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:
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.
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_... .
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-bond...
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.
As a small company you can apply for this same innovation thing and get 17K tax deduction, and you have to put 500 hours into it. It's rediculous.
It's called "WBSO (Wet Bevordering Speur- en Ontwikkelingswerk)". Hoi Jan.
When the Apple ruling first came out there was talk of it being the first of others, but with how much resistance the Irish government have put up, it's hard to see them coming to fruition at this stage.
The deal with Apple was considered a sweetheart deal and is illegal (under EU law but not Irish) and not available to other companies.
OP is right correct approach is a consolidated tax rate/base across EMU.
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 . The bank guarantee . The failure to nationalise (in time) what was effectively a financial time bomb 
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.
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.
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.
The head of the Bank of England is appointed by the UK government. The head of the ECB is appointed by the Council of ministers - ministerial representatives of member states. How is is this different, conceptually, in terms of answerability to the electorate?
The ECB sets interest rates independently, the BoE does the same.
Most of your arguments appear to be about the difficulties inherent in having a single monetary system across disparate economies, and I agree with you - but there is nothing inherently anti-democrat in the way that the ECB manages its affairs.
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.
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.
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%...
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.
So no, it wasn't.
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.
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.
Unified tax rates would greatly reduce the burden of setting up and running a business in the EU.
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.
> It’s starting to pay the funds
You know, I was fined for not paying my installments (not my taxes! just my installments) in 2017 and these guys didn't pay their back taxes for two bloody years and were not charged hefty penalties and interest for it. Really, blood boiling unfair.
You are required to pay the installments on time all the time, nothing has changed in the last several years related to this.
The analog would be: IRS told you that you didn't have to pay the installment this year but next year instead. A court then said IRS was wrong, you have to pay back taxes. You wouldn't be fined because IRS was wrong this time.
One year I made a mistake on my taxes and my refund was $1000 more than it should have been. Six months later not only was I fined for the mistake and forced to pay back the $1000, I had to pay interest on that $1000. (Canada)
This year when the government owed me $6000 in overpaid taxes, why didn't they pay me interest on my money they were holding...?
In the US, if you don't file for a year and are owed, after the filing period they do pay interest. But not for the initial filing year. In fact, if you over pay too much, they (the IRS) can penalize you for that as well.
Anyone who's been "penalized" for overpaying their taxes was actually underpaying their taxes prior to their overpayment. People don't realize that taxes are generally due over the course of the year (usually quarterly), not all at once on April 15/16/17. The April deadline is just the due date for the final payment of your prior year's tax liability. If you were underpaying during the year, you could be penalized for that even if you overpaid in April the following year.
This is why trying to game your withholding on your wages (i.e., minimal or underwithholding) is such a bad idea. Any gain (i.e., investing in stocks) is usually more than offset by the penalties and interest you pay if you end up being wrong about how much in taxes you owed. The stock market would have to have a very bullish year to see an upside, usually better than 10% growth--and the target just goes up as interest rates go up.
Actually what they are starting to do is put the money into escrow while the case moves slowly through the courts. Ireland is not yet receiving money for back taxes.
Ireland's position is still that the taxes are not owed and that the government made no improper deals.
It will take some years before the taxes are actually paid to Ireland or Apple gets the money back from escrow.
It's not surprising that Ireland would want to keep being able to give the tax break: very small taxes from Apple (and other companies) is better than no taxes from Apple at all.
It's not just about the tax paid by Apple, but the tax paid by Apple employees. Income tax and VAT make up the majority of Ireland's tax receipts, and adding more jobs increases those.
Ireland did not make 21B from additional VAT and income tax receipts thanks to Apple - I estimate more like 2B - but she probably made an amount commensurate with the amount of value added by Apple employees in Ireland. The excess comes from Apple's ability to declare a large part of its worldwide corporate income in Ireland, which somehow is not what is under scrutiny here.
This is a really big debate in Australia at the moment, a lobby group made up of large corporates (the Business Council of Australia) is campaigning heavily for a tax cut given the recent Trump cuts. So there's been a lot of examination of this data and the best they have is intuitive arguments ("of course if there's more profits you'll have more investment and employment") but they admitted in a Senate enquiry just yesterday that they didn't actually have any demonstrable statistical evidence that tax cuts have caused employment growth, wage growth or increased investment in any developed economy.
But this isolated issue with this particular tax dodging scheme should be solved separately, as should "lowering tax rate", "reducing unemployment" et al.
Enforcing law is different job than making law.
In many ways, the emergence of the EU was forced by the rise of supranationally-sized industrial giants emerging from US and URSS. Now that it's clear that "supranational champions" really have no fundamental loyalty, there is a very high chance that supranational institutions will become more and more powerful. The challenge is to make those institutions answer to everyone rather than just to the elites.
Seems particularly apt in this context.
Seems the markets already believed Apple would lose this one.
Damn EU! Destroying our country.
This is exactly why a lot of people don't like the EU. Local politicians claim EU victories as their own, while blaming the EU for all unpopular laws. David Cameron was really good at that and look how that worked out...
Nevertheless I feel compelled to nitpick at the statement that the EU bailed Ireland out.
I believe the most important components of the so-called bailout instrumented by the IMF, ECB, and EU were that:
A. Ireland was forced to turn about 65bn euro of private (banking) debt into public debt [for scale: our national debt was 36bn a couple of years before]
B. The Irish government was allowed to run an _enormous_ budget deficit for many years