Obama's latest jobs/opening campaign/scream foul to the media - speech

[SpiritWarrior]

Originally Posted by Micah Foehammer I'm not sure how proximity matters given such a large disparity in the corporate tax rates. Given the choice of 12.5% versus 26% the slightly lower labor costs in the UK wouldn't seem to be that much of a driver for a US corporation or EU companies for that matter to preferentially locate in the UK versus Ireland or (Switzerland for that matter).

This was my initial feeling too. It's covered on the news in the UK & Ireland quite a bit as a hotbed issue. From what I have seen and heard, proximity is a factor when the HQ is located an hour or so across the ocean. If they want an office as close as possible to Ireland for example, they have no choice but to go to the UK to perhaps route orders via Heathrow etc. So England gets a cut of the action. Not a big cut, but a cut due to being the closest proximity to Ireland. A relucant benefit maybe. This is all gleaned from talking to friends who are vendors or listening to news and radio of how the UK is getting some trickle-down benefit from Ireland's uniquely low rates.

I don't follow this closely. Do you have some details on what sort of changes were made? I do know that the government of Ireland refused to consider raising the corporate tax rate despite the furor.

I try to not follow it closely as we are mindnumbed by the thing via the media. I could find them if you are really curious - probably somewhere on the official Irish Gov site. I follow this via the TV and radio mostly rather than reading about it on websites. Like I said it was a big issue at one point like a year or more ago and most of us are so burned out hearing about it. From what I recall, Ireland refused to raise it's super-low corporate rate in the face of EU opposition. Many argued that it would discourage these businessess from springing up and they would just go elsewhere (which some have). So the main proposal was turned down, but in the wake of a troubled economy something needed to be raised and I think they did a bit of a number on these corps and enacted some new laws. IIRC there was even a public vote on it. (in Ireland we vote on EVERYTHING so you lose track of what the issue is this week and what the signs are referring to on this day).

But anyways, there was then talk that while the official rate was not altered, some other laws were put in place to squeeze some money out of these large corporations. It used to be a topic on talkshows, where CEO's would be interviewed and acknowledge that while at first glance the rate remains untouched, they still wind up with slightly more to pay. Still quite coveted, but I think a bit more expensive than it was. I could probably hunt the laws down with some time but my understanding of it is jaded at best.

[Micah Foehammer]

Originally Posted by SpiritWarrior This was my initial feeling too. It's covered on the news in the UK & Ireland quite a bit as a hotbed issue. From what I have seen and heard, proximity is a factor when the HQ is located an hour or so across the ocean. If they want an office as close as possible to Ireland for example, they have no choice but to go to the UK to perhaps route orders via Heathrow etc. So England gets a cut of the action. Not a big cut, but a cut due to being the closest proximity to Ireland. A relucant benefit maybe. This is all gleaned from talking to friends who are vendors or listening to news and radio of how the UK is getting some trickle-down benefit from Ireland's uniquely low rates.

Okay, now I see where you were going with that. It's a distribution issue as opposed to directly tied to corporate tax rates. But I get the point.

I could find them if you are really curious - probably somewhere on the official Irish Gov site. I follow this via the TV and radio mostly rather than reading about it on websites. Like I said it was a big issue at one point like a year or more ago and most of us are so burned out hearing about it. From what I recall, Ireland refused to raise it's super-low corporate rate in the face of EU opposition. Many argued that it would discourage these businessess from springing up and they would just go elsewhere (which some have). So the main proposal was turned down, but in the wake of a troubled economy something needed to be raised and I think they did a bit of a number on these corps and enacted some new laws. IIRC there was even a public vote on it. (in Ireland we vote on EVERYTHING so you lose track of what the issue is this week and what the signs are referring to on this day). But anyways, there was then talk that while the official rate was not altered, some other laws were put in place to squeeze some money out of these large corporations. It used to be a topic on talkshows, where CEO's would be interviewed and acknowledge that while at first glance the rate remains untouched, they still wind up with slightly more to pay. Still quite coveted, but I think a bit more expensive than it was. I could probably hunt the laws down with some time but my understanding of it is jaded at best.

All I've been able to dig up was something about the furor over the corporate tax rate. Ireland basically told the rest of the EU to shove it re: corporate tax rates. LOL

So if you have any details on what else was enacted, it would be appreciated. Don't bust a gut looking but I'm curious as what changes were made by the Irish government that altered the corporate bottom line.

