who see themselves as special ones, still.

    • EugeneN

      the government can’t do much to make magical industrial development happen in Waterford. In fact the best thing we could have done, given Ireland’s paucity of indigenous capital, was to encourage American capital in. Which was done. It was then up to the local industrialists to make hay, which they didn’t do.

  5. Reality Check

    I have a simpler solution; Make income tax 12.5%.

  6. paulpw

    Great article, a good complementary piece to this is Will Goodbody’s piece about the state of the Irish software sector. Between the two articles they give a good picture of where we actually are and where we could be if we just had the right government policies.

    http://www.rte.ie/blogs/business/2014/07/14/the-hard-reality-of-the-irish-software-industry/

    • EugeneN

      His solution is not going to work:

      “It’s a point backed up by the Irish Venture Capital Association, which claimed the software industry in Ireland has reached a tipping point. Chairman, John Flynn, said while the indigenous software sector is one of the leading segmets aiding the country’s recovery, the tax environment for investors, entrepreneurs and employees has become increasingly uncompetitive compared with the UK and the US.

      He added that high marginal tax rates in Ireland are making it difficult to attract and retain scarce human resources and are working against the excellent ecosystem which has been developed here. He also criticised recent increases in Capital Gains Tax which he described as a serious disincentive to indigenous entrepreneurs, warning that not only jobs but entrepreneurs could be lured overseas.”

      The problem with capital gains reductions is they aren’t necessarily going to go to entrepreneurs, but could easily go to property magnates. (The government did make a huge mistake in making recent property purchases CGT free). And how can we afford to reduce the high levels of taxation on high earners? WE are still €2Billion in the hole from meeting maastricht.

      So not going to happen. On the plus side Dublin is cheaper than London, and wages are better. The part of the UK to worry about is Bristol.

      • @EugeneN “Dublin is cheaper than London, and wages are better. The part of the UK to worry about is Bristol.”

        My son is studying Philosophy there. I was there for the recent Pogues gig & again last week & in nearby Bath. The whole regions is now an exurb of West London, with the London Country 2nd Weekend House set agitating for corporates to move to the West Country to escape ‘edgy’ hoods beyond the Notting Hill enclave. Bristol has it’s edgy hoods but the quality of life in the area is extraordinary. It’s going to become a Cambridge/Shoreditch hub of innovation, but as you say, Finance based to rival the IFSC rather than Tech or Engineering.

        If the proposed HS2 bullet train branches south-west from Brum to Bristol then all hell would break lose, but that’s still under discussion as far as I know. It’s looking like London is going to become Tokyo. All that needs to happen now is an independent Wales with the Euro….and Ireland is absolutey & totally fc-uk’d.

        I’m in Stirling for the vote in September and hope and pray the Scots do the right thing for Mercia and the wrong thing for themselves. If they vote to leave, the HS2 stops at Brum, no need to go any further as they’ll be total electoral and economic hegemony for the wealthy south of the island of Britain, with Birmingham finally becoming the Capital linking the river basin trade nexus of the Thames, Trent, Severn and Mersey. It’s what the architects of the Canal systems envisaged when they ‘invited’ refugees from Ireland to dig them, then lay the railroads, build the motorways…that’s why Birmingham is the Eternal City of the Shire-Irish 5th Province and, if Winston Churchill hadn’t directed the Luftwaffe to bomb the Peaky Paddy Blinders, the whole ‘destiny’ thing would have happened a few centuries earlier. But it’s inevitable.

        Didn’t anyone in Dublin realise what Cameron was up to when he ‘allowed’ the Scottish to vote for their own oblivion? And ‘the North’ of this island of Ireland? What lies ahead for them if the Scots f-off? A free-trade entrepot state-let with both the Euro and the £ once the religious nut-jobs are vanquised and Ulster rises to reclaim it’s ancient domain…but with a peaceful, secular meta-narrative, explanatory framework & legislative scaffolding?

