19/11/2012: Two points on Irish Corporate Tax

Two thoughts, related (on foot of the current discussions of the Irish Corporate Tax Haven in the EU, US and in Ireland):

1) US/EU/Ireland strategy dilemma: 

(X) : US is unhappy about MNCs underpaying tax in the US via international tax arbitrage

(Y) : US' strategic ally - the EU - is unhappy about US MNCs underpaying tax in the EU via international tax arbitrage

(Z) : Ireland is a trading & investment ally with the US and a member of the EU

(W): Ireland is a major center for tax arbitrage by the MNCs

So now: Z  =  X  +  Y  -  W  +  V(?)

Where V(?) is the unknown 'good will' that US and EU must feel toward Ireland to sustain the above equation.

2) And the above implies this: In the current environment: 

-- incentives for the US to increase (X) are higher than normal (driven by the fiscal cliff and the need to onshore jobs); 

-- while incentives for the EU are to increase (Y) are also much higher than normal (driven by EU own fiscal deleveraging and aggravated by the fact that EU member states are funding 'bailout' for Ireland), 

-- yet at the same time, incentives for Ireland to keep increasing (W) are also extremely heightened (due to the Irish crisis 'solution' model of 'exporting out of the recession and fiscal deleveraging'). 

All of which means that V(?) is rapidly diminishing, squeezed by contradicting (X)+(Y) and (W) rapidly pulling the national interests further and further apart.

I'd say (as an old boxer) - we are heading for the corner... Good luck to anyone thinking we can sustain current corporate tax regime in this world...