Food for thought:
What is good for a corporation isn’t necessarily what is good for a
country that hosts that corporation – especially when those goodies are
extracted from that country by that corporation.
Tax is not a cost to an economy, but a transfer within it. So it’s
not immediately obvious that a corporate tax cut – taking wealth away
from public investment programmes and giving it to (often foreign)
shareholders will make your economy more “competitive,” whatever that
word means. Is a new factory more productive than a new road or a bunch
of teachers’ salaries?
Bono: Tax Haven Salesman for the Celtic Paper Tiger | naked capitalism
I certainly think that it can be bad for a country to create tax loopholes, especially for larger corporations. As Professor Jim Stewart of Trinity College, Dublin, was quoted in the article saying, "If you’ve given away your educational system to attract those marginal investors, that may well be a price too high to pay." How much tax revenue are we willing to forgo just to attract some new companies? Understanding if the benefits outweigh the costs is very important. I found Stewart's perspective refreshing as it counters the common dialogue about how attracting corporations is always what is best for a country's economy and its people.
ReplyDeleteSimilarly, I found the article's take how expanding tax loopholes affects the global political economy interesting. I think the article is correct in claiming that governments are in a race to the bottom, trying to "out-loophole" each other. This trend is particularly bad for underdeveloped countries that are already struggling to be competitive on the world stage, who could significantly benefit from effectively taxing multi-national corporations.
This article has helped explained what is happening United Kingdom, Luxembourg, the Netherlands, Switzerland, Belgium, Gibraltar, Bermuda. Tax loophole only benefits corporations and the wealthy and those countries are suffering the consequence. The tax loophole is "out-loophole" those countries, which can lead to economy downturn.
ReplyDelete