        Unless the treacherous, traitorous Trojan Horse hiding in Ireland Inc is destroyed and the Gaels find their feet for a 2nd Republic with their own currency, trust me lads: you are absolutely fc-uk’d. Watch Scotland, then Wales, and hope and pray that the Normans in Edinburgh hold sway on Thursday 18 September 2014. And remember, remember 21 November 1974: Birmingham, Belfast, Boston: so much to answer for….but you have all been forgiven and will be saved from slavery by Mercians as you were centuries ago when I was called “St Wulstan”. Or I’m just taking the piss…that would be unusual though, wouldn’t it?

        *interesting times* as the proverb goes….

        best wishes
        Seoirse The Saxon aka
        “Mad Paddy From Brum”
        Lower Gardiner Street
        Dublin 30/7/2014 CE

        • DB4545

          I thought the Notting Hill crowd would aim for Bath rather than Bristol in the same way that the Scots “contained” most of the working classes in Glasgow rather than Edinburgh given the interesting industries around the M4? I can see why the English middleclasses are deserting the major cities. Apart from the rows of redbricks some of the cities bear a greater resemblance to Karachi or Lahore. This isn’t a racist rant by the way.I absolutely respect the speed and rise of sections of the Asian immigrants to the UK through hard work and education. Driving through London,Birmingham, Bradford and Stoke on Trent it’s scary looking at the pockets of deprivation in ethnic and what might be regarded as “traditional” English areas. If the discontent in those areas gets out of control it would make the Northern Ireland legacy look like a pub brawl.

  7. I don’t meant to sound negative every time I come on here but, being realistic – the useless, incompetent and corrupt Irish government is going to do diddly squat when it comes to this issue and yet another opportunity will be pissed up against the wall.

    • Deco

      Correct, in the substantial sense.

      In the superficial sense, the government is very busy.

      Have a look at the boarding beside the Newlands Cross Road reconstruction. It is like the PR for a Communist era state infrastructure plan in the 1980s. A load of propaganda, with loads of impressive numbers and quantities.

      So many tons of cement. So many lorries. So many diggers, etc..

      Hard sell, of the greatness of the state system, and the geniuses in charge, to the ungrateful and sceptical peasants, is the current policy.

      Beyond that, everything else is “somebody else’s fault”. The IMF, Seanie Fitz, FF, the weather etc…

      • What are they doing there Deco?

        I thought all that work was finished with the Red Cow junction functioning smoothly etc.?

        • Deco

          Adam, there are still displays in Dublin Airport (T2), concerning the Irish holding of the EU Presidency (it means that Irish government ministers get to hold lavish EU based events in their constituencies).

          It approaches all arrivals, as they walk to the baggage reclaim.

          At this stage I have forgotten that it even happened.

          But state propaganda never relents. More of this “punching above our weight” nonsense. It is also a variant of David’s “Good Room theory” with respect to the local state officialdom.

          It has completely lost any meaning (even at a superficial level) at this point in time.

          The propaganda just never ends.

  8. SMOKEY

    There you go again Mc Williams, being the outlier, trouble maker, talking sense, begorrah man these men in the Dail are trying to have a holiday could you just leave it for now!

  9. ps200306

    Obama’s talkin’ thru his h*le. He’s a lame duck president facing into his final mid-terms. You’re looking at him and thinking “the leader of the free world is about to come down on us like a ton of bricks”. Wrong! Try this: picture Obama’s face; now, in your minds eye let the face morph into our beloved leader Inda. Listen to what he’s saying: “ah lads, we’ve done shite in de locals … what can we say dat’ll make us popular again with de plebs?”

    Now you’ve got it. Obama is the same populist windbag as any parish pump Irish politician. He can no more force tax changes through congress than he can implement gun controls. He had a chance earlier in his term and he fluffed it because he won’t compromise with Republicans (or vice versa … they’re all as mad as each other). The odds are 1000-1 against anything happening in Obama’s term. Pay no nevermind to the little whiner.

