Blarney is Irish for sweet talk that aims to charm or flatter as “he had the street charm of an Irish politician, but this blarney concealed his inner truth.” Joe Biden was very good at blarney in his talk before the Irish Parliament, but he failed to take issue with how the Irish government has stolen thousands of jobs from the United States.
Starting in 1996, Ireland began lowering its corporate tax rate from 40% to 12.5%. With the lowest tax rate of developed countries, Ireland enticed American companies to move factories and headquarters to the Emerald Isle. According to the New York Times (Feb. 2, 2005) Ireland was a relatively poor country the 1990s. Ireland is currently the second richest country in Europe. This happened solely because Ireland has the lowest corporate tax rate. The Guardian, a leading British newspaper, reported that 700 US companies are now located in Ireland. The list of major US firms operating in the Irish Republic includes leading American pharmaceutical and tech companies: Intel, Boston Scientific, Dell, Pfizer, Google, Hewlett Packard and Facebook.
Janet Yellen recently proposed an international tax agreement setting the minimum national corporate tax rate of 15%. Frankly, this is too little, too late. With 700 US companies already in Ireland most are not likely to come back home. Ireland has agreed to Yellen’s tax proposal, albeit, with a significant loophole. Ireland will increase its basic corporate tax to 15%, but will keep the 12.5% tax rate for the first 750 million Euros of income. The clever large corporations can pay taxes via their numerous corporate subsidiaries so that very little tax is paid at about 12.5%.
Pharmaceutical companies originally came to Puerto Rico in the late 1960s and 1970s to take advantage of the now-expired federal tax incentive known as Section 936. This incentive allowed US-based manufacturers to send all profits from local plants to mainland parent companies without having to pay any federal taxes. After Section 936 of the Internal Revenue Code was phased-out in 2006, Puerto Rico entered into a recession that has lasted until today. The American pharmaceutical companies that had benefited from this tax exemption granted under Section 936 left Puerto Rico for another island, Ireland. Now nine out of 10 of the world’s largest pharmaceutical companies are established in Ireland. Johnson & Johnson, Eli Lilly, Pfizer, Merck Sharp & Dohme, Amgen, Abbott Labs, Glaxo Smith Kline, Gilead Science, Bristol-Myers Squibb, Allergan, Biogen, Stryker, Regeneron, Baxter and many others. Johnson & Johnson has 3,000 employees in Ireland. Pfizer has invested more than $7 billion in its factories in Ireland while closing their factories in Puerto Rico. Bristol-Myers Squibb closed a plant in Puerto Rico, firing 225 workers while it boosted employment in Ireland to 650 workers. Allergan, the maker of Botox and other drugs, transferred its global headquarters from New Jersey to Dublin, Ireland in 2013
The world’s largest chip maker, Intel, opened a plant in Ireland in 1993 just in time to take advantage of Ireland’s low corporate tax rate. Intel has invested $15 billion in Ireland expanding chip production there. Medtronic, a high-tech medical device manufacturer, was founded in Minneapolis in 1949. This company grew to become a Fortune 500 company. Medtronic shifted its global headquarters address to Ireland. This move cut its tax bill in the United States, though the company’s headquarters and major operations are still run from its US offices.
In 2015, Apple announced a major investment in its Irish operation with the construction of a giant €850m data center in Athenry, Co Galway. The center is expected to create 300 new jobs and will be Apple’s largest data collection hub in Europe.
Biden should have proposed a trade agreement with Ireland that would have included a strong corporate income tax provision. If Ireland wants to trade with the United States, it should agree to have an equal corporate tax rate. While Biden may love his Irish cousins, this does not give them the right to steal our factories and jobs. Pfizer, which developed Viagra and Lipitor in the United States, should not be allowed to abandon the United States for a tax haven in Ireland while shipping billions of dollars worth of drugs from Ireland to the United States. Until Ireland agrees to an equal corporate tax rate, we should heavily tax all products coming from Ireland.
Joel Joseph is an attorney and chairman of the Made in the USA Foundation, a non-profit organization dedicated to promoting American-made products. Email joeldjoseph@gmail.com. Phone 310 MADE-USA
From The Progressive Populist, May 15, 2023
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