Obama's Offshore Tax Reforms Prompt Jitters in Ireland

By Hearne, John | The Christian Science Monitor, June 16, 2009 | Go to article overview

Obama's Offshore Tax Reforms Prompt Jitters in Ireland


Hearne, John, The Christian Science Monitor


President Obama launched his offshore tax reform proposals last month with a briefing note stating that Ireland, Bermuda, and the Netherlands accounted for nearly a third of all foreign profits reported by US corporations in 2003.

These are precisely the profits Mr. Obama hopes to tax.

The three countries named in the memo did a shocked double-take: "Who, me?"

It was not an entirely ingenuous reaction. The president's intent to rein in offshore tax havens and close corporate tax loopholes was signaled long in advance.

Although the issue has remained relatively under the radar in the US, it's caused something of a furor in Ireland, where unemployment is skyrocketing, the budget deficit is deepening, and the banking sector threatens to disappear down a black hole left by the imploding property market.

More than 500 US firms employ 100,000 people directly in Ireland. In 2008, those firms paid more than $3.6 billion in corporation tax to the Irish government - 40 percent of the country's total corporation tax take that year. If the new rules were to prompt a mass exodus of US multinationals, as some analysts predict, the economy would effectively be almost entirely hollowed out.

The Irish press has reacted to the proposal with dismay, but more sober minds have since combed the president's statement and exhaled an uncertain sigh of relief. For Ireland, and for every other country with a substantial US corporate presence, deferral is the big issue. Existing law allows multinational corporations to defer reporting their foreign income to the Internal Revenue Service and to obtain US tax credits for paying foreign taxes.

The president stopped short of repealing the tax deferral law, but he proposes to prohibit businesses from receiving tax deductions for overseas investments until taxes are paid to the IRS on the profits gained abroad.

Beyond the brass plate

It's a situation that makes countries like Ireland, with a corporation tax rate of 12.5 percent, considerably more attractive as an export base than the US, with its 35 percent rate.

Pat Wall, a tax expert with the American Chamber of Commerce in Ireland and a partner with PricewaterhouseCoopers in Dublin, says existing tax rules are hideously complex. The president's proposal to reform deferrals would take in an estimated $60 billion over a 10- year period.

"To be honest with you, that's not a hill of beans," Mr. Wall says. "Don't get me wrong, anything that tilts the playing pitch against foreign investment has to be bad news for us, but I suppose to some extent we are lining this up against the worst-case scenarios that people were painting in the run-up to all of this."

Those worst-case scenarios included a complete end to the deferral system.

"That would have been Armageddon," Wall says. "What [Obama] is proposing is nuanced, and to be honest, you couldn't really argue with it. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Obama's Offshore Tax Reforms Prompt Jitters in Ireland
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.