    • EugeneN

      If the US wants to get money “home” ( a dubious concept for a multinational company anyway) he could reduce the 35% corporate tax rate. Reduce that to 20%, put pressure – moral or otherwise on these companies – and they will pay 20% as opposed to 0% on foreign earnings.

      BTW for people who are claiming that our policies created this, Obama is also ( in fact mainly) talking about inversions. Thats when a company buys a foreign company and then charges it’s worldwide taxes to the lower priced company. This is perfectly legit, btw ( not even a scam), if the foreign company is actually producing all those profits. In the main this is not what has happened here, although it is beginning to happen in our robust software sector, what has normally happened here is they set up subsidiaries which were never independent.

      Obama is blowing smoke. Every country in the world is a tax dodger compared to the US, which has one of the highest – maybe the highest – corporate tax rates in the world.

      • Multi nationals will get money “home” when it is economically in their interest. Tax is one of many factors. My point (as above) is perhaps wage expectation is lowering in America while rising in emerging economies. Hence Apple are now proudly stating “Manufactured in the USA” on their latest products and not because they are concerned with political reform of taxation.

        • EugeneN

          Bring money “home’ has nothing to do with where you employ people. It’s where the IP is.

          Apple are doing that with one line – the Mac Pro – which sells at $2-3K. They really can’t afford to do it anywhere else, however they are suffering a margin cost to manufacturing in the US.

  10. Tony

    Here we go again. It’s time to blame the other guy. Obama’s doing it and now DMcW is doing it.
    The Americans need to address their ridiculous budget deficit and their corporatist culture. In terms of getting into bed with the White House, there are more companies in that position than there were interns and movie stars under Clinton and Kennedy. While they bail out companies like GM, they also give them special conditions to operate under.

    “GM received an “automotive interest expense,” tax credit from the government, which was related to impairment of assets and amortization.” (http://www.marketwatch.com/story/10-us-companies-paying-no-taxes-2013-03-26)

    There are several others that get nice little “deals” that make them immune from taxes and, in some cases, oversight. Then Obama blames Ireland.
    If Americans were forced to pay income tax at a flat rate of 35% there’d be another revolution. The highest federal tax is less than 40%, and that’s only paid on income over $400k. But corporations don’t vote at the ballot box, they vote with their feet, and that’s what’s happening.

    I don’t know how the 12.5% rate here applies to multi-nationals, but it’s my understanding that they pay it on the profits derived from Irish operations. If American companies can show their government that the profits made here are properly taxed, yet somehow manage to fudge the books (not unlike our own government – 8000 people on Tús programmes are magically no longer unemployed), fair play to them.

    The call here for foreign multi-nationals to “pay their own way” is ridiculous. They pay whatever corporation tax they pay, as well as local rates and charges, employers PRSI, and in the main employ tens of thousands of people. And while their employees “use our schools” etc. those employees are already paying an exorbitant amount of tax on their salaries. This then brings us back to managing government budgets; this time on this side of the Atlantic. Our lot can’t manage their budget either, but know that if they increase the corporate tax rate, many of the multi-nationals will leave. And we’ve seen how easy it is to jump ship (remember Dell?)

    In the end it all comes down to governments operating within their means. Consider how much of each country’s budget is spent on servicing the interest on the never-to-be-repaid debt dragging them down. As long as the politicians can borrow willy-nilly to prop up the deficits they manage (that’s the same as budget mismanagement) there’ll always be one of them somewhere pointing his finger at another one. It’s called deflection, and has nothing to do with economics, budget management, or indeed income and corporate taxes. It’s all to do with politics.

  11. Fat Tony

    Doesn’t this just kick the can down the road? Suppose you (they) set up a confidential entity/company is a country outside the G20, for example an international business corporation based in Belize. Say then that their Euro/American company operates doing low-profit operations as a client of the Belize based IBC, which holds all the profits tax free. Whats can they do about that?