[SpiritWarrior]

Originally Posted by Micah Foehammer Okay, now I see where you were going with that. It's a distribution issue as opposed to directly tied to corporate tax rates. But I get the point. All I've been able to dig up was something about the furor over the corporate tax rate. Ireland basically told the rest of the EU to shove it re: corporate tax rates. LOL So if you have any details on what else was enacted, it would be appreciated. Don't bust a gut looking but I'm curious as what changes were made by the Irish government that altered the corporate bottom line.

It's not that it is hard to find, it's just that I wouldn't recognise the specific laws unless someone pointed them out to me. Which is kinda the point, as people say they snook 'em in almost. But those who do know the exact laws and have to abide by them, keep complaining on the Irish media, lol. I have a friend who works in the civil service I can ask him exactly what and where, but Irish law and politics are really an overly-complicated cumbersome thing in comparison to America or even the UK. The Dail, Sinn Feain, the Green Party, the Taoiseach - don't ask.

[Micah Foehammer]

Originally Posted by SpiritWarrior It's not that it is hard to find, it's just that I wouldn't recognise the specific laws unless someone pointed them out to me. Which is kinda the point, as people say they snook 'em in almost. But those who do know the exact laws and have to abide by them, keep complaining on the Irish media, lol.

I came up empty on my searchs - probably made them too generic but not sure how to screw down on them. Again, anything specific you can add would be appreciated.

Or even some details about which sort of costs were increased under the laws would be helpful.

Again, not looking for a complete thesis - just something to fill in the blanks.

Not a big deal, so no need to jump thru hoops.

[Timber Loftis]

Originally Posted by Cerek What I noticed with most of these examples is that the move to foreign countries had very little to do with healthcare costs or benefits and a LOT to do with lower corporate or patent taxes.

2 unrelated issues. You locate your corporate HQ where you get the best tax benefits as far as corporate income tax.

You locate your workforce where labor costs are cheapest -- and this is based on a number of things, and certainly free health care is one of those.

As for Ireland -- they have a special tax rate for pharmaceutical companies -- they targeted those companies with big tax incentives in the 90's and drew in a lot of their business.

[SpiritWarrior]

Originally Posted by Timber Loftis As for Ireland -- they have a special tax rate for pharmaceutical companies -- they targeted those companies with big tax incentives in the 90's and drew in a lot of their business.

It does? A specific rate for pharma industry only?

[Cerek]

Originally Posted by Timber Loftis 2 unrelated issues. You locate your corporate HQ where you get the best tax benefits as far as corporate income tax.

That's very true. The article I read about the companies with HQ in Bermuda pointed out that several of these companies still had their large, main offices in the States and it was only the HQ site that was established in Bermuda.

Originally Posted by Timber Loftis You locate your workforce where labor costs are cheapest -- and this is based on a number of things, and certainly free health care is one of those.

That begs another question. Is the health care really "free" for the corporations? National healthcare plans aren't really "free" for regular citizens because the program is usually funded by higher tax rates, but corporations receive tax breaks and/or incentives for locating in those countries. Even without the tax incentives, I would imagine that, from the corporations perspective, the health care really is "free".

In America and other countries without a national plan, corporations have to purchase a group insurance policy to cover their employees or fund an insurance program themselves. Of course, this cost is normally passed on to the employees, who still have to pay a monthly premium for the coverage.

In countries with a national plan, however, I would assume the corporation does not have to purchase an insurance plan or establish an insurance fund, since the health care is provided by the state and would be funded through taxes on the wages earned by the employees.

Is that actually the case, or does the state recoup some of the cost for their national plan through the permit and licensing fees paid by the corporation?

[Micah Foehammer]

Originally Posted by SpiritWarrior It does? A specific rate for pharma industry only?

Pharm companies did get special breaks - initially the corporate tax rate was 10% which was raised to the current 12.5% in 2003 (iirc) due to EU pressure. There are also some very lucrative R&D tax credits of 25% that are still in effect along with special tax treatment of income from propriatary IP rights and Patents.

I think those initial 1990's tax breaks were allocated for a broader class of health service, chemical and technology related companies not just the pharm sector. I could be wrong though.

[SpiritWarrior]

Right, the standard rate is 12.5 but that's for all corporate, not just pharma companies. Perhaps he means the tax credits favor the Pharma industry. Patents are handled very generously too.

[Timber Loftis]

I thought this might bring levity to this big honking tax discussion.