  12. Corporate Tax Arbitrage was a temporary opportunity/problem but like Global Wage Arbitrage faces the Black Swan of Robotics-led Onshoring, the Citizen Occupy-outrage stuff about Nation States bluffing Corporate Tax Whites is reaching a crescendo. GOOD!

    This article is a timely reprise of Mr McWilliams closing Sun evening pitch at Kilkenomics 2013. I was dozing off in the balcony but that was cause someone gave me a mega-measure of brandy in Bridie’s the night before. Or was it whiskey?

    This boat is moving fast towards Dublin. Ireland Inc needs a newe upcycled unskilled iteration.

  13. Pat Flannery

    Back in 2002 Donal Denham, the current Irish ambassador to Finland, was the newly appointed Consul General at San Francisco. Immediately prior to coming to California he had served at the Department of Enterprise, Trade and Employment.

    He went straight to work aggressively selling Ireland as a tax haven. No doubt his Dublin in-house training was what got him the San Francisco gig. I went to one of his Ernst & Young seminars explaining the ins and outs of what became known as “double Irish”.

    I was shocked because at the time Ernst & Young were under investigation by the U.S. Government for helping U.S. companies avoid U.S. taxes. But Mr. Denham assured everybody that it was all perfectly legal and was enthusiastically backed by the much-travelled Frank Fahy, then a junior minister at Enterprise, Trade and Employment.

    It is now a bit galling to hear Enterprise minister Richard Bruton criticizing President Barack Obama for finally calling out the Irish for openly prostituting their country. I witnessed them do it first hand in California 12 years ago and warned Denham and others that it would destroy Ireland. The damage to Ireland’s reputation worldwide is now irreparable. Obama is only reflecting the general view of Ireland.

    • J-Will

      @Pat

      The damage to Ireland’s reputation worldwide is now irreparable? Ráiméis !

      Conniving Obama didn’t fare to well with his recent Randori with The U.S. Congress though did he Pat?! He had his ass handed to him,when resolution HCR105 was approved by a resounding vote of 370 – 40 !

      HCR105 – a congressional resolution where Barry cannot now go to war [on a whim] in Iraq, without first consulting the congress – A nice shiny shnaffle fitted for O’bama! That’ll calm the stormy waters,while his upgraded impeachment shnaffle is being crafted – as we speak.

      The shnake,de-fanged

  14. Fat Tony

    Belize as the next whore that takes our trade? Anyone?
    What can’t that happen?

  15. DB4545

    David if what you say is correct why hasn’t Delaware been shut down as a tax haven? It’s a global economy no Government can put the genie back in the bottle. This was a message for a local electorate just like Mr. Obama did the Pint O’ Guinness routine and “I’m Barack O’Bama from the Moneygall O’Bamas for a specific electorate. It’s just politics. Virtually every major corporate is registered in Delaware for tax saving purposes. We could learn a Delaware trick and up our game on Corporate law. Part of the attraction of Delaware is the speed of resolution for Corporate law issues and knowledge of the Delaware legal codes is a must have for Corporate lawyers in the US. Why not take advantage of the opportunities that come our way instead of suggesting the world is about to cave in? Corporations control the world now not Nation States. Why not use that to our advantage and develop our Commercial Courts on the Delaware model as a USP to aid inward investment?

    • Pat Flannery

      DB4545: my observations of the use of Delaware LLCs is more about hiding ownership of personal assets, like real estate, than for tax avoidance. Admittedly Delaware has no sales tax, income tax or personal property tax and you don’t have to do business in the state to operate a Delaware LLC, but you do have to deal with the IRS. Therefore it has few advantages for ordinary corporations.

      When pimps like Donal Denham started whoring Ireland they opnely referred to themselves as the Delaware of multi-nationals. Shannon Development was particularly bad. It had dreams of becoming the robber’s roost of international tax banditry. Denham, a Trinity College business grad, was closely associated with Shannon while he was at Enterprise and Trade.

      The sad fact is that the Dublin Government’s whizz kids thought they could build a rogue economy with the connivance of a few unscrupulous politicians like Frank Fahey and Bertie Ahern. They deliberately set out to cater for the worst elements of international corporate greed. Apple became their flagship.

      Yes, Delaware is a cancer on the American personal tax system, in that it is designed to hide private money, but there is no comparison with Ireland. We save corporations hundreds of billions in taxes. It is what we do. How proud are we of that?

      • DB4545

        How proud are we of that? Not very is my answer. Unfortunately decency and nice sentiment is not how the world works. The EU recently placed pressure on Switzerland who have a long history of financial “dealings” to put it kindly. The result? A tidal wave of money has left Switzerland and is now washing up in Dubai fuelling another property bubble there. Money moves around this planet with the same keystrokes we use to make our comments on this blog. There is no effective Government control over it.
        Politicians will make all the noise they have to in order to get elected. But they will prostrate themselves before anyone who will fund their lifestyles and campaigns. That is realpolitik in the 21st century and maybe that’s always the way it’s been. It ain’t nice but it’s reality.
        I was driving through Lugano in Switzerland a few days ago. The crowd walking about the lakeside were well polished wearing the usual labels and trinkets of the Uber rich. The bus in front of me had a charming advertisement with two undertakers promising to take care of “any arrangements required worldwide” for this select clientele. Imagine being that wealthy but so insecure that you’d arrange your own funeral in advance just in case the little darlings trousered the loot and didn’t bother with a decent send off? They’re the people running this planet. They have the same faces and hungry eyes that you might see in Mountjoy Prison. Just better dressed.

  16. summacumlaudae

    No sign of Jwill tonite?busy playing scrabble i suppose and no Michael Coghlan for ages?

    • J-Will

      it’s not summa cum laudae,it’s summa cum laude (best not to copy others work – they may be having an off nite.You” be signing in under BRICK next time we see you!)

      You pop outa nowhere like a fart in the wind,no mention of the article and in search of some gossip are we ?? hah?

      Michael Coughlan is busy getting a tan i’m imagining – while working outside and building a house or extension and being productive and creative,the opposite of your contributions to date,Rookie.

      http://www.youtube.com/watch?v=57VGOVuFtMM

      • michaelcoughlan

        Hi,

        Getting a tan all right. In Kilkee on my holidays. My creativity is now focused on establishing an online retailing business which could be best described as an online farm co-op but aspiring to organise along the lines of the Mondragon Corporation in Spain:

        http://en.wikipedia.org/wiki/Mondragon_Corporation

        McWilliams articles in recent times (the only classically trained economist highlighting it) have indicated that much of what’s wrong in the west is the complete imbalance in the relationship between capital and labour in that all profits return to capital and nearly none to labour. Organisations like Mondragon Corporation have a much better relationship between capital and labour such as agreed wage ratios of a max of 9:1 from top to bottom as compared to the utterly perverse 600:1 in some cases in the US with many other differences which can be read at the link above. The areas where the Mondragon co-ops operate in Spain have the lowest unemployment rates and the wealthiest middle classes.

        What I want to achieve with the second half of my working life is to give to the young people of Ireland every reason possible to decided that this country is a place worth working in, living in, and raising a family in and not the usual present of an airline ticket to Canada or Australia where better salaries are available when they graduate.

        My daughter for example is starting national school in a few weeks. One of the schools we were considering would have 12 girls in the class (my daughter being one) 9 of which are foreign. In another school in the area over half the kids are foreign and the same in another provincial town not too far away. The standard goes UP by the way with the foreign students it’s just that our culture is being displaced and replaced with dirt cheap foreign labour.

        Recent government policies have ensure a more dysfunctional property market than ever. The policies have resulted in copper fastening prices below costs of production for decades to come simultaneously with skyrocketing rents and falling wages. It beggars belief but that’s it.

        So we have to do it for ourselves and STOP being lazy (cynical) and blame everyone else even if they deserve it!

        • michaelcoughlan

          I am hoping to complete a diploma in economics with McWilliams in the next couple of years as he is the only main stream economist who spoke recently about a framework for analysis of what’s about to be unleashed on the world which I subscribe to and that’s Irving Fisher’s debt deflation strategies;

          http://en.wikipedia.org/wiki/Irving_Fisher#Debt-deflation

          His commentary in the last year is also much more balanced with political insight which will add real value to the diploma. I am hoping that a section on the work conducted by EC Riegel on private enterprise currency alternatives could be available. Fisher shows the problem and Riegel shows the solution. Both men I would say were despised.

          The Bonbon’s of this world have the most accurate analysis in my view I have read on the monetary madness causing all the conflict and strife in the world but Riegel shows the way to prosper with the insanity of the Fed in the US and rehypothecation of money etc going on in China driving asset prices crazy.

          Michael.

          • J-Will

            Morning Michael,

            Fisher,hmmm,aside from the worrying fact that he was a eugenics freak Michael,he was blinded by an empiricist,supply and demand,monetarist mindset and therefore ,as Bonbon pointed out here many times, that Fisher,an Austrian,could never discover the immutable Truth of economics – that at the heart (and ‘soul’) of economics – is mankind’s use/mastery of Science & Technology,and the development of Chemistry,the physical principle of Fire and any economics that deviates from that Truth,for even a heartbeat,is simply a fraud.

            When you have your business plan at an advanced stage,by all means reach out and i would be happy to help brainstorm it with you.

            Enjoy the sunshine in Kilkee and “wear sunscreen” ;)

  17. gcy_1980

    Really flying through the posts now…Completely agree with the sentiment in this. However, I really doubt whether Obama or any other American politicians will take on the American multinationals over this.

  18. Deco

    We are overleveraged in many senses. Financially socially and intellectually.

    Over-reliant on borrowing, because we decided sometime in the 1990s to adopt a superficial cultural more that valued the impression above the underlying reality.

    There is an intellectual battle going on in Ireland between the advocates of more Ponzi-economics, and common sense. You see this in the property market, ultimately.

    If the laws change with respect to double-tax arrangements and other funny business, then the Ponzi-economics racket will take a massive hit.

    The response of the state will be more taxes, and more “bottlenecking” of housing supply on the east of Ireland. The most ridiculous form of “bottlenecking” is in respect to the height of construction projects in much of suburban Dublin. NAMA also plays a part here.

    If “bottlenecking” is successfully, it will result in a “second bailout of the D4 banks”. At this stage state policy is about sucking out of the workers to bailout various organized vested interests. In effect state policy is supportive of wasteful economics, and mal-investment.

    Yet there is no debate about this. In fact the recent changes in the government, and the loud mouthing of Joan Burton seems to indicate that the two government parties will chase your vote with your money, and they will come after your for both with hunger. This is a glaring sign that state policy is already too heavy for the individual trying to survive. No wonder Noonan keeps dropping hints about tax changes – but not commitments. At the first sign of a crisis in the tech sector, he will be ready to blame d’intornet the way that Ahern blamed Lehmans.

    There is so much lying going on about public policy, for the sake of the real estate market, that it is truly astounding.

    Dublin’s economy is dependent on Tech investment, state borrowing, bank bailouts, and tourism (which benefits from the bottlenecking of the Irish transport system).

    How much of the tech investment in Dublin is driven by companies locating their Euro HQ to Dublin, because it looks as if they are going to maximise their keep of (non-existent profits).

    The current Tech investment mania is heavily based on smartphones. The previous one in 1999 was based on the internet. In both cases there is relentless talk about new paradigms, and about all that can done.

    Both become low margin businesses very quickly. Especially if there is overinvestment. And nothing encourages overinvestment like low interest rates. The investment mania is driven by capital investment plans and not by cash flow. The cash flow is barely existent. Social media is a lower margin business than concrete blocks. It really is that stupid.

    We are once again planning state policies that will ensure the destruction of capital resources by means of mal investment, inefficiency and bad state planning.

    With the knock on effect that Irish people/businesses are not accumulating capital, to be in a position to deliver the productivity investments that will clear up the debt mess. We are an economy on a treadmill to hell, particularly in the East region. [ strong similarities exist with the same stupidity that exists in the SE region in Britain].

    In fact the only thing that the left in Ireland can consistently do, on a very effective basis, do is prevent productive investment. The only thing that the right can effectively do is construct policies that rely on debt as a means of facilitating growth.

    It is absolute nonsense.

    Germany has a business plan. Denmark has a how to run a welfare state efficiently plan. In Ireland we have a load of liars promising us something for nothing, and a sceptical populace who have sussed them out. Next step – the liars will lie harder, and demand more state programs to take control of matters. [ It is always insightful in a policy debate, to evaluate how much of the debater's income is extorted from the taxpayer by force, and how much from the public by their paying consent - call it the McGill versus Kilkennomics ration - because most of the speakers at McGill have state income/pensions].

    • Don’t know what you do offline, but you should get on stage at Kilkenomics 2014 and last this message out. Superb analysis.

    • Hi Deco

      Love your Kilkenomics V McGill idea!

      D

      • Deco

        McGill is a barely relevant nonsense. It is based on the assumption that a state system that us completely oversized relative to the rest o the economy can deliver results. It can’t. It is chronically inefficient. In fact state policy from everything ranging from crime prosecution, to taxation, to banking to education is becoming chronically ineffective.

        It is not about solving the problems. It is a bunch of politicians (many of them lawyers) making ridiculous statements.

        If an element in the Kilkennomics festival had system thinkers debating the systems problems that are caused by the Irish state, that would be hugely beneficial. It would provide a marked contrast to the posturing in McGill.

        Also – please find somebody who knows something about how the Danes run their institutional state, for the conference. Because it is not lack of funding that is responsible for the messes being found in the Irish institutional state.

        When Bertie’s mate gets to head up the CRC, you are going to get problems.

  19. McGoo

    Don’t worry. It’s been clear for years that the USA and EU would eventually clamp down on Irish corporate tax. I’m sure our government have planned for it and have a brilliant plan B waiting in the wings.

  20. You are dead right David. At least enforce the 12.5% rate. Our revenue people are extremely efficient at enforcing our self-employed and SME’s to cough up, not to say ruthless. Why are they such wimps when it comes to the big guys with the big bucks. We are supposed to be globalised, so we should have global tax fairness, or does globalisation only apply to making profit?

    • J-Will

      This was a critical article from David.

      12 Billion Euro, you say ?

      What a Revelation !

      • J-Will

        Is making a profit the best yardstick in determining mankind’s level of overall efficiency?It’s certainly central to the banksters only creed of “show me the $ monaaaaay £!”

        i’m a small bit rusty,but globalisation was once the sharing of ideas and discoveries(in engineering and medicine etc)and products too,but it’s now the intended thinning of the American herd,with the poison of outsourcing and de-industrialisation! e.g.the insane ‘farming out’ of USA’s manufacturing base to Asia,which resulted in the poisoning and devastation of past generations’ work on creative development of their physical economy,which naturally led to the demise of the potential of an integrated agro-industrial development – which again Obama has played a central evil role in bringing down.[ Forget the Ebola virus ,,,Obama's policies are in themselves plague-like ]

        • J-Will

          and this is the kicker – China have contracted this same mental virus and are now too outsourcing to Vietnam – taking advantage of cheap [slave !] labour.Who’d have thought this scenario would have ever evolved?

          That wasn’t the original plan,or was it??!

          And now China,who have depended on an export economy,realise that the jig is up on consumerism,so wisely,with a vision of their future,they are choosing to change course and adopt a mission of a hi-tech economy.This is just observable Fact!

          • J-Will

            So while the Chinese realise CLEAR AS A BELL that the old system is incompatible with the reality of sustaining 1.5 billion citizens,the damage to U.S. productivity by way of thick-hound-Obama’s anti-science and anti-growth policies and his promotion of the artificial scarcity fraud,has brainwashed citizens’ minds and embedded a fraudulently fearful survival-of-the-fittest virus,hard-wired to our “self-love”,where most people have only a Pavlovian response to the word PROFIT (in monetary terms)

            The fusion of Culture,Science and Technology and human creativity – to make Real Progress for the Future is where the BRIC nations are RIGHT NOW?

            That’s the THREAT to OBAMA and the neo-cons.Their system is crumbling,as is again,observable FACT

            Go Clare Daly!

            3mins
            http://www.youtube.com/watch?v=QIMucHfUMyg

  21. J-Will

    Written by Pól Ó’Braonáin and derived from an ancient text from Galway, explains how in war and in violence,no side wins – that all lose!

    http://www.youtube.com/watch?v=QWKpF0ETjLI
    (1983)

    Imtheochaidh soir is siar – I will go east and go west
    A dtáinig ariamh an ghealach is an ghrian – From whence came the moon and the sun

    Fol lol the doh,fol the day
    Fol the doh,fol the day – port(aireacht)béil – Gaelic ‘lilting’

    Imtheochaidh an ghealach’s an ghrian – The moon and the sun will go
    An duine óg is a cháil ‘na dhiadh – And the young man with his reputation behind him

    Fol lol the doh,fol the day
    Fol the doh,fol the day

    Fol lol the doh,fol the day
    Fol the doh,fol the day

    Imtheochaidh a dtáinig ariamh – I will go wherever he came from
    An duine óg is a cháil ne dhiadh – The young man with his reputation behind him

    Fol lol the doh,fol the day,
    Fol lol the doh,fol the day

  22. DB4545

    Bonbon, Switch off that computer right now. Take a walk down to the local and have a few beers, maybe a chat and get back in touch with reality. It’ll do you good.

    • summacumlaudae

      let him blog DB45 …his links are cool

      i’m watching this one nowhttp://www.youtube.com/watch?v=JeXqi-XYXKk

  23. Deco

    TINA There Is No Alternative.

    Due to the chronic cost base inefficiency that exists in Ireland (where state taxes/levies, state underperformance, industry association pricing, agreed “bottlenecking” (like in real estate) and private sector oligopolistic pricing exists) – There is no alternative to generating economic activity, except by offering foreign MNCs tax terms that are ridiculously cheap.

    TINA.

    We are underpricing ourselves in one section, and over-pricing ourselves in another.

    And we need to learn from Denmark, or Germany how to make the state more efficient. The amount of clientelism that exists, and the vast army of quangos and private organizations (like REHAB) that are being propped by by state grants – is a drag on economic competitiveness.

    Does Singapore need so many quangos ?

  24. Monbiot repackages his usual opinions but that doesn’t make them any less true:

    http://www.monbiot.com/2014/07/29/unmasked/

  25. StephenKenny

    “I don’t care if it’s legal – it’s wrong.” is just pure political posturing – it’s as absurd as saying that something, socialism for example, is “good in theory and bad in practice”. When theory and reality disagree, it the theory that’s wrong, not reality.

    If the law doesn’t fit, then change the law, and the US has many options to force their multinationals to do what the government wants. Do it where we can all see it, make a clear, unambiguous statement of intent by signing a law. Anything else feels like backstairs intrigue, dodgy goings on in smoke filled rooms, and fat envelopes of currency notes passing from hand to hand.

    If this statement is about anything, it’s much more likely to be about one of these forthcoming nation-destroying trans-national treaties that give corporations legal powers over governments.

    It’s governments that we elect to govern on our behalf, not corporations